The global microinsurance sector is expected to double by 2020, potentially providing coverage to 1 billion people by that time, suggests one industry network.
Over the past decade, governments, insurance companies and providers have been widening their geographic scope and range of services to low-income people worldwide, notes the Microinsurance Network, which includes members from major insurance and reinsurance companies, and receives support from the German Development Cooperation and the Luxembourg government.
“Microinsurance, which currently provides coverage to 500 million people, could pass the 1 billion mark by the end of the decade,” Craig Churchill, chair of the Microinsurance Network and head of the International Labour Organization’s Microinsurance Innovation Facility says.
Microinsurance has become an important protection in developing countries that face catastrophic risks such as crop failure, illness and impact from climate change, the group says. A recent special report on African markets from rating agency A.M. Best also noted that microinsurance has been an important part of the growth for the insurance sector in that region.
“The expansion of the sector is being facilitated by the emergence of alternative distribution channels and public-private partnerships, the adoption of technological innovations as well as an increased awareness amongst insurance companies of the business case for microinsurance,” Eugenio Velasques from Bradesco Seguros e Previdência, one of the leading insurance companies in Brazil, notes.
Developing insurance regulations and standards measuring impact and client value are also key to achieving long term sustainability of the sector, the network says.
The rapid expansion of microinsurance led the network to acquire its own institutional legal status in May 2012.
“Becoming independent enables the Network to assume a greater leadership role in the sector, serving its mission of promoting the development and delivery of effective insurance services for low-income people,” the network’s executive director Véronique Faber notes.
This year, the network will be focused on increased supply, improved client value, conducive environment and enabling infrastructure, its four key strategic outcomes. It will also be working on draft guidelines for agricultural microinsurance schemes and will continue to report on trends through various media, including the 9th International Microinsurance Conference in Indonesia in November 2013.