Transcript Canadian Institute of Actuaries L’Institut canadien des

Canadian
Institute
of
Actuaries
2007 General Meeting
Assemblée générale 2007
Montréal, Québec
Denis Garand [email protected]
MICROINSURANCE IP-31
L’Institut
canadien
des
actuaires
2007 General Meeting
Assemblée générale 2007
Millennium development goals
• ERADICATE EXTREME POVERTY AND
HUNGER
• UNIVERSAL PRIMARY EDUCATION
• PROMOTE GENDER EQUALITY AND
EMPOWER WOMEN
• REDUCE CHILD MORTALITY
• COMBAT HIV/AIDS, MALARIA AND
OTHER DISEASES
• ENSURE ENVIRONMENTAL
SUSTAINABILITY
• DEVELOP A GLOBAL PARTNERSHIP FOR
DEVELOPMENT
2007 General Meeting
Assemblée générale 2007
Importance of Microinsurance
In its first report, Insuring for
Sustainability, the Insurance Working
Group of the UNEP FI ranked nine
global sustainability issues identified as
vital for insurers to address. Topping the
list is climate change, followed by
microinsurance, lifelong income, health,
emerging man-made risks,
environmental liability, natural
resources, recycling and internal
resource efficiency.
2007 General Meeting
Assemblée générale 2007
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
2007 General Meeting
Assemblée générale 2007
Micro Finance
• Founded by Muhammad Yunus
(Grameen Bank in Bangladesh)
– Lending without collateral
– Doorstep service
– Small payments
– Impact on 110 million poor
• Spandana
2007 General Meeting
Assemblée générale 2007
What is Microinsurance?
• Living without insurance!
• Part of solution to lower poverty.
• Can Microinsurance be viable?
2007 General Meeting
Assemblée générale 2007
Who’s involved
•
•
•
•
•
•
ILO
CGAP
World Bank
Other agencies
Insurance companies world wide
5 out of 10 actuaries Canadian!
2007 General Meeting
Assemblée générale 2007
Poverty and Microinsurance
• 100,000,000 become poor, each
year, due to a lack of protection.
(WHO 2005)
• Does the world have the correct
priorities?
– Health care cost Rwanda $200
million
– War in Iraq $150 billion
2007 General Meeting
Assemblée générale 2007
Reasons for Decent into
poverty
Why do people save or borrow - UGANDA
2007 General Meeting
Assemblée générale 2007
S.No.
ITEMS
SAVE
BORROW
1
For meeting household basic needs such
as food, clothing, health services
82%
61%
2
For emergency (burial, medical)
70%
32%
3
For education of self, children or siblings or others
35%
19%
4
For expanding your business
19%
15%
5
To be able to leave something for my children
12%
-
6
For starting up a new business
11%
7%
7
For using later in life/old age
10%
-
8
For purchase of livestock /cattle
9%
4%
9
For social reasons (wedding, travel, bride price)
8%
3%
10
For purchasing or building a house to rent out
6%
-
11
To pay off debts
-
9%
12
For improving a house
-
6%
13
For agricultural implements - hoe, plow, tractor
-
3%
Source: “Preliminary” findings from FinScope Survey (2007)
The cycle of poverty
2007 General Meeting
Assemblée générale 2007
• Most poor are very resourceful
• Major disaster, sell all assets
• Poverty is a cash flow management
problem
2007 General Meeting
Assemblée générale 2007
Microinsurance in the world
•
•
•
•
Credit life (40 million and viable)
Accident insurance
Life insurance
Health (25 million and few are
viable)
• Assorted general insurance and
crop protection
– Household goods (hut)
– Weather insurance
2007 General Meeting
Assemblée générale 2007
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.
2007 General Meeting
Assemblée générale 2007
What are the challenges?
• High mortality, morbidity, assets at
risk
• Low administrative margins
• Ability to pay small amounts
• Transform your insurance
organization
Successful micro insurance (or
lesson we need to relearn)
2007 General Meeting
Assemblée générale 2007
• Local organization (distribution)
– Brand name
– Clear communication, one page
contract (pictorial)
– Target high participation
– Efficient premium collection
– Link with other services
2007 General Meeting
Assemblée générale 2007
Successful micro insurance (2)
• Clearly defined products
• Rapid service
• Community verification of claims
– Health
• Appropriate treatment protocols
• Health promotion and prevention
• Data base to help manage
• Underwriting the community and
insurance
2007 General Meeting
Assemblée générale 2007
Other forms
• Microtakaful
2007 General Meeting
Assemblée générale 2007
Key to micro insurance
success
• Distribution system
• Affordable quality care
• Efficient management
2007 General Meeting
Assemblée générale 2007
What you can learn
•
•
•
•
Creating efficient organizations
Creative solutions
Understand real service issues
Development opportunity for your staff
• TRANSFORM YOUR
UNDERSTANDING OF INSURANCE
AND MANAGEMENT
2007 General Meeting
Assemblée générale 2007
Learn more
• www.microinsurancefocus.org
• www.ilo.org/gimi
• www.munichre-foundation.org
2007 General Meeting
Assemblée générale 2007