The Rise of Micro insurance

by John Hui | March 8, 2013 at 6:08 pm

Around the world, approximately three billion people survive on less then $2 a day. Many are trapped in a cycle of poverty that impairs their health, relationships and social mobility. When financial disaster strikes, such as the death of a breadwinner or costly health issues, the majority have no means of getting by. It is a disheartening phenomenon, that those whose lives are most fragile are the ones without access to a safety net. Enter microinsurance. Microinsurance is a segment of insurance products designed with smaller premiums and less coverage to support low-income populations that cannot afford or do not have access to traditional plans. As an example, premiums for a microinsurance plan in India can be as low as 45 rupees a month (3.8 cents per day) and cover losses around 2,500 rupees ($62.75 dollars).

The number of people insured by microinsurance has increased from 78 million in 2007 to 500 million today, according to a study published by the International Labor Organization and the Munich Re Foundation. The total value of the microinsurance market now exceeds $40 billion, according to reinsurer Swiss Re, and Lloyds of London projects that the market has the potential to someday provide up to three billion policies. There have been many factors contributing to the growth of microinsurance in the past five years. Urbanization and economic growth in countries with large, lowincome populations has increased the purchasing power of this market segment. The two leading microinsurance countries are China and India, which account for nearly 80% of the worldwide market, followed by Latin America, at 15%, and Africa, at 5%. The estimated purchasing power of Chinas poorest is $161 billion and Indias is estimated at $93 billion, according to Accenture. As the purchasing power of these densely populated, low-income areas continues to increase, so too does the need to insure that income.

High costs are the top challenge facing insurance companies when issuing microinsurance, according to Commercial Insurers in Microinsurance, a survey of insurers conducted by the Microinsurance Network. (click for larger graph)

Another factor driving the rise of microinsurance is government involvement. The Chinese government first started using microinsurance in August 2008 in rural areas where 400 million people, among a population of approximately 700 million, may be able to benefit from microinsurance. The government has offered incentives for large, state-owned firms, such as Peoples Insurance Company of China, as well as small, privately owned insurance companies.

The increase of private-firm involvement and partnerships between public and private groups has also helped attract attention. In 2005, seven of the 50 largest insurance companies targeted this low-income group. Today, 33 out of 50 are involved. These companies have seen the enormous potential for growth in the industry and have been eager to increase their market size, a factor that was cited as the largest benefit for insurers that offer microinsurance, according to a survey conducted by the Microinsurance Network. Private insurance companies have formed partnerships with local microfinance institutions, governments, agents, mobile networks, health service providers and NGOs. The infrastructure created by these partnerships, which include organizations that work in the worlds biggest cities and smallest villages, allows these financial products to be distributed to a much more geographically diverse consumer base than ever before. Another cause for the expansion is the rise in technology, namely the widespread use of mobile phones. The number of mobile phone users in the developing world now surpasses the number of users in the developed world, according to a report by the World Bank. Unbelievably, three-quarters of the world now has better access to mobile banking than to clean water and electricity, and the number of people using mobile banking in developing nations is expected to explode, from 60 million today to close to one billion in 2015. As technology use continues to evolve throughout the developing world, so too will its citizens access to microinsurance. Three organizations, for example, have joined together to create a system that allows Kenyan farmers to insure crops through a mobile phone. A microinsurance policy, which is distributed by the Kenyan branch of UAP Insurance in partnership with the Syngenta Foundation for Sustainable Agriculture and Kenyas largest mobile company, Safaricom, can be registered by using a camera phone to scan the barcode on each bag of seed sold.

A microinsurance policy can be registered by using a camera phone to scan the barcode on each bag of seed sold.
A text message is then sent to the farmer to confirm the policy. If the weather worsens, analysts use a system to calculate if the crops would be damaged. If the crops are, a payout is made directly to the farmer through his phone using Safaricoms mobile banking service. This system eliminates all other intermediaries and paperwork, which reduces transaction costs drastically. Even with the sectors recent expansion, microinsurance has experienced a variety of challenges. The concept of insurance is completely new to many low-income

populations, including farmers and migrant laborers, many of whom are illiterate. Considering that insurance can be a tough sell even in the United States, there is a larger hurdle in trying to introduce it to populations unfamiliar with the underlying principles. When a microfinance institution provides a loan to a borrower, it is entrusting that the borrower will repay his installments, however this is reversed when a consumer purchases insurance. The client needs to trust that the agency will repay him or her in case of disaster. This is a foreign concept to many populations in the developing world. It may be more likely that a microinsurance package will be purchased when coupled with a microloan because, in this situation, mutual trust is created. In order for microinsurance to scale in an area, the revenue model needs to be selfsustaining with a large pool of policyholders. A large number of small policies leads to higher transaction costs, however. Microinsurance programs need to be able to provide sustainable revenue models that can access fluid distribution channels, overcoming geographical and cultural barriers. Although challenges exist, many initiatives have arisen that highlight the promise, now and in the future, for microinsurance. LeapFrog, the worlds first and largest microinsurance investment fund, and its high-profile investors, such as the Clinton Global Initiative and J.P. Morgan, continue to bring attention to the business. Providing insurance for the poor not only gives the economically disadvantaged a fallback plan, but also an opportunity to invest for the future with increased security. With an growing, successful track record, microinsurance continues to be a promising tool in the war against poverty.

