An engaging rationale for microinsurance

Wednesday, August 26, 2015
The collaboration between the Microinsurance Network and the Global Federation of Insurance Associations (GFIA), resulted in microinsurance being a key topic of discussion at the G-20 Insurers and G-20 Goals Conference in Istanbul, Turkey at the end of July 2015.
We would like to report some of the highlights of the key note speech by Governor Dirk Kempthorne, Chairman of the GFIA, who provided an engaging rationale for governments to embrace the concept of microinsurance and ensure regulatory frameworks are in place to support the development of the industry. Here the sections directly pertaining to microinsurance:
Insurers wholeheartedly support inclusiveness. Our products are available to vast numbers of people. We prevent people from backsliding into poverty after a calamity. We offer the security of property insurance for homes and businesses, the protection that comes from auto insurance, and the peace of mind that comes with knowing that your family will be financially protected in the event of dying too soon, or knowing your income is secured for your entire life through an annuity… which means that you will have dignity throughout your life.
A growing element of being inclusive is microinsurance. Microinsurance is also known as starter or “first time” insurance. We will hear more about this in our second panel moderated by Véronique Faber, Executive Director of the Microinsurance Network. Microinsurance covers more than 260 million lives and properties in developing countries in Africa, Asia/Oceania and Latin America. This number is growing rapidly. In Africa alone in 2008, 14.6 million people owned a micro-policy; three years later that grew to nearly 45 million. … a 200 percent growth. This dramatic growth demonstrates the world-wide need for insurance. And while we think of microinsurance for developing economies, let me suggest that even in developed economies you need microinsurance because many citizens still do not have any form of insurance.
Microinsurance helps people living at or below the poverty line. It is an affordable way to cover a range of risks, such as death, disability and property damages. Microinsurance can provide vital security for families and help ensure continued and sustainable economic growth and stability for society.
Making insurance accessible and inclusive is key for sustainable development and lasting prosperity. Insurance is indispensable when catastrophe strikes. After the devastating 2010 Chile earthquake, the Chilean economy actually expanded the next quarter. Why? Because of the large inflow of cross-border reinsurance, the payments that boosted the economy. And because the Government of Japan recognized the importance of spreading insurance risk to global reinsurers, after the tragic 2011 earthquake and tsunami, 90 percent of the reinsurance funds came from cross-border re-insurers.
Insurance provides certainty in an uncertain world.”
Read the full speech here