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Protecting the poor   

Protecting the poor

A microinsurance compendium

Editor  :   Craig Churchill 

HardBound Book   :   Pages : 654
2008  Edition   :   ISBN -978-81-7188-670-8
Price : Rs. 1295.00 (For Sale in South Asia Only)
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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.



Table of Acronyms


  Part 1 Principles and practices    
1.1 What is insurance for the poor? (Craig Churchill)    
  1  Defining microinsurance    
  2  The two faces of microinsurance    
  3  What a difference three words make    
1.2 The demand for microinsurance (Monique Cohen and Jennefer Sebstad)    
  1  Managing risk    
  2  The importance of understanding the demand for microinsurance    
  3  Current coping strategies: Strengths and weaknesses    
  4  Opportunities for microinsurance    
  5  Conclusion    
1.3 The social protection perspective on microinsurance (Christian Jacquier,Gabriele Ramm, Philippe Marcadent and Valérie Schmitt-Diabate)    
  1  Introduction    
  2  What is social security? What is social protection?    
  3  What is microinsurance)    
  4  Potential and limitation of microinsurance as a social protection mechanism    
  5  How can microinsurance be used to extend social protection?    
  6  Conclusion    
  Part 2 Microinsurance products and services    
2.1 Challenges and strategies to extend health insurance to the poor (Ralf Radermacher, Iddo Dror and Gerry Noble)    
  1  Product manufacturing     
  2  Product sales    
  3  Product servicing    
  4  Maintenance of long-term stability    
  5  Conclusion    
2.2 Long-term savings and insurance (James Roth, Denis Garand and Stuart Rutherford)    
  1  Providing savings to the poor    
  2  Long-term savings and insurance products for the poor    
  3  Key issues in offering long-term savings and insurance    
  4  Conclusions    
2.3 Savings- and credit-linked insurance (Sven Enarsson, Kjell Wirén and Gloria Almeyda)    
  1  Loan-linked products    
  2  Savings-linked insurance    
  3  Product design and delivery issues    
  4  Conclusions    
2.4 Meeting the special needs of women and children (Mosleh Ahmed and Gabriele Ramm)    
  1  Special risks affecting women and children (girls and boys)    
  2  Microinsurance to address the special needs of women and children    
  3  Policy tasks to improve the strategic situation of women and children    
  4  Conclusions    
  Part 3 Microinsurance operations    
3.1 Product design and insurance risk management (John Wipf, Dominic Liber andCraig Churchill)    
  1  Market research    
  2  Eligibility    
  3  Terms and payment options    
  4  Benefits    
  5  Risk management and claims controls    
  6  Conclusions    
3.2 Marketing microinsurance (Craig Churchill and Monique Cohen)    
  1  Main marketing messages    
  2  Marketing techniques    
  4  Marketing and mandatory insurance    
  5  Conclusion    
3.3 Premium collection: Minimizing transaction costs and maximizing customer service (Michael J. McCord, Grzegorz Buczkowski and Priyanka Saksena)    
  1  Modes of premium collection    
  2  Collection frequency and timing    
  3  Client considerations    
  4  Premium collection controls    
  5  Conclusion    
3.4 Claims processing (Michael J. McCord and Richard Leftley)    
  1  Introduction    
  2  Claims notification    
  3  Settlement    
  4  Controls    
  5  Claims considerations in product design    
  6  Conclusions    
3.5 Pricing microinsurance products (John Wipf and Denis Garand)    