FESA Micro-insurance: Satellite Indices Breakthrough

Andries Rosema, EARS
Weather index insurance is considered an important risk-sharing mechanism to assist farmers in resisting the vagaries of climate, to increase their production and escape from poverty. But the introduction of index insurance is hampered by lack of data. This situation, however, is rapidly changing. Dutch remote sensing company EARS has developed a 30 year climatic database on the basis of Meteosat, which covers the entire African continent. Using its relative evapotranspiration(RE) drought index, EARS is successfully cooperating with a range of partners and developing drought and excessive precipitation insurance across the African continent.

Introduction

FARMD (March 2012) | Farmers can raise their production and income considerably by applying improved tillage techniques, better seeds, fertilizer and pesticides. For this purpose most farmers need a loan. However, financial institutions are reluctant to offer credit. Because of climatic disaster, in particular drought, famers may lose their crop and would not be able to pay back the loan. Micro-insurance is the solution. There are millions of smallholders with only a few acres of land and a production of say 1-2 tons of millet or maize annually. The loan to be insured may be in the order of $200 and the insurance premium some $20. Thus micro-insurance must be low cost. At the same time the index should closely represent the reduced crop production due to drought. (Figure 1: Meteosat relative evapotranspiration (RE) used for drought insurance)

In the past, drought insurance has been based on precipitation. Indemnification of farmers would then take place if precipitation during the growing season would not meet certain predefined levels. In Africa, however, there are few rainfall stations. A very dense and costly network would be required to adequately represent the spatial variability. Moreover, adding rain gauges would not provide for a long precipitation history that is required to assess the drought risk and to price the policy. Another limitation is that rainfall is not a good measure of actual crop water use. A considerable part may run-off or may percolate into the subsoil. It is also possible that rainwater is stored in the soil for considerable time and used by the crop with months of delay. Therefore, using rainfall data for micro-insurance involves considerable basis risk, both in terms of co-location of the data and representativeness for crop growth.

Climate data from space

After the declassification of remote sensing at the end of the 1990s, a Dutch remote sensing school developed, specializing in the physical description and mathematical modeling of object-sensor interaction. EARS is a product of this school. The company is using visual and thermal infrared satellite data in mapping temperature, radiation, evapotranspiration and precipitation from space. Systems and services are provided for satellite based drought monitoring, crop yield forecasting and river flow forecasting. Operational systems have been or are being implemented in China (4x), Mongolia and Niger. EARS is producing regional crop yield forecasts for Europe and Africa. In 2009 the company received a grant from the Minister of Development Cooperation to carry out the FESA Micro-insurance project, as a Netherlands contribution to the UN Millennium goals. The objective is to develop satellite based micro-insurance that reaches every farmer in Africa. In the framework of this project a 30 year retrospective data base of Meteosat hourly visual and thermal infrared data has been compiled and has been processed to daily and 10-daily climatic data fields. The methodology has been reported and extensive validation of the climatic data has taken place(Rosema et al. 2010). FESA is not using precipitation for drought insurance, but the relative evapotranspiration (RE). Since evapotranspiration is hardly measured on the ground, this index is not yet well known. But it is the best possible agricultural drought indicator. RE is proportional to crop yield (Stewart 1973, Doorenbos and Kassam 1979). The RE data developed in the FESA project covers the entire African continent at 3 km resolution. 30 year data series can be extracted for any location on the African continent. Thus FESA based insurance can truly reach every farmer.

Maize insurance pilot and scaling up

In early 2010 EARS completed it first drought insurance design for Maize growers in Burkina Faso and Mali. The project is carried out in cooperation with micro-insurance broker Planet Guarantee. The index was approved and priced by Swiss Re. The corresponding pilot project was carried during the 2011 growing season. EARS monitored the index and each 10

days a data report was provided with information on the start and progress of the season and the temporal development of the index. During this pilot a remarkable event took place. Due to fragmented rainfall, some locations had a very timely start of the season, while others, not far away, were 40 to 50 days later. This analysis was confirmed by rain gauges that for the purpose of validation had been placed on the ground. Based on this successful first pilot this insurance initiative is now being scaled up to more than 800 locations, covering farmers in large parts of Burkina Faso, Mali and Benin.

