Microinsurance Conference in Munich 18-20 October 2005 • Coverage – Death due to accident or natural causes – Permanent or total disability – Hospitalization • Compensation – Lump sums in case of death or disability – Monthly awards during hostpitalization (max 15 days)
• Premiums payable – Varying from 10 LKR to 100 LKR per month for: • Household with no children • One parent with children – Household with children from LKR 15 to 150 – Other adult > 18 years from LKR 5 to 50 • Compensation varying to selected premium – Accidental death LKR 6000 to 60000 – Death due to natural causes LKR 3000 to 30000 – Permanent disability LKR 12000 to 120000 – Sudden death of child LKR 3000 – Sudden death between 65 and 75 LKR 3000 to 6000 – Hospitalization LKR 30 to 300 per month
• The product is well adapted to suit the needs of the traget group – Simple to explain and administer – Affordable – Influence on product development by the members – Most of the members are women • Question marks – Sustainability • Actuarial analysis of product and price • Viability of product – Inflation • Decreases the value of compensation • Administration costs will consume a larger part of the premium • Control of administration costs vital
• Question marks, cont. – Monetary subsidies will cease during 2005 – To compensate, increase in premium income of 60 % necessary – Reinsurance cover may have to be renegotiated – Increase in claims may cause a reduction of amounts put into members’ accounts – Retention rates must be increased in order not to cause bad will among the members – Still an ”illegal” insurance service according to IBSL • Recommendations – Actuarial expertise to evaluate premiums and funds – Extend number of partners – Find ways of covering up for loss of subsidies – Reinsurance arrangements for ”hospitalization” – New methods of premium collection to increase retention rates – Adjustment for inflation
ALMAO Yasiru • Simple and affordable product • Identify established partners that can easily be understood carefully, dialogue • Start as an agent; no capital • Make a thorough situation required, access to profession analysis • Build equity if you want to • Need analysis in dialogue with develop to an insurance comp target group • Provide death cover, avoid • Mutual system with democratic maturity control • Take care to involve people • Government funding scarce • Microinsurance a private sector operation • Demand driven complement to Government social security • Builds long term capital
• Low penetration by insurance industry • Why limit to the poorest segments? • Middle and low income groups need service and may become good clients • Their involvement may be necessary to make service viable • Depletes benefits and premiums • Costs increase • Creates disappointments • In Sri Lanka: lower returns on safe investments • Schemes need tools to reduce effects
COUNTER MEASURES • Will create negative • Do not reduce attitudes commission • May destroy the future • Build members’ market accounts • Compare poor • Allow withdrawals agricultural credit every fifth year schemes • Mindsetting exercises • Governments do not facilitate microinsurance because they are unaware • Develop education and promotion material • Organise meetings, seminars and conferences • Develop models for both systems and legal framework
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