1  Database design requirements for pricing (and sound microinsurance  


  2  Pricing components, key factors and methodology    
  3  Modelling techniques    
  4  Conclusions    
3.6 Risk and financial management (Denis Garand and John Wipf)    
  1  The risks inherent in insurance products    
  2  Capital requirements    
  3  Reserves    
  4  Reinsurance    
  5  Investment management    
  6  Profit distribution    
  7  Conclusion    
3.7  Organization development in microinsurance (Craig Churchill and Richard Leftley)    
  1  Organizational structure: Where does microinsurance fit in?    
  2  Recruitment: Where to access appropriate expertise    
  3  Training    
  4  Compensation    
  5  Institutional culture    
  6  Conclusions    
3.8 Governance (Zahid Qureshi)    
  1  Governance in microinsurance    
  2  Board composition and expertise    
  3  The foundation stone    
  4  Microinsurance governance in practice    
  5  Conclusions    
3.9 Loss control (Zahid Qureshi and Gerry Noble)    
  1  A retrospective look at loss prevention    
  2  Converging interests    
  3  Pinpointing prevention    
  4  Practising prevention    
  5  Minimization: A stitch in time    
  6  Evaluating the return on investment in prevention    
  7  Conclusions    
3.10 Performance indicators and benchmarking (Denis Garand and John Wipf)    
  1  Marketing and distribution    
  2  Financial management and viability    
  3  Efficiency and client value    
  4  Investment management    
  5  Conclusions    
  Part 4 Institutional options    
4.1 Cooperatives and insurance: The mutual advantage (Klaus Fischer and Zahid Qureshi)    
  1  Introduction    
  2  What is a mutual insurer?    
  3  The cooperative difference    
  4  Insurance development models and stages    
  5  Insurance products offered under the cooperative network model    
  6  Why mutuals develop networks and how they work    
  7  Advantages and disadvantages of the model    
  8  Conclusion    
4.2 The partner-agent model: Challenges and opportunities (Michael J. McCord)    
  1  Why a partner-agent model?    
  2  How the partner-agent model works    
  3  The good and the bad    
  4  Advantages and disadvantages    
  5  Conclusions    
4.3 The community-based model: Mutual health organizations in Africa(Bénédicte Fonteneau and Bruno Galland)    
  1  What is a community-based model?    
  2  Why was/is this approach implemented in West Africa?    
  3  What is the target group of the community-based model?    
  4  Do MHOs function (well) and make a significant impact?    
  5  What are the origins of the problems?    
  6  What is the added value of this model?    
  7  Conclusion    
4.4 Institutional options for delivering health microinsurance (Ralf Radermacher and Iddo Dror)    
  1  Institutional options    
  2  Value, interests and conflicts in the insurance business process    
  3  Conclusion    
4.5 Beyond MFIs and community-based models: Institutional alternatives (Richard Leftley and James Roth)    
  1  Risk-carrying alternatives    
  2  Administrative alternatives    
  3  Distribution alternatives    
  4  Conclusions    
4.6 Retailers as microinsurance distribution channels (James Roth and Doubell Chamberlain)    
  1  Why retailers? Which retailers?    
  2  Microinsurance distribution/Product combinations for retailers    
  3  Conclusions    
4.7 Microinsurance: Opportunities and pitfalls for microfinance institutions(Craig Churchill and James Roth)    
  1  Institutional arrangements    
  2  The type of insurance    
  3  Conclusions    
  Part 5 The role of other stakeholders    
5.1 The role of donors (Alexia Latortue)    
  1  An analytical framework    
  2  Donor requirements to effectively support microinsurance    
  3  Types of donor support for microinsurance    
  4  Conclusion    
5.2 An enabling regulatory environment for microinsurance (Martina Wiedmaier-Pfister and Arup Chatterjee)    
  1  Background    
  2  Barriers in existing regulatory frameworks    
  3  Country experiences – preliminary insights    
  4  Conclusions    
5.3 The promotional role of governments (Sabine Trommershäuser, Roland Lindenthal and Rüdiger Krech)    
  1  Policy-making, participation and consensus-building    
  2  Creating an enabling environment    
  3  Strengthening institutions    
  4  Providing financial assistance    
  5  Concluding remarks    
5.4 The role of insurers and reinsurers in supporting insurance for the poor(David M. Dror and Thomas Wiechers)    
  1  The value proposition of reinsurance    
  2  Involvement of commercial insurers and reinsurers in microinsurance    
  3  What part of this value proposition can insurers and reinsurers deliver?    
  4  Recommendations    
  5  Conclusion    
5.5 The provision of technical assistance (Richard Leftley and Richard Lacasse)    
  1  Why is technical assistance required?    
  2  What does a TA provider do?    
  3  Who provides microinsurance technical assistance?    
  4  Conclusion: Providing quality technical assistance    
  Part 6 Conclusions    
6.1 Strategies for sustainability (Craig Churchill and Denis Garand)    
  1  Limit benefits    
  2  Focus on efficiency    
  3  Diversify income sources    
  4  Good management    
6.2 The future of microinsurance (Felipe Botero, Craig Churchill, Michael J. McCord and Zahid Qureshi)    
  1  Microinsurance customers of the future    
  2  Microinsurance providers of the future    
  3  The regulatory landscape    
  4  The environment for microinsurance    
  5  Embracing the future    

Appendix I: Description of microinsurance providers

Appendix II: About the authors




  List of tables    
  1  Microinsurance providers and products    
  2  Priority risks in selected countries    
  3  Coping strategy by risk    
  4  Examples of informal group-based insurance systems    
  5  Test for an insurable risk    
  6  Typology of microinsurance linkages    
  7  Overview of product manufacturing tasks and features    
  8  Overview of product sales tasks and features    
  9  Overview of product servicing tasks and features    
  10 Some key ratios of health microinsurers    
  11 Overview of the tasks to be undertaken to maintain long-term stability    
  12 Two insurers with endowment products    
  13 CARD MBA’s loan protection plus family funeral insurance    
  14 Different benefit classes for minimum/maximum premiums at Yasiru    
  15 Market coverage of selected voluntary life insurance products    
  16 VimoSEWA’s coverage and price in rupees    
  17 Benefits of LIC’s Janashree Bima Yojana    
  18 Benefits from UIIC’s UniMicro insurance scheme    
  19 Benefits of La Equidad’s Ampararmicroinsurance product    
  20 Coinsurance and payment ceiling of health microinsurers    
  21 Benefit amounts at CARD MBA    
  22 Rolling admission versus annual campaign    
  23 Marketing checklist for microinsurance managers    
  24 Comparison of premium collection modes    
  25 A sample of claims durations    
  26 Evolution of life mortality rate at VimoSEWA    
  27 Claims experience of VimoSEWA’s child benefit    

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


  29 Average monthly earnings for frontline staff (US$)    
  30 Commissions on long-term policies at ALMAO and Tata-AIG    
  31 Non-life and life insurance loss prevention    
  32 Improved service enhances retention at VimoSEWA (India)    
  33 Selected examples of net income    
  34 Expense and claims rations for selected schemes    
  35 Rating of microinsurance schemes – An illustration    
  36 Case studies that correspond to the cooperative network model    
  37 Insurance products offered by SACCO networks    
  38 ASA’s cost per policy    
  39 ASA’s profit/loss per policy    
  40 Performance of four microinsurance schemes in Zambia    
  41 Advantages and disadvantages to the agent compared to self-insuring    
  42 Advantages and disadvantages for an insurer    
  43 Advantages and disadvantages for low-income policy-holders    
  44 A comparison of premiums and benefits for selected MHOs    
  45 Basic motivations and primary interest through the business process    
  46 HTG funeral insurance product    
  47 Does self-insurance provide greater client value?    
  48 Definition of microinsurance in India    
  49 Partnership factors for an insurance or reinsurance company    
  51 Advantages and disadvantages of long-term, on-site TA support    
  52 Continuing challenges that limit the expansion of microinsurance    
  53 Process automation transforms insurance operations    
  List of figures    
  1  Janus: The two faces of microinsurance    
  2  Impact of shocks on household income and assets    
  3  The impact of risks    
  4  The locus of microinsurance    
  5  A dynamic approach to extending social protection through microinsurance    
  6  Health insurance product design    
  7  Claims model 1: Insurer pays healthcare provider (third-party payment)    

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

    financial transaction)


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


  10 Daughter’s wedding insurance plan: Delta Life    
  11 Marketing brochure: Yeshasvini    
  12 Guaranteed savings brochure: TUW SKOK    
13 Three-step marketing process
  14 Microinsurance drop-outs and access to microcredit    
  15 Typical claims settlement process for Madison’s microinsurance product    
  16 The claims process at UMSGF    
  17 Microcare and Opportunity International claim form    
  18 CARD MBA timing of claims    
  19 Kharif Hungama sales prizes    
  20 Organizational chart of Tata-AIG    
  21 Illustrating Grameen’s 16 decisions    
  22 The circular logic of customer retention    
  23 Distribution of microinsurance products in the SACCO network model    
  24 A mutual network structure with its portfolio of functional subsidiaries    
  25 The MHO system    
  26 Types of health insurance provision    
  27a The partner-agent model    
  27b The partner-agent model with TPA    
  28 The charitable insurance model    
  29 The provider-driven model    
  30 The community-based/mutual model    
  31 Three components of insurance provision    
  32 Yeshasvini’s claim settlement process    
  33 Micro-agents, CRIGs and NGOs in the premium-collection process    
  34 An analytical framework for donor support for microinsurance    
  35 The Aid Effectiveness Star    
  36 The what, who and how of microinsurance technical assisatance    
  37 The RIMANSI model of technical assistance to MBAs    
  38 Striking a balance: The microinsurance challenge    
  39 Perspectives on the future    
  List of boxes    
  1  Microinsurance and the MDGs    