Figure 2: RE 30 year data series at Dande, Burkina Faso

Expanding activities
Cooperation with micro-insurance brokers is also expanding. Partnerships are developing with Syngenta Foundation, MicroEnsure, FSD-Kenya, Cardano and RMS. In cooperation with Syngenta Foundation a new challenge was met. In the foothills of the Aberdare range farmers grow French beans using water flowing from the mountains. It was shown that the RE index reflected well the overall water availability. Variations in RE were, with some phase shift, correlated to production. In this area, the FESA project also entered a new path: excessive precipitation insurance was developed, based on Meteosat derived cold cloud duration (CCD). The CCD is measure of the dwelling time of Cumulonimbus clouds (rainstorms). It is a good proxy of precipitation. Both the drought and the excessive precipitation insurance were approved and priced by re-insurer Swiss Re.

Partner MicroEnsure is carrying out drought insurance activities for the Tanzania Cotton Board. An inventory of existing rainfall data in the Bunda district showed these to be insufficient in quantity and quality. EARS was requested to develop an RE based drought insurance structure. Since December 2011 the pilot is running and the RE index is monitored. MicroEnsure regional managers were trained in understanding the RE-index. As a spin-off, MicroEnsure also requested EARS to develop drought insurance for maize and rice growers in Rwanda. A second cotton insurance project has started in Kenya with Planet Guarantee. Also in Kenya, EARS joined FSD-Kenya and World Bank ARMT to develop drought insurance for wheat growers in the district Narok. This concerns mechanized agriculture with property sizes of tenths to hundreds of hectare. A most profound design process took place with the objective to properly reproduce the drought events as witnessed by local farmers in recent years. The final RE based insurance structure did well reproduce the crop losses in recent drought years. The pilot is to start soon. Current FESA activities also tend to extend further southward on the continent. RMS, from Newark, California, is studying the use of the RE index data for large scale maize insurance in Mozambique. In cooperation with risk manager Cardano from Rotterdam, drought insurance for rice growers in Madagascar is explored.

Outlook
FESA micro-insurance is growing fast. It is expected that millions of African farmers may be insured in about 5 years. After due introduction in Africa, the technology may also be extended to other parts of the world, in particular to eastern Asia, where Japanese and Chinese geostationary meteorological satellites can provide 20-25 years of data. Geostationary meteorological satellites serve a large meteorological community and belong to the most reliable and stable satellites in the world. For Meteoat there is a permanent backup satellite in orbit. Therefore reception of the data is assured. Consequently there is a stable basis for further deploying the FESA micro-insurance technology. We are proud that, after many years of development, this innovative satellite remote sensing technology can play an enabling role in the development of large scale, affordable micro-insurance.

References
Stewart J L, and Hagan R M (1973) Functions to predict effects of crop water deficits, ASCE J. Irrigation and Drainage Division 99, p. 421-430. Doorenbos J and Kassam A H (1979) Yield Response to Water, FAO Irrigation and Drainage Paper 33, FAO Rome, pp 193. Rosema A, DeWeirdt M, Foppes S, Wilczok C (2010) FESA Micro-insurance: methodology, validation, contract design, Milennium project no 38, DG International Cooperation, Ministry of Foreign Affairs, the Netherlands. Publication EARS Earth Environment Monitoring BV, Delft, the Netherlands, pp 95.

MICRO INSURANCE and its singular feature

Microinsurance has burst onto the insurance scene as a groundbreaking product. Its hallmark features are its social function, low premium and low coverage limits but microinsurance also involves other complex and less familiar aspects deriving from its target segment, i.e., low income groups. These complexities hinder the implementation of traditional insurance criteria not only in terms of risk aspects but also strictly operational factors, calling into question the economic viability of the projects involved. The various international operators and bodies working on the development of microinsurance are currently striving above all to identify and address these limitations and barriers, seeking viable ways of overcoming them on the back of groundbreaking initiatives and developments. This will open up a potential market of 4 billion people and 5 billion dollars of annual income, allowing these operators to meet their social responsibility programmes while also fulfilling their strategic business plans. FRANCISCO JAVIER GARAYOA ARRUTI DEA Insurance Sciences - Universidad Pontificia de Salamanca

WHAT IS THE MEANING OF MICROINSURANCE?

This question brings us up at once against the classic twofold nature of microinsurance, firstly its function of social protection, which is the original approach and is tied in with CSR programmes, and secondly the challenge of coming up with a commercial insurance solution for low income markets, identified as the segment occupying the base of the wealth pyramid. Both approaches aim at the same objective, which is none other than alleviating the vulnerability of the poorest. This twofold approach is represented graphically by C. Churchills Janus model, which is the best known among students of microinsurance:

Figure 1. - Source: C. Churchill 2006. The two faces of microinsurance.

