The Landscape of Microinsurance 2020

Author: Alice Merry for the Microinsurance Network

Date: October 2020

The Landscape of Microinsurance 2020 finds that between 162 and 253 million people were covered by a microinsurance products in 2019 across the 28 countries included in this report. This figure represents between 6% and 10% of the low- and middle-income population in these countries. A total of USD 1,060 million was collected in microinsurance premiums, representing about 5% of the estimated potential market for microinsurance in the countries concerned.

Across all three regions, life and credit life products continue to dominate microinsurance markets, with personal accident and funeral products also playing an important role. In Africa and Asia, low-cost health products, particularly hospital cash products, have consolidated over recent years to become another key microinsurance offering.

Additionally, in all three regions, insurers are strengthening their links with health services, including bundling their products with telehealth services.

Crop and livestock insurance have experienced mixed results. Where there is government support and subsidies, schemes have grown dramatically, but without such support they have struggled to achieve scale.

Agents, brokers, financial institutions and microfinance institutions (MFIs) remain very important in microinsurance distribution. The high use of agents (whether the insurer’s own sales force or linked to a distribution partner) in over half of products stresses the continued need for human contact in order to sell microinsurance and educate customers. Increasingly, insurers that attempted highly digital approaches are reintroducing elements of human touch and creating hybrid models.

The Landscape of Microinsurance in Africa 2018 explored the rise and fall of MNO-linked freemium models in Africa. In many cases, MNOs have dropped insurance, but some partnerships have continued and shifted to paid products. These paid products require a more active sales approach, which often includes call centres and agents. They have not reached the same scale seen in freemium models but may well provide a more sustainable customer base. At the same time, mobile money and digital platforms, including ride-hailing and delivery platforms, have surged globally. Successful cases of leveraging such platforms for microinsurance are emerging.

Despite positive developments in microinsurance markets in all regions, there are important concerns around the value provided to customers. Claims ratios across the three regions are relatively low, at a median rate of 23%. Most worryingly, a third of products in all regions, and half of products in Latin America and the Caribbean, have claims ratios in single digits.

Read the full report on the Microinsurance Network website here.