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


  3  Impact of shocks on the rich and poor in Viet Nam    
  4  Risks and risk management in Malawi    
  5  Coping strategies in Viet Nam    
  6  Risk management and over-indebtedness in Georgia    
  7  Membership in multiple burial societies    
  8  High cost of funerals in Zambia    
  9  Understanding the demand for microinsurance in Sri Lanka    
  10 We want to know more . .    
  11 The extension of social protection through microinsurance in Colombia    
  12 Linkages in the Philippines    
  13 Developing balanced linkages in Senegal    
  14 The Global Social Trust    
  15 Cambodia’s Master Plan    
  16 An integrated approach to social protection in Senegal    
  17 BRAC’s three-tier approach to providing health services    
  18 CARD’s foray into annuities    
  19 Grameen’s deposit pension scheme (GPS)    
  20 Mis-selling in South Africa    
  21 Life insurance as an alternative to loan protection?    
  22 Illness cover in a credit life policy?    
  23 Shepherd’s Sugam Fund    
  24 Outreach at Yeshasvini    
  25 Family coverage at UMSFG    
  26 Lapses at Delta Life    
  27 Flat-rate pricing for Shepherd    
  28 Mass weddings    
  29 UHC definition of family in Uganda    

30 Creating awareness: The experience of the South African Insurance  


  31 UMSGF’s three-tiered marketing strategy    
  32 Regional differences in Zambia    
  33 Sales challenges at TUW SKOK    
  34 Linking insurance premiums to loans    
  35 Flexible premium payments for funeral insurance in South Africa    
  36 Paying premiums in milk at Yeshasvini    
  37 Delta Life – combining microcredit and microinsurance    
  38 Claim rejection: A case of insufficient documentation in Zambia    
  39 Beneficiary frustration    
  40 Requirements for an advance payment at Columna    
  41 The many stops in claims settlement at Delta Life    
  42 Efficiencies of informal insurance    
  43 Claims adjustment and HIV/AIDS    
  44 Pricing problems    
  45 Database design problems    
  46 Importance of a health insurance MIS: Experience of AssEF    
  47 VimoSEWA’s renewal rates    
  48 VimoSEWA’s claims processing    
  49 Actuarial reserves and capital defined    
  50 Management risk illustrations    
  51 Organization development: How not to do it    
  52 Criteria in the selection of micro-agents at Tata-AIG    
  53 Frontline staff at CARD MBA    
  54 TUW SKOK’s outsourcing model    
  55 What is corporate governance?    
  56 The four pillars of governance    
  57 Responsibilities of the board of directors    
  58 Trust is good, but control is better    
  59 Read the writing on the wall    
  60 Taking the societal perspective    
  61 Promoting well-being    
  62 Prevention through sister organizations: VimoSEWA    
  63 Coping with disaster: The Japanese experience    

64 Microcare: Using insecticide-treated bed nets to reduce malaria-related  


  65 Great value placed on insurance    
  66 What doomed Confederation Life of Canada?    
  67 Why cooperative insurance suits low-income markets    
  68 Management of lapses and claims: The mutual difference    
  69 Selling an insurance concept in Ghana    
  70 Partner-agent premium collection checklist    
  71 ASA’s on-again off-again relationship with the partner-agent model    
  72 Profiles of initiating organizations of MHOs    
  73 A variety of membership profiles    
  74 The target population of the rural MHOs    
  75 Union Technique de la Mutualité Malienne    
  76 Coordination Régionale des Mutuelles de Santé de Thiès    
  77 Réseau Alliance Santé, Benin    
  78 MHO performance: Some trends    
  79 The power of collective action    
  80 Nkoranza Community Health Insurance Plan    
  81 Zambuko Trust, Zimbabwe    
  82 VimoSEWA’s claims committee    
  83 Retailers and rural areas    
  84 AFL/CIO’s Union Privilege Scheme    
  85 Reducing the vulnerability of the poor: The case of Shepherd, India    
  86 Unleashing the catalytic role of the private sector with public subsidy    
  87 Providing support through donor guarantees    
  88 FinScope surveys: Getting to know the market    
  89 Lessons learnt the hard way: Illustrations from India    
  90 Informal insurance in South Africa    
  91 Formalization of ALMAO    
  92 Insurance cooperatives in Malawi    
  93 Capital requirements in Peru    
  94 Requirements for agents and brokers    
  95 AIG Uganda    
  96 The Insurance Ombudsman Sri Lanka    
  97 Health service providers and mutual health organizations (MHOs) in Mali    
  98 Stewardship in Guinea-Bissau    
  99 Facilitating links to UNDP in India    
  100 Subsidizing Yeshasvini Trust    
  101 Africa Re    
  102 What do microinsurers get out of reinsurance?    
  103 A short summary of the social reinsurance model    
  104 Actuarial reviews of microinsurance schemes    
  105 The 7 Cs of technical assistance    
  106 Technical assistance partnerships: DID and CIF    
  107 Management tools for microinsurance    
  108 Technological advances in banking services for the poor