Microinsurance Learning Sessions – One step back, two steps forward

Of the country's almost 30 million citizens, nearly one quarter live close to, on or below the national poverty line. According to recent figures published by the landscape study of the World Map of Microinsurance programme[1], slightly more than three million lives and properties are insured in the country, a figure representing coverage of close to 10% of the entire population. But the trend has been negative in the past. Grave problems encountered by two major insurance schemes led to the loss of almost one million clients between 2011 and 2013.

In his welcome note, Eduardo Morón, ‎President of the Peruvian Association of Insurance Companies (APESEG), underlined the high number of event participants as a sign of the microinsurance industry's growing interest in also providing products to the low-income market. “The recent G7 decisions to increase the number of people insured against climate risks to 400 million by 2020 are an unprecedented opportunity for the industry,” commented Dirk Reinhard, Vice Chairman of Munich Re Foundation. “However, to meet these targets, strong partnerships, improved infrastructure, reliable products providing value to the customers and the increased use of technology will be necessary,” he added.

Managing successful partnerships
Providing access to financial services to those who had no access in the past in many ways means entering unknown territory. It can therefore be crucial to build upon existing knowledge and networks, for example when it comes to understanding clients and demand. It is furthermore important to find the right partners to close up knowledge gaps. Well-managed partnerships between risk takers, distribution channels, sponsors and governments can be a successful approach towards the development of viable insurance solutions for the low-income market. This is all the more important when it comes to solutions such as those addressed in the above-mentioned G7 decisions against climate risks or for the provision of health insurance for all members of society. Both types of insurance require regional, national or even transnational approaches to build solid risk management tools.

The ILO provided an overview of possibilities for creating successful public-private partnerships and improving the client value of insurance products. This was complemented by sessions focusing on health insurance and agricultural insurance demonstrating the different roles of the stakeholders. A wide range of speakers provided inspirational examples of agricultural and catastrophe insurance including an in-depth exploration of agricultural insurance in Mexico.

Distribution is a key factor – but not the only one
Reaching out to large numbers of clients using cost-efficient distribution channels is one of the key challenges in microinsurance business. Microfinance organisations are by far still the most predominant distribution channel in Peru and represent nearly half the client base. However, alternative channels and new technology above and beyond the regular insurance sales channels also provide interesting opportunities. Rodolfo Ern presented Bradesco’s experiences with alternative distribution through banking correspondents in Brazil. However, distribution alone will not succeed if it is not accompanied by other measures. The act of bringing thousands of clients for the first time to a bank is an enormous educational challenge. Without sufficient understanding of how insurance and financial services work, it will, however, be difficult to create a sustainable financial market.

Exploring the opportunities provided by mobile technology, experts discussed the features of Peru’s new mobile banking platform. Over 90% of the Peruvians have a mobile phone,” explained Carolina Trivelli, representing Asbanc. This represents not only a huge market potential for mobile money and the use of mobile phones for insurance distribution and service provision but also demonstrates how technology can increase efficiency. However, mobile technology may not play an important role in the management of efficient payment alone. The example of TeleSalud, one of the leading telemedicine providers in Latin America, clearly showed that the technology still has unexplored potentials in many areas. In this case, it helped provide health insurance services to the clients more efficiently while at the same time increasing value for them.

The way forward
The development of the insurance market is strongly linked with the overall economic developments. However, the low-income market still falls through the grid of many insurance providers. The opportunities are there. Technology will improve efficiency, and governments both inside and outside Latin America are willing to support market development to avoid more set backs. Munich Re Foundation is prepared to support this process. The year 2017 will most likely see the 13^th International Microinsurance Conference taking place in Peru.

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About the event

The Microinsurance Learning Sessions Peru took place in Lima from 6 to 7 July 2015. More than 100 insurance experts – mainly from Latin America – attended the conference.

The event was hosted by the ILO Impact Insurance Facility in partnership with Munich Re Foundation and supported by APESEG, FOMIN and the Microinsurance Network.