Senior Managing Director - Industry Relations, A.M.Best USA
Vice Chair, Microinsurance Network
Andrea KEENAN: The MicroInsurance Network is a multistakeholder network that provides for a forum for sharing innovations, ideas and concerns in the Microinsurance space. Through networking events, seminars, webinars and publications we help to inform the general public on microinsurance but to also enable communication among various practitioners who wouldn't otherwise have contact. Since microinsurance is a global priority, the MiN does an excellent job of centralizing knowledge and sharing.
XPRIMM: Microinsurance has mostly been seen by the insurance community as a solution for developing countries. How can this model be tailored for other regions of the world, e.g. Eastern Europe.
A.K.: Microinsurance is certainly more of a priority in developing countries, where a larger percent of the population is in the target consumer group of microinsurance. However, "reverse innovation" can occur here, where lessons learned in the lower-income environments can be applied farther upmarket. Or, similar to Latin America, "mass insurance" can be offered which includes polices that are targeted at several different income groups.
XPRIMM: For the sake of clarity - how would you define the relationship between microinsurance and inclusive insurance?
A.K.: There are many definitions out there on the goals and design of what can be considered "microinsurance" and I would hesitate to give false precision to my own perception. So, in general I'd say that microinsurance and inclusive insurance are, in most respects, very similar concepts. And as a group, the MicroInsurance Network focuses on the increase of financial inclusion through offering of insurance products.
XPRIMM: What benefits are to be expected from implementing this model and what are the main challenges in doing so?
A.K.: Microinsurance helps with financial education, family planning, development of small enterprises and maintenance of health, and the products are typically designed to address the specific needs of any given population. A virtuous cycle develops as this produces income smoothing, larger planning horizons and the development of financial wellbeing. It is challenging because, to be affordable, scale must be achieved. Therefore distribution models often require partnerships or other creative solutions that are not easily achieved when operating margins are so small.
XPRIMM: How do you see the relationship between social security and microinsurance, considering that in the regions where microinsurance has already been successfully implemented the public sector can not always raise to the expectations of those in need (while in example, in Eastern Europe, social security systems are in place).
A.K.: Social security does not always address all the needs of the working poor. Microinsurance products can enable the owner of a small business to take on additional labor, experiment with more profitable crops or create efficiencies with new equipment. It is intended to allow an individual, family or company to plan into the future.