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Microinsurance: Links to Occupational Safety & Health

Microinsurance: Links to Occupational Safety & Health. Workshop for OSH through provision of MI, MF & Banking Services Cairo, Egypt – December 2009 Jeanna Holtz The Microinsurance Innovation Facility International Labour Organization, Geneva. Overview of Microinsurance Presentation.

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Microinsurance: Links to Occupational Safety & Health

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  1. Microinsurance: Links to Occupational Safety & Health Workshop for OSH through provision of MI, MF & Banking Services Cairo, Egypt – December 2009 Jeanna Holtz The Microinsurance Innovation Facility International Labour Organization, Geneva

  2. Overview of Microinsurance Presentation • What is microinsurance? • Evolution & trends • Product development • Closing thoughts-way forward

  3. Microinsurance is… Definition “…a mechanism to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved” Microinsuranceis not… • Regular insurance products with smaller sums insured and premiums • Small insurance companies • Just another product offered by MFIs • Savings, credit, risk prevention

  4. Characteristics of the insurable poor • Often work in the informal economy • Irregular cash flows • Manage risks through myriad of informal means, including social networks • Limited familiarity with formal insurance • May not trust insurance companies • Vulnerable to risks… Valuable, effective MI considers these characteristics

  5. Micro vs. Conventional Insurance Adapt to needs of target market

  6. Microinsurance roots Micro-insurance Investor interest Popular insurance by cooperatives Expansion of Microfinance Business opportunity by insurers Extension of social protection

  7. Microinsurance trends • MI emerging out of the shadow of microfinance: business and social impact • Greater variety of distribution channels • Growing interest from policymakers, regulators and insurance companies • Increased focus by investors; some evaluate social dimensions • Product innovations that provide better coverage to more low-income people • Increasing experimentation with consumer education on risk management and insurance

  8. 2009 Survey results • 14.7 million people in Africa with microinsurance • USD 257 million in premiums received in 2008 • 2.6% of the population living under USD 2 per day

  9. Microinsurance product spectrum Credit life Term life/Personal accident Savings life Property insurance Endowment life Agriculture Health insurance Success Difficulty & demand 3. Products Products in greatest demand are least available

  10. Getting Started • Start simple: • Life insurance, linked to loans, easy point of entry • Also: accident, disability • Potential add-ons (later): income replacement, critical illness, hospitalisation cash… • Example: Microfund for Women, Jordan • Caregiver product: covers certain costs during illness episode

  11. Considerations to develop Microinsurance • Partnership with insurer, other stakeholders • Eligibility • Mandatory or voluntary • Piggyback or standalone • Premium collection timing and mechanism • Benefit design • Claims payments • Client & employer education • Risk management and controls • Important for accident cover

  12. Checklist for workplace microinsurance • Medium to large organizations (volume); growing • Accidents and deaths are frequent, volatile • Win-win for insurer/channel, employer and employees • Efficient distribution (easy access) • Low transaction costs (enrolment, premium collection, claims) • Simple, valued product

  13. Benefits of Microinsurance, Microfinance & Decent Work: Closing Thoughts SOCIAL COMMERICIAL • Better jobs, safer workplace • Protection when accidents occur • Employee Loyalty • Socially responsible • Improved access to financial services • Higher loan repayment • Profitable business venture • Increased productivity • Lower absenteeism • Employee retention • Attract capital

  14. Closing Thoughts, cont. Successful products: Overcome the wariness of customers Adapt to the socio-economic situation of the poor Create an insurance culture Consider social dimensions Scale up, by: Start small: Build client interest and trust; organizational competency Leverage existing distribution channels such as MFIs (efficiency!) Build on lessons learned Innovate; add value to products Manage Risks Increase Income Build Assets Risks: Accidents, Illness, Death, Property Loss, Disasters… Innovation will drive development

  15. Thank you! Jeanna Holtz For more information: www.ilo.org/microinsurance or email: holtz@ilo.org Tel +41 22 799 66 84

  16. Extra slides

  17. Learning about microinsurance • Conducted 24 case studies, which draw lessons from 40 microinsurance providers, including risk carriers and delivery channels, primarily in Africa, Asia and Latin America • Case studies are available on www.microinsurancefocus.org • Published “Protecting the poor: A microinsurance compendium” with Munich Re Foundation

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