Microinsurance changes its spots completely depending on which side we approach it from, subsidised in its social approach or self-sustainable in its commercial vision. Reality, however, resists being boiled down to neat theories so general analysis works from the social aspects towards market approaches to bring both strands together. Another theoretical dichotomy is posed by the function of microinsurance, which could be protective, in the strict sense, embracing personal and family protection, with health and life products, and also could be viewed as productive, on the basis of support for investment in economic activities with capital-based microinsurance tied in with crop- or animal-farming work or small companies. In practice, as in the former dichotomy, both strands tend to come together in terms of protecting the poorest groups from the risks they are exposed to. As our starting point we are going to take one of the most complete and widely accepted definitions of microinsurance put forward by the World Banks Consultative Group to Assist the Poor, CGAP , which defines microinsurance as A financial arrangement to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. (C. Churchill 2006) According to this definition, the characteristic trait of microinsurance is assistance for the low income segment but incorporating the basic principles of the traditional insurance activity, such as regularly paid premiums, the uncertainty of the risks and the proportionality of the premiums to the risks and costs. As our study of microinsurance deepens we soon see that some aspects of this definition are difficult to apply in the low income segment. As we have already pointed out, this difficulty impinges on the product and the activity itself, limiting implementation of the principles of the traditional insurance activity. This claim is borne out by the key determining factor, the necessary affordability of the premiums for the members of the low income segment, which is often hardly compatible with the principle of proportionality between the premiums and risk covered or with the passing

on of the operating costs (It should be borne in mind here that the claims ratio and costs will be higher than those of other segments given the special vulnerability of the people involved, the complexity and cost of setting up new delivery channels and the costs deriving from smaller coverage units, among others.). As we see the complexity of microinsurance soon raises its head. It is not just a question of low premium, low coverage insurance but is in fact hemmed in by barriers that are difficult to surmount for traditional operators who wish to move into the microinsurance market. One vision of the economic challenges to be taken on is reflected in the so called Microinsurance Challenge, dealt with by C. Churchill and Denis Garand as part of the strategies of sustainability (C. Churchill 2006), shown graphically in the figure below. As we see from figure 2, the right balance needs to be struck between coverage, premium affordability and operating costs. This is no easy task as we will see later on.

Figure 2. The microinsurance challenge. Source: Strategies for Sustainability. Churchill, C. & Garand, D. (C Churchill 2006).

To strike this balance between economic sustainability and affordability we cannot fall back on the traditional insurance set-ups. Innovation is essential, redesigning the typical products, rethinking delivery channels, streamlining internal processes and, in short, bringing them into line with the target market. Along these lines we are going to look at some breakthroughs achieved in terms of the product, demand and delivery channels, finally considering some examples of the adaptation measures.

1. Problems in the technical specifications of the product:

To be able to weigh up properly the future risk assumed and allow actuaries to establish the corresponding criteria and quantifications we need first to look at the characteristics of the group involved, of the claims ratio and other aspects. In many cases there is no tried and trusted information on these aspects and this is in fact the first problem we come up against. As an added complication we have to bear in mind that the poorest segment is characterised by high claims volatility, greater exposure to risk covariance and the irregular and informal economic base of the insureds. The above appreciations give us a good idea of the sheer complexity of determining the products technical specifications. We therefore need to turn to groundbreaking and imaginative formulae that provide real solutions. 2. Difficulties in identifying the demand: Problems are also raised in terms of identifying, accessing and responding to the demand, which can often only be vaguely defined. It should be pointed out here that this population segment often looks askance at the insurance activity, seldom understanding the advantages of the product. The lack of any financial culture, especially in terms of insurance, leads to situations in which there is no clear demand. The insurance provider is not positively viewed and little sense is seen in the tradeoff of paying premiums against an uncertain future event. It is essential to set up an insurance culture, feeding in the necessary knowledge, with the corresponding time and economic cost, thus building up a favourable climate for the microinsurance activity. The problem is exacerbated if we factor in the complex technology that is hard to understand for a population with a high degree of illiteracy, standing in need of help and advice.

One positive trait of microinsurance, from the cost and affordability viewpoint, is the group contracting nature of this arrangement, albeit normally on a family basis. This saves costs and introduces an acrossthe-board premium for everyone with the same coverage.

From the demand point of view group contracting means that these groups have to be identified beforehand, to find out their needs and offer products meeting these needs and their priorities. 3. The Delivery Channels: It is essential to set up functional delivery channels, from the point of view of costs, operational feasibility and proximity to the segment. This entails meeting certain basic characteristics, regardless of the model followed:

a. Physical proximity to the low income segment. b. The trust that has to be built up in said segments. c. A suitable level of efficiency to ensure that the whole process can be carried out properly.

4. Examples of adjustment measures: Getting down to the operational brass tacks, we can cite examples of some cost-cutting measures: 1. Limitation of benefits: Here there might be different variants, