Microinsurance products often require far more comprehensive, high-touch delivery and servicing than do traditional insurance products, in large part due to the characteristics of clients: low levels of education and financial literacy, lack of familiarity with insurance, and lack of familiarity and trust in providers and products.
Depending on the model, some delivery and servicing functions may be performed by an intermediary (agent or broker) or delivery channel, performed by the insurer itself, and/or left to the client.These functions include:
- Education and information about insurance in general and about the specific product
- Collection of premiums and transfer to the insurer
- Processing and payment of claims
- Resolution of questions, problems, and complaints from clients
The ability of clients to navigate all of these processes successfully, with the support of insurers, delivery channels, and other parties, is at the core of consumer protection in microinsurance. One of the most significant challenges in microinsurance is finding the balance between the high cost of all of these services and the need for efficiency to support the low premiums microinsurance requires. This challenge is particularly significant when delivering the needed services involves building of capacities within client bases, delivery channels, and other stakeholders.
- Emily Zimmerman, Emily, Barbara Magnoni & Andrea Camargo (2013). DRAFT "Pure" Intentions and Practice: Challenges and Good Practices in Consumer Protection in Microinsurance. Luxembourg: Microinsurance Network
- Tyler Tappendorf, Camyla Fonseca, Zani Muller, Jeremy Gray, Saima Zafar, Mia Thom , José Miguel Solana & Pranav Prashad (2014). Scale: Thinking Big - Case Studies. Appleton: MicroInsurance Centre.