“Pathways Towards Greater Impact: Better Microinsurance Models, Products and Processes for MFIs;” by Craig Churchill, Aparna Dalal and Josh Ling; published by International Labour Organization; November 2012; 52 pages; available at: http://www.ilo.org/public/english/employment/mifacility/download/mpaper18_models.pdf
This document reviews challenges and successes that microfinance institutions (MFIs) may face when offering insurance to low-income individuals and microenterprises. The paper focuses on the evolution of products and improving business processes, offering ten suggestions for improving the provision of insurance by MFIs. The authors suggest that MFIs work to understand market needs and preferences, arguing that many MFIs and insurance providers design products that suit themselves rather than their clients. Second, MFIs should ensure that low-income households can access simple, easy-to-understand products. The authors also argue that MFIs should prioritize savings, such as by offering savings-linked insurance coverage. MFIs should be sure any mandatory coverage is valuable by ensuring clients understand the coverage and its benefits. The authors also suggest proactively developing their “product menu,” improving claims processing and applying holistic risk management practices. Finally, institutions should make sure to have specialized insurance personnel; develop capacity for a variety of insurance functions such as marketing, sales and claims management; and monitor the performance of their insurance products.
“Microfinance Investments;” by Roland Dominice; published by Symbiotics; 2012; 120 pages; available via a no-cost registration process at: https://my.syminvest.com/industry/microfinance/papers/2cbe58ea-4705-474e-b2a4-d275a8194f50
This e-book summarizes investments made in microfinance institutions by microfinance investment vehicles (MIVs) and non-MIV socially responsible investors (SRIs). The authors estimate the MIV market value to total USD 10 billion as of 2012, demonstrating a 35 percent growth since 2007. Two thirds of MIVs are debt funds, and 80 percent of MIV transactions are loans. A 75-percent share of MIV assets is placed in Eastern Europe and Latin America. Institutional investors hold 45 percent of MIV market share and the authors state that debt financing is the main source of growth for MFIs. The total equity market size is approximately USD 10 billion, and according to the authors, MFIs usually outperform emerging market banks when they receive private equity investments. The authors conclude that there is high demand for the “democratization of access to capital” in low-income countries and a “flourishing financing intermediation market.”
“Application Paper on Regulation and Supervision Supporting Inclusive Insurance Markets;” published by the International Association of Insurance Supervisors (IAIS) MicroInsurance Network Joint Working Group and the Access to Insurance Initiative; October 2012; 35 pages; available at: http://www.iaisweb.org/index.cfm?pageID=763&lyrHighlightWord=application%20paper%20on%20regulation%20and%20supervision%20supporting%20inclusive%20&searchvalue=application%20paper%20on%20regulation%20and%20supervision%20supporting%20inclusive
This paper aims to provide guidance on the application of principles and standards in inclusive insurance markets through an examination of the “Insurance Core Principles” (ICPs) of the Switzerland-based nonprofit International Association of Insurance Supervisors (IAIS). The authors state that governments should regulate inclusive insurance products and services and that insurance businesses should be separated into an independent legal entity by businesses offering other products in addition to insurance. The authors also recommend the licensing of pilot programs and the formalization of informal services. Supervisory approaches are discussed, and it is suggested that local laws and regulations incorporate clear, qualitative definitions for insurance topics unless a quantitative reason is needed.
By Charlotte Newman, Research Associate
About the International Labour Organization
Founded in 1919, the International Labour Organization (ILO), is an agency of the United Nations, an organization promoting peace and improved living standards. The objective of ILO is to advance opportunities for men and women to obtain productive work in conditions of freedom, equity, security and human dignity. Headquartered in Switzerland, its founding mission is that labor peace is critical to prosperity. For the biennium 2012-2013, ILO anticipates a budget of USD 861 million.
Sources and Additional Resources:
“Pathways Towards Greater Impact: Better Microinsurance Models, Products and Processes for MFIs,” http://www.ilo.org/public/english/employment/mifacility/download/mpaper18_models.pdf
“Microfinance Investments,” https://my.syminvest.com/industry/microfinance/papers/2cbe58ea-4705-474e-b2a4-d275a8194f50
“Application Paper on Regulation and Supervision supporting Inclusive Insurance Markets,” http://www.iaisweb.org/index.cfm?pageID=763&lyrHighlightWord=application%20paper%20on%20regulation%20and%20supervision%20supporting%20inclusive%20&searchvalue=application%20paper%20on%20regulation%20and%20supervision%20supporting%20inclusive
MicroCapital.org story, November 19, 2012, “SPECIAL REPORT: Panel: Seeking Diversification, Microfinance Investors Often Reap Annual Returns of 4%,” http://www.microcapital.org/special-report-panel-seeking-diversification-microfinance-investors-often-reap-annual-returns-of-4/
MicroCapital.org story, October 30, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Analysis of Microfinance Investment Vehicles; Female Microfinance Clients in Pakistan; Life Microinsurance in the Philippines,” http://www.microcapital.org/microfinance-publication-round-up-analysis-of-microfinance-investment-vehicles-female-microfinance-clients-in-pakistan-life-microinsurance-in-the-philippines/
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