In July 2013, 40 members from the Southern African Actuarial ConneXions (SAAX) member interest group met for a panel discussion on microinsurance. The meeting was held at Old Mutual's offices and was followed by drinks set against the backdrop of the River Thames
The panel consisted of Lisa Morgan from Milliman; Eamon Kelly from Deloitte and Agrotosh Mookerjee from MicroEnsure, and who did not fail to provide an extremely interesting discussion for those in attendance. The panel discussion was expertly chaired by John Smith of Bupa.
All three panelists shared their experiences from the field including anecdotes from the different projects they have each worked on.
All three panelists shared their experiences from the field including anecdotes from the different projects they have each worked on.
Microinsurance is an insurance product for low income individuals with limited disposable income, yet a need to reduce uncertainty in at least one aspect of their lives.
A common theme throughout the discussion was the fact that microinsurance is very similar, from an actuarial perspective, to traditional insurance products. There is however the need for more focus on keeping products, pricing and claims processes simple as well as the importance of building trust within a population unfamiliar with and skeptical about insurance products. Eamonn stressed the importance of principles based solutions to common problems and a need for pragmatism.
Microinsurance suffers from the similar problems of anti-selection, moral hazard and lack of data for pricing as any traditional insurance product in its infancy. Lisa shared her experience of pricing a maternity benefit in India with no data, while Agrotosh explained the issues he had come across in using satellite data to help support the 'easily modifiable' data from weather stations on the ground for agricultural microinsurance products.
Core to any microinsurance product is the aspect of social responsibility and the concept of giving back to the community with more 'value added services'. The panel were clear about the need for tangible benefits to society and that there needs to be some focus on social KPIs rather than just financial return measurements.
General consensus amongst the panel and those in attendance was that the microinsurance market is growing quickly and has vast potential but must be developed carefully and responsibly.
