By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®
You want microinsurance to succeed. As defined as insurance products for poor people in underserved regions, microinsurance could make for a very happy ending if a sustainable global market develops.
From the spate of headlines and press releases on the topic in recent months, one might suspect that we've been given that happy ending already.
As Dirk Reinhard, vice chairman of the Munich Re Foundation, put it, it can almost feel like microinsurance practitioners and supporters have passed a peak, that their market isn't "sexy" anymore. It's almost just like any other type of insurance.
Reinhard, however, is quick to explain that there is no overall success story yet. It's a matter of one project in one country, or another project in another country, succeeding.
Some established successful microinsurance projects include the Card MBA program in the Philippines and Allianz's life insurance operation in Indonesia, according to Dr. Richard Phillips, department chair and C.V. Starr Professor of Risk Management and Insurance at Georgia State University. Phillips agreed with Reinhard, defining the state of microinsurance as "episodic successes." There is a lot of experimentation going on in the world, but not yet a lot of "proven business models," he said.
The news stories and press releases come about when experimentation works.
"There are some institutions that are doing well and growing rapidly and that are tooting their horn just a little bit," Phillips said.
Funny he should say that, because his organization is one of the noise-makers. GSU's Center for the Economic Analysis of Risk made official its long-standing partnership with Munich Re Foundation. The Germany-based philanthropic arm of the reinsurance giant will continue to facilitate the conversation between the academic researchers in Atlanta and microinsurance practitioners all around the world. The cooperation culminates each year at the International Microinsurance Conference, put on by Munich Re Foundation and the Microinsurance Network. This year's event will bring together 500 professionals in Rio from November 8 to 10. The proposal submission process is still open through May.
Currently, Phillips reported, the students and teachers at the Center for the Economic Analysis of Risk are researching why insureds have different perceptions of risk than underwriters do--and what to do about that. Another topic that is near and dear to the professor's heart is how insurance governance structures impact insureds' perceived credit risk of an insurance company.
In general terms, future microinsurance research could also investigate why successful experiments succeeded, and why failures failed.
Another "experiment" tooting its horn lately--and one we can all hope succeeds--is the Microinsurance Catastrophe Risk Organization (MiCRO) in Haiti. A partnership among Swiss Re, brokerage CGM Gallagher Group, Guy Carpenter's GC Micro Risk Solutions division, relief group Mercy Corps and Haitian microfinance institution Fonkoze, the facility will offer products to protect against natural catastrophe losses.
Whatever the outcomes with GSU's research and MiCRO, keep in mind that microinsurance practitioners aren't in it for the huge profit motive, as Phillips said.
"These are earnest people, right? They want to save to the world," he said.
April 12, 2011
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