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Microinsurance in International Development University of Waterloo Webinar Feb 8, 2018

Microinsurance in International Development University of Waterloo Webinar Feb 8, 2018. Denis Garand, FSA, FCIA. Microinsurance market. 3.0 billion earn less than $2 (US) a day 1.3 billion earn less than $1 (US) a day 72% of the world population has income below $3000 a year

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Microinsurance in International Development University of Waterloo Webinar Feb 8, 2018

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  1. Microinsurance in International DevelopmentUniversity of WaterlooWebinar Feb 8, 2018 Denis Garand, FSA, FCIA

  2. Microinsurance market • 3.0 billion earn less than $2 (US) a day • 1.3 billion earn less than $1 (US) a day • 72% of the world population has income below $3000 a year Source: World Bank

  3. Sustainable development goals and Microinsurance Source: How insurance contributes to the 2030 Agenda for Sustainable Development (GIZ 2017)

  4. Poverty and Microinsurance • 100,000,000 become poor, each year, due to a lack of health protection. • At least half of the world’s population still do not have full coverage of essential health services. Source: (WHO 2017) • Does the world have the correct priorities? • World military expenditure in 2012 is estimated to have reached $1.756 trillion, USA 39% of that amount Source: http://www.globalissues.org/article/75/world-military-spending

  5. What can Microinsurance do? • Poor people are extremely vulnerable to risks (crop failure, death, illness, etc.) • Mostly no social or financial protection from savings or social welfare from government • Danger or dropping into poverty due to one risk event • Insurance is a tool to help mitigate these shocks • Insurance theory confirms ability to create an aggregation of resources for certain industries to enter the market

  6. What Microinsurance Cannot Do? • Along with other instruments can make a valuable contribution to reducing poverty • Important instrument to avoid and reduce poverty, but: no panacea (one part of a range of instruments, such as education, health, etc.)

  7. Various Microinsurance Products

  8. Why Micro Health Insurance? • Principal reason for loan default for a MFI – health • To maintain economic situation – does not reduce poverty • Improve access • To enhance overall productivity • Problem in USA, India, Cambodia, etc.

  9. Micro Insurance examples • Bangladesh Endowment product • Women chose endowment to save for themselves • Term insurance used to protect family • Grameen Kaylan and BRAC • Efficient health centers, health promotion, meeting 99% of the communities needs.

  10. Is MI profitable? 5 Life co’s in Philippines Since 2008: Premium grew Loss ratio is higher Profits up 3.6M NI ratio decreased Source: Win-Win-Win Profitability and client value along the life microinsurance value chain in the Philippines (Jan 2014), Koven, Wipf, Zimmerman, McCord; (MILK, MIC) Profit margin: (1-combined ratio)

  11. Key Performance Indicators

  12. Key Performance Indicators

  13. Why use Key Performance Indicators • Focuses on key issues that need action • With benchmarking against others, demonstrates where to improvement • Organizations that make change and benchmarks have superior results. • With microinsurance working towards reasonable profits results in larger portfolios and bigger $ results.

  14. Key to micro insurance success • Distribution system • Affordable quality care • Efficient management • For Actuaries need to understand whole picture!

  15. Health Mutual in Rwanda

  16. More information • Access to Insurance Initiative: www.access-to-insurance.org • Microinsurance Network: www.microinsurancenetwork.org • ILO Microinsurance Innovation Facility: www.ilo.org/microinsurance • Munich Re Foundation: www.munichre-foundation.org • MicroInsurance Center: www.microinsurancecentre.org Books • Banker to the Poor, Muhammad Yunus • Protecting the poor: A microinsurance compendium www.ilo.org/global/What_we_do/Publications Denis Garand, FSA, FCIA denis@garandnet.net

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