Landscape of Microinsurance in Asia and Oceania · Banglades Indonesia 0.4% Country contribution to...
Transcript of Landscape of Microinsurance in Asia and Oceania · Banglades Indonesia 0.4% Country contribution to...
Landscape of Microinsurance in Asia and Oceania
Premasis Mukherjee Arman Oza
Lisa Chassin
Rupalee Ruchismita
Date: 02/07/2014
Munich Re Foundation
How is microinsurance defined? ILO : Microinsurance is the protection of low income people against specific perils in exchange for regular premium
payments proportionate to the likelihood and cost of risk involved.
IAIS : Microinsurance is insurance that is accessed by low-income populations, provided by a variety of different
entities, but run in accordance with generally accepted insurance practices
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Landscape of Microinsurance in Asia
Individ
ual Instt./govt. co-
contribution
Partiall
y
subsidi
sed
Fully govt.
subsidised
Individ
ual
Semi-
formal
instt.
Insurer
Govt.
CBO
Commu
nity
Risk
underwri
ting by
Premium
contribution
Informal
insurance
Social
security
The common understanding of
microinsurance and social security
Microins
urance
Indivi
dual
Instt./govt.
co-
contributio
n
Parti
ally
subsi
dised
Fully govt.
subsidised
Individual
Semi-formal
instt.
Insurer
Govt.
CBO
Comm
unity
Risk
underwr
iting by
Premium
Contribution
Informal
insurance
Social
security
The new paradigm
Microin
suranc
e
Social
micro
insuran
ce
Overall Findings
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Landscape of Microinsurance in Asia
Munich Re Foundation
Overall outreach of microinsurance in Asia and Oceania
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Landscape of Microinsurance in Asia
Key numbers
31 countries participated
24 countries with microinsurance
216 providers with 507 products
170.4MM covered
83.9 MM Life
29.2 MM Health
77.8 MM Accident
7.7 MM Property
23.2 MM Agriculture
4.65 MM Takaful
Munich Re Foundation
Which countries are leading the market?
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Landscape of Microinsurance in Asia
0.3 0.3 1.1 1.3 5.3
9.3 9.4 11.9 19.9
111.1
0
20
40
60
80
100
120
Millio
ns
1.2% 1.4% 1.5% 2.0% 3.0% 3.7%
6.1%
9.0%
13.9%
20.6%
0%
5%
10%
15%
20%
25%
Ten countries with highest coverage (2012)
Ten countries with highest coverage ratios
• More than 66% of all products are from India
• 74.1% of coverage from South Asia, of which
India contributes 88%
• Top ten countries contribute 99% of all
coverage
• Overall coverage ratio: 4.3%
• The Philippines leads in coverage ratio owing
to market development in recent years
Munich Re Foundation
What kind of products are sold?
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Landscape of Microinsurance in Asia
33.2
13.3 5.7
1.3
13.7
83.9
29.2
77.8
7.7
26.2
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Life Health Accident Property Agriculture
In m
illio
ns
Individual policies in force Number of people covered
Number of people covered and policies in force per risk type
12
7
3 2
8 10
12
19
11 13 12
28
22
32
0
5
10
15
20
25
30
35
0
50
100
150
200
250
Nu
mb
er
of
pro
du
cts
lau
nch
ed
in
th
e y
ear
Accu
mu
late
d n
um
ber
of
pro
du
cts
Accumulated number of products Number of products launched
Launch of microinsurance products
• Life insurance predominant with 40% of
policies and 48.5% of people covered
• Accident insurance covers 45% of people :
largely due to India and China
• Regional disproportion in health insurance
types: many a country have shown only single
type of product 0%
20%
40%
60%
80%
100%
Accident
Property
Agriculture
Health
Life
Breakdown of total lives and properties covered by risk type
in Asian regions (including primary and secondary covers)
Munich Re Foundation
Growth of the market is divergent and interesting
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Landscape of Microinsurance in Asia
Munich Re Foundation
Growth of the market is divergent and interesting
07/07/2014 8
Landscape of Microinsurance in Asia
184.7%
103.4% 93.6% 76.0%
60.2% 54.1% 30.6% 23.4% 19.4% 18.2% 17.5% 16.5% 16.0% 9.3% 6.9%
-7.2% -25.3% -50%
0%
50%
100%
150%
200%
Ma
laysia
Ind
one
sia
Fiji
Chin
a
Nepa
l
Mo
ngo
lia
Ind
ia
Leb
ano
n
Pakis
tan
Phili
ppin
es
Sri L
an
ka
Palis
tine
Cam
bod
ia
Om
an
Ban
gla
de
sh
Kuw
ait
Vie
tna
mMicroinsurance coverage compound annual growth rate, 2010-2012 by country
2% 17% 21% 23% 24%
38% 41% 48% 49% 57% 60%
152%
-35,000,000
15,000,000
65,000,000
115,000,000
165,000,000
215,000,000
265,000,000
-25%
25%
75%
125%
175%
Premium growth % Premium growth (in USD)
368% 578% Microinsurance premium growth rates by country
Munich Re Foundation
Growth leaders remain the countries with high outreach
07/07/2014 9
Landscape of Microinsurance in Asia
Others* 1.3%
India 71.5%
China 15.6%
Philippines 8.3%
Indonesia 2.0%
Bangladesh 1.3%
Country contribution to coverage growth
Others* 0.5%
India 79.9%
China 6.9%
Philippines 5.2%
Sri Lanka 3.9%
Malaysia 2.8%
Bangladesh
0.5%
Indonesia 0.4%
Country contribution to premium growth
• India, The Philippines and China lead the growth: 92.9%
of outreach and 92% of premium growth
• Countries with takaful insurance contribute to the
premium growth significantly
Life, 29.9%
Health, 21.1%
Agriculture, 13.9%
Property, 1.3%
Accident, 31.7%
Product contribution to growth (in coverage)
Life microinsurance
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Landscape of Microinsurance in Asia
Munich Re Foundation
Life microinsurance predominates the market
- 83.9 million individuals covered
- 48.5% of all micro insured across the
continent
- 33.8 million policies in force,
- 40% of all policies identified
- USD 290 million premium generated
in 2012 (primary covers only),
- 31% of all premiums collected
Munich Re Foundation
Specification of life microinsurance products
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Landscape of Microinsurance in Asia
0
10
20
30
40
50
60
Be
fore
20
00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013N
um
be
r o
f p
rod
uc
ts
Term life
Credit life
Funeral
Endowment
Savings
Credit Plus
Evolution of life microinsurance sub-covers
(by number of products)
Credit life 5.7%
Credit plus 8.2%
Term life 42.5%
Endowment
14.5%
Funeral 3.7%
Pensions 9.3%
Savings 16.2%
Life sub-covers by coverage
Community-based
organisation 0.1%
Cooperative 0.3%
Takaful 2.7%
Mutual 3.3%
NGO 7.3%
Other 20.7% Regulated
commercial insurer 65.6%
Providers of life microinsurance
- Life microinsurance growing by 39.2% in terms of
number of policies
- Life microinsurance growing by 88% in terms of
number of people covered
- Mostly short-term policies
- Bangladesh showing increasing trend of micro
endowment policies
Health microinsurance
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Landscape of Microinsurance in Asia
Munich Re Foundation
Health insurance outreach is quite below potential
- 29.2 million individuals covered
- 31 million in 2007
- 0.7-1.5% coverage ratio
- 15.5million policies in force,
- 18% of all policies identified
- USD 92.4 million premium generated
in 2012 (primary covers only),
- 11% of all premiums collected
Munich Re Foundation
Specifications of health microinsurance products
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Landscape of Microinsurance in Asia
0
5
10
15
20
25
30
35
Be
fore
20
00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Nu
mb
er
of
pro
du
cts
Primary health
Hospitalisation
ComprehensivehealthHospital cash
Dread disease
Dental
Evolution of health microinsurance sub-covers
(by number of products) Primary health 6.8%
Hospitalisation
51.9%
Comprehensive health
18.1%
Hospital cash
13.1%
Dread disease
9.7%
Dental 0.4%
Health sub-covers by coverage
Hospital 0.1%
Other 0.3%
Mutual 0.4%
Cooperative
4.8%
Community based
organisation
7.3%
Parastatal insurer 10.5% NGO
37.2%
Regulated commercial insurer
39.4%
Providers of health microinsurance
- Health microinsurance (HMI) is dominated by
regulated insurers and not community based
organisations
- In Bangladesh, Pakistan and Cambodia, NGOs
participate in the sector
- Hospital cash and comprehensive covers are
increasing after advent of Universal Health
Coverage schemes
Accident insurance
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Landscape of Microinsurance in Asia
Munich Re Foundation
Accident insurance is mostly provided as linked cover
- 77.8 million individuals covered
- 33.9% of coverage
- 17.7million policies in force,
- 20.6% of all policies identified
- USD 128.4 million
- 7.7% of premium generated
(primary covers only)
- 50% of products are tied with other
products
- 40% of products are tied with
life microinsurance
Agriculture microinsurance
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Landscape of Microinsurance in Asia
Munich Re Foundation
Agriculture microinsurance generates highest premium
- 23.8 million individuals covered
- 10.5% of coverage
- 16.1 million policies in force,
- 18.7% of all policies identified
- USD382.6 million premium generated
- 46.2% of premium generated
(primary covers only)
- Growing at 130%
Munich Re Foundation
Specifications of agriculture microinsurance products
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Landscape of Microinsurance in Asia
Evolution of agriculture microinsurance sub-covers
(by number of products)
Agriculture sub-covers by coverage
- Livestock insurance: crop insurance : : 46:54
- Livestock indemnity based insurance is most
populous in agriculture insurance
02468
