Insurance – among other financial services – is a powerful way to help poor people manage the myriad of risks that are part of their everyday lives. This comprehensive compendium comes at a key moment, as funders, governments, microfinance institutions and even commercial insurers are increasingly interested in insurance services for low-income people. Peppered with examples from over 20 case studies, this essential guide combines in-depth analysis with readability, a remarkable achievement on a topic of critical importance to improving the lives of the poor.

                                                Elisabeth Littlefield

                                    CEO, Consultative Group to Assist the Poor (CGAP)

The planning process has brought about significant and pronounced transformation in rural areas and among the disadvantaged sections of the population in India. This has paved the way for the financial sector to step in and extend their services more as a business opportunity than as an obligatory service. The Micro Insurance Regulations enacted by the Insurance Regulatory and Development Authority facilitate extension of insurance intermediation in a smooth and seamless manner and at affordable cost to meet the overarching objective of inclusive growth. The publication Protecting the Poor: A Microinsurance Compendium enables policy-makers, insurers, academics and NGOs an opportunity to study the various initiatives taken in different countries and profit from these experiences. I congratulate the publishers for bringing out this excellent compendium.

                                                    C.S. Rao

                                    Chairman, Insurance Regulatory and

                                     Development Authority (IRDA), India

Microinsurance is now a mainstream development topic. Research over the last 15 years shows clearly and consistently that the main reasons people fall below the poverty line are related to idiosyncratic risks such as the death of a wage earner or, more frequently, catastrophic health expenditures. Insurance, in conjunction with savings and credit, provides a mechanism whereby the working poor can retain their productive assets after such discontinuities. This compendium provides an invaluable summation of the state of the art and will hopefully encourage people with relevant skills and unfettered minds to look at what they can contribute to grassroots risk management.

                                                Rodney Lester

                                    Program Director, Financial Markets for

                                     Social Safety Net, The World Bank

Poor households employ various strategies to protect against risk. These include building stocks of food or saving small amounts. Some risk situations are more predictable than others, and if the expected impact is small, it is easier for a poor household to prepare for these. However, events that are unexpected and that may cause significant damage in terms of lost income or increased expenditures pose high financial pressures to poor households. Availing microinsurance helps poor households better manage unexpected events such as accidents, serious illness, and death. Protecting the Poor builds on experiences and lessons made to-date and thus is an important step for innovations of the future.

                                                Dr. Aristotle Alip,

                                    President, CARD Bank, Philippines

This authoritative compendium brings together the latest thinking of leading academics, actuaries, and development professionals in the microinsurance field. The result is a practical, wide-ranging resource which provides the most thorough overview of the subject to date.

The book allows readers to benefit from the valuable lessons learned from a project launched by the CGAP Working Group on Microinsurance analysing operations around the world. Essential reading for insurance professionals, practitioners and anyone involved with offering insurance to low-income persons, this volume covers the many aspects of microinsurance in detail, including product design, marketing, premium collection and governance.

It also discusses the various institutional arrangements available for delivery such as the community- based approach, insurance companies owned by networks of savings and credit cooperatives and microfinance institutions.

The roles of key stakeholders are also explored and the book offers insightful strategies for achieving the right balance between coverage, costs and price.

Craig Churchill joined the ILO’s Social Finance Programme in 2001. Craig has microfinance experience in both developed and developing countries having previously worked for Get Ahead Foundation in South Africa, ACCION International, the MicroFinance Network and Calmeadow. In his current position, he focuses primarily on the role of financial services that the poor can use to manage risks and reduce their vulnerability, including microinsurance. He serves as Chair of the CGAP Working Group on Microinsurance and on the editorial boards of the MicroBanking Bulletin and the Journal of Microfinance. Craig has authored and edited dozens of articles, papers and monographs on various microfinance topics including microinsurance, customer loyalty, organizational development and management, governance, lending methodologies, and regulation and supervision.

Acknowledgement

Table of Acronyms

Introduction

1  Database design requirements for pricing (and sound microinsurance  

    management)

Appendix I: Description of microinsurance providers

Appendix II: About the authors

Bibliography

Index

28 Potential effect of investment mismatch on CARD’s Provident Fund – An

     illustration

8  Claims model 2: Integrated healthcare and insurance provider (internal 

    financial transaction)

9  Claims model 3: Insurer reimburses clients’ out-of-pocket healthcare  

    expenses

2  Applying Prahalad’s “Twelve Principles of Innovation for BOP Markets” to

    microinsurance

30 Creating awareness: The experience of the South African Insurance  

    Association