MILK Brief #19: Microinsurance-only multinational intermediaries: The early years

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The MILK Project, which is a three-year initiative of the MicroInsurance Centre, has been designed to help answer the following two questions: Do low-income families really benefit from microinsurance? Is it true that there is a business case for microinsurance? The current paper looks specifically at whether there is a business case for microinsurance intermediation. The MILK project explores this by studying the commercial viability of three microinsurance-only multinational intermediaries: MicroEnsure, PlanetGuarantee, and AKAM. The first brief on this subject analyses the performance of these programs through their early years (until 2010), and an update showing their subsequent development is planned for later this year. The short answer to the question, based on the early operations of these three intermediaries, is that there is not a business case for a multinational microinsurance-only intermediary, but that there may be potential for a business case to develop. The three programs took relatively similar initial approaches and experienced similar struggles, and none had achieved financial sustainability by 2010. In particular, all three struggled to balance the markets' need for comprehensive intermediation services (including research, product development, and support to all parties along the value chain) with their own needs to keep costs low and achieve scale. Unique circumstances and different approaches to the role of intermediation, however, lead to some nuanced lessons about how a business case for microinsurance intermediation may emerge.

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Richard Koven, Michael J. McCord

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MILK

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8

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