MICROCAPITAL BRIEF: In Forbes, Nicole Skibola Explores Opportunities, Challenges for Insurance Industry in offering Microinsurance

Nicole Skibola, of Australian-US firm Apricot Consulting, recently published an article on the website of US-based Forbes magazine, discussing how some insurance companies are “reconfiguring the value chain to create shared social and economic values” through offering microinsurance to underserved consumers [1]. The article posits that microinsurance offers a significant opportunity to companies to increase their shareholder’s value because industrialized countries have become “saturated with limited prospects for further growth.”

The article also explores the challenges presented by microinsurance: (1) “the poor” often require flexible payment patterns since most do not have fixed incomes; (2) product design requires extensive on-the-ground knowledge to “localize” products optimally; (3) consumers need more “literacy training” to understand the products; and (4) distribution channels are often unconventional such as franchising through women’s groups, rural kiosks etc.

Ms Skibola then posits that, though there are many challenges in the sector, there is an opportunity to bring about innovation in the insurance industry. She cites products like Max Vijay, a joint venture between India-based Max India Limited and US-based New York Life Insurance Company, which uses a simple process to enroll and uses a chain of retail stores as a distribution channel through which policyholders can manage their policies.

By Nisha Koul, Research Associate

Sources and Additional Resources:

[1] Forbes.com, “Micro-Insurance: A Macro Innovation” by Nicole Skibola, http://www.forbes.com/sites/csr/2011/07/12/micro-insurance-a-macro-innovation/

MicroCapital.org story, May 19, 2011, “MICROCAPITAL BRIEF: Asian Development Bank Argues in Favor of Greater Private Sector Involvement in Microinsurance,” https://www.microcapital.org/microcapital-brief-asian-development-bank-argues-in-favor-of-greater-private-sector-involvement-in-microinsurance/

MicroCapital.org story, May 16, 2011, “MICROCAPITAL BRIEF: Microinsurance Network Releases Coverage Of “Microinsurance Debate on Public-Private Partnership (PPP),” https://www.microcapital.org/microcapital-brief-microinsurance-network-releases-coverage-of-%E2%80%9Cmicroinsurance-debate-on-public-private-partnership-ppp%E2%80%9D-2/

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