Conference opening (left to right): Sri P. Chidambaram, Honourable Minister of Finance, Government of India; Thomas Loster, Chairman Munich Re Foundation; C.S. Rao, Chairman IRDA, Michel Flamée, Chair of Executive Committee of the IAIS.
Sri P. Chidambaram, Honourable Minister of Finance, Government of India

3rd International Microinsurance Conference 2007

In search of the right framework

Over 300 microinsurance experts and practitioners from over 50 countries were in Mumbai from 13–15 November 2007 to discuss the latest trends and developments in insurance products for the poor at the Third International Microinsurance Conference. One of this year’s main topics was the question of which regulatory parameters are necessary to help microinsurance achieve a breakthrough.

According to a MicroInsurance Centre survey, almost 80 million people in the world’s 100 poorest countries (85% of whom live in Asia) have access to insurance. In absolute terms, the number of microinsurance clients seems very high. In reality, however, it corresponds to a mere 3% of the world’s poor. Experts from the Indian Insurance Regulatory and Development Authority (IRDA) go as far as to estimate that in India alone, 250 million people could take advantage of microinsurance.

“It is clear that wealth does not percolate down to society’s poor”, said the Indian Finance Minister, Sri P. Chidambaram in his opening speech. “While growth is the best antidote to poverty, governments must now turn their attention to those who are at the bottom of the income pyramid.” The Microinsurance Conference, which has now become the most important annual meeting in the sector, offered a suitable forum for this.

More than half of the Indian population, continued the minister, had no access to banking, let alone insurance products. “Addressing these concerns is as important as focusing on growth”, Chidambaram is convinced. Against this background, India was an ideal country to host this conference, particularly in the light of its unique regulatory environment: commercial insurers are required by law to offer cover to low-income households, with the result that over 30 million low earners have insurance today.

The doubling of the number of participants compared with the 2006 conference in South Africa was particularly pleasing. The significance the topic has now attained is also apparent from the fact that almost one in three conference delegates came from a private-sector insurance company. Furthermore, unlike at similar conferences, all the stakeholders were present – from governmental and non-governmental organisations, to insurers and actuaries, and academic researchers – fulfilling a basic precondition for the intensive discussions necessary to help microinsurance achieve an effective breakthrough.

Apart from looking for innovations to reduce administrative costs and the development of insurance solutions in the area of agricultural and natural catastrophes, the main focus was on the issue of optimum regulatory parameters. “We need the support of politicians to drive microinsurance forward”, stressed Michel Flamée, Chair of the International Association of Insurance Supervisors’ Executive Committee. He praised the pioneering role India has assumed in this area, but went on to say that the regulatory framework must not only take into account the special features of microinsurance business, but also avoid placing traditional insurers at a disadvantage.

C. S. Rao, Chairman of the IRDA and co-organiser of the conference, underlined the importance of developing tailor-made and affordable products. “Low income people often live in high-risk areas and face many perils. They are far more susceptible to illness, accidents and disability,” Rao warned. Insurance is a key tool that helps people live with these risks and safeguards hard-won developmental progress.

The conference showed once again the high expectations people have of microinsurance. And because India, like many other countries, is suffering considerably from the consequences of global warming, the debate about adjustment strategies and insurance cover will intensify even further. “Agricultural insurance in particular will see a lot of new solutions,” stated Thomas Loster, Chairman of the Munich Re Foundation, who had put together a panel on “microinsurance for agriculture”.

For the organisers of the conference, Craig Churchill, member of the International Labour Organisation (ILO) and Chair of the CGAP Working Group on Microinsurance, and Dirk Reinhard, Vice-Chairman of the Munich Re Foundation, the event in Mumbai was a complete success: “Over the three years of this conference, we have seen drastic changes. The level of discussions has gone from general overviews of isolated cases to much more detailed and technical examinations of multiple experience.” In view of this, we are looking forward to the next conference, which will take place in Cartagena, Columbia, in 2008. As was already the case for Mumbai, a steering committee will ensure that the content of the conference meets the needs of participants from all over the world. Alongside innovative solutions extending beyond health and life insurance, discussions in Cartagena will focus on the topics of training and technology.