Some 500 million people worldwide are now covered by microinsurance, a low-cost form of insurance for individuals generally not covered by traditional insurance or government programs.
In fact there has been a more than 500 percent increase in the number of people covered by microinsurance in just the past five years, according to the Microinsurance Innovation Facility of the International Labor Organization (ILO) and the Munich Re Foundation.
The second volume of Microinsurance Compendium, Protecting the poor just published by the two organizations says the number of people covered by microinsurance rose from 78 million in 2007 to 135 million in 2009, reaching nearly 500 million today.
Their findings show that Asia Ã¢â‚¬“ with its two microinsurance powerhouses China and India Ã¢â‚¬“ is spearheading the trend, covering roughly 80 percent of the market. Latin America accounts for 15 percent of the market and Africa 5 percent.
Large and dense populations, interest from public and private insurers, property distribution channels and active government support, are some of the reasons why Asia is ahead of the game, the report says.
While microinsurance policies are typically thought of as products for emerging markets, a recent blog post over at Insurance & Technology suggests that microinsurance projects are applicable to mature economies too.
In the post, Marik Brockman, of PWC Insurance Advisory Services, says:
Even though developed economies do not have the same customer segments, per se, as emerging ones, they too have significant numbers of working poor. The constraints of remote geographies, the working poor’s difficulty in affording insurance, and differing technology infrastructures in emerging markets have led to innovations to and efficiencies in microinsurance schemes that are applicable to low growth and under-penetrated mature life, health and property & casualty markets.Ã¢â‚¬
Brockman concludes that developed markets experiencing stagnating economies, increasing income disparity, and the risk of more consumers dropping below the poverty line are likely to see insurers adapt microinsurance schemes to increase insurance adoption and drive growth.
An interesting idea.
Check out further Insurance Information Institute (I.I.I.) information on microinsurance.