101214161820 Crop, indemnity
based
Crop, weather indexbased
Crop, area yield(ground measured)
Livestock indemnitybased
Livestock, satellitebased Index
Crop, indemnity
based 1.0%
Crop, weather
index based 27.8%
Crop, area yield(groun
d measured)
25.3%
Crop, area yield(satellite images)
0.0%
Live stock, indemnity
based 44.9%
Live stock
satellite based index 1.0%
Property microinsurance
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Landscape of Microinsurance in Asia
Munich Re Foundation
Property insurance is least developed in the region
- 7.7 million individuals covered
- 3.4% of coverage
- 1.3 million policies in force,
- 1.5% of all policies identified
- USD 31.5 million premium generated
- 3.8% of premium generated
(primary covers only)
- Most of the coverage is on
possession and not type of risk
Product Characteristics
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Landscape of Microinsurance in Asia
Munich Re Foundation
Product type : Most of microinsurance is of group product nature
Total Life Health Agriculture Property Accident
Individual
Products 48% 50% 51% 42% 45% 43%
Lives or
properties 28% 35% 51% 1% 8% 22%
Group
Products 31% 37% 30% 13% 23% 31%
Lives or
properties 21% 40% 8% 1% <1% 14%
Both
Products 21% 13% 19% 46% 32% 26%
Lives or
properties 51% 25% 41% 98% 92% 64%
Munich Re Foundation
Microinsurance products are mostly short-term in nature
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Landscape of Microinsurance in Asia
0 20 40 60 80 100
Fixed term, upto one year
Limited Term 1-3 years
Limited term 4-7 years
Limited term, more than 7 years
Yearly renewable term
Linked to loan or other product term
Whole of life
Other
Monthly
Multiple term
Millions
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Life Health Agriculture Property Accident
Monthly
Whole of life
Linked to loan or other product term
Limited term, more than 7 years
Limited term 4-7 years
Yearly renewable term
Fixed term life, upto one year
Munich Re Foundation
Asian microinsurance market has higher claim incidence
07/07/2014 26
Landscape of Microinsurance in Asia
Product type
Number of lives insured
in million
(only if both premiums
and claims provided)
Premiums
in million USD
(only if both premiums
and claims provided)
Claims
in million USD
(only if both
premiums and claims
provided)
Loss ratio
Life 60.3 199.6 179.9 90%
Health 15.5 59.8 47.3 79%
Agriculture 22.4 381.11 224,1 59%
Property 5.2 27.2 22.1 81%
Accident 75.7 128.4 155.2 121%
Total 181.6 797.2 628.7 79%
Distribution and use of technology in microinsurance
Munich Re Foundation
Distribution of microinsurance is still conventional
0 50 100 150 200 250
CBOs, mutuals other member…
MFIs, remittances, banks
Conventional insurance agents
Specialised microinsurance agents
Employer
Other/Non insurer
Retailers
MI brokers
Mobile
Churches
Funeral parlours
Number of products
- CBOs and mutuals are predominantly
into health microinsurance delivery
- Life microinsurance mainly delivered
through MFIs and specialised
microinsurance agents
- Community based insurance more
common in South and South East
Asia
Munich Re Foundation
Use of technology is limited to back office management
65% of all processes of all providers are based on paper forms
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Landscape of Microinsurance in Asia
0%
25%
50%
75%
100%
Specialised Software
Call centre
Magnetic striple cards
POS devices
Mobile phones
Percentage of providers using technologies in their processes (excluding paper forms)
6.1%
6.1%
7.1%
7.1%
10.1%
18.2%
19.2%
26.3%
Claims payment
Policy management
Product design
Data transfer with partners
Premium collection
Sales
Marketing
Customer service
Use of mobile phones in microinsurance processes
- Only 40 organisations of 228
surveyed use mobile phone for any
process of microinsurance
- Of those who uses mobile phone,
most use it for customer service,
marketing (tele-calling) and sales
Microinsurance stakeholders
Munich Re Foundation
Regulated insurers are dominant microinsurance providers
0%
20%
40%
60%
80%
100%
Number of institution Lives/Properties
Takaful
Government agency
CBOs, mutuals, cooperatives
NGOs
Parastatal insurer
Other
Regulated commercial insurer
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Life Health Agriculture Property Accident
Parastatal insurer
Government agency
Takaful
CBOs, mutuals, cooperatives
NGOs
Other
Regulated commercial insurer
Microinsurance provider types and outreach
Microinsurance providers according to product type
Providers’ perception on microinsurance: how they see the sector
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Landscape of Microinsurance in Asia
Munich Re Foundation
How do the providers define the microinsurance sector?
5%
31%
38%
34%
55%
53%
72%
75%
25%
25%
32%
46%
38%
43%
45%
57%
0% 20% 40% 60% 80%
Other
Specialised customerservice
Separate accounting forproduct expenses
Separate accounting forproduct
Specialized department
Management of MI products
Differentiated distributionchannels
Design and marketing ofproducts
All other insurers Regulated insurers
MFI
clients
21%
Women
11%
Farmers
11% Rural
19%
Others (urban
poor,
cooperative
members,
retirees etc.
7%
Low
income
21%
Self employe
d 3%
Target market for microinsurance (as identified by providers)
How is microinsurance business different for providers
Social microinsurance
Munich Re Foundation
With 1.7billion outreach, social microinsurance is unavoidable
reality for market based microinsurance
316.6
76.4 45.8 38.5
15.0 10.5 2.2 0.0 1.0 0.1 0.0 0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
SMI outreach (in mn)
Current population below poverty line (inmn)
1154.5
Name of the scheme Country Individuals covered (in million) Type of risk covered
New Rural Cooperative Medical Scheme China 832.0 Health
Urban Resident Basic Medical Insurance China 221.0 Health
Rashtriya Swasthya Bima Yojana India 130.5 Health
PICC- Crop insurance China 101.5 Agriculture
Rajiv Arogyashree Yojana India 89.6 Health
Jamkesmas Indonesia 76.4 Health
Dr.Kalaignar (now Chief Minister's) Scheme India 54.4 Health
Universal Coverage Scheme Thailand 45.8 Health
PhilHealth, Philippines Philippines 38.5 Health
Aam Aadmi Bima Yojana India 20.3 Life
National Agriculture Insurance Scheme India 16.3 Agriculture
Universal Health Coverage Vietnam 15.0 Health
Crop Loan Insurance Pakistan 10.5 Agriculture
Regulation of microinsurance
Munich Re Foundation
Regulatory development are at various stages
Classification of countries in terms of their microinsurance regulatory development
Functional
MI
regulation
Institutional
MI
regulation
Regulatory/ policy development
No/restrictive
MI regulation
MI allowed as
part of
microfinance/
Insurance
MI as
obligation/
promotion
Inception stage Growth stage Maturity stage
• Sri Lanka
• Azerbaijan
• Thailand
• Malaysia
• Laos
• Mongolia
• Indonesia
• Bangladesh
• China
• Cambodia
• Vietnam
• Nepal
• Pakistan
• Papua New Guinea
• Fiji
• East Timor
• India
• The Philippines
Representative countries of Asia
Country segmentation based on landscape
Munich Re Foundation
Market segmentation of Asian and Oceania market throws insight
into differential treatment
0.9% 1.2% 1.4% 1.5% 2.0% 3.0% 3.7% 6.1%
9.0%
13.9%
20.6%
1.9% 1.9% 5.4% 2.9% 4.1%
20.7%
11.5%
14.7%
42.3%
36.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Coverage ratio Alternative coverage ratio
Stabilised markets Growth leaders Monoliths Nascent
India
The Philippines
Bangladesh
Indonesia
Malaysia
Nepal
Pakistan
Thailand
Cambodia
China
Jordan
Mongolia
Sri Lanka
Vietnam
Azerbaijan
Bhutan
East Timor Oman
Fiji
Kuwait
Lebanon
Palestine
Papua New Guinea
Uzbekistan
Thank you
07/07/2014 40
Landscape of Microinsurance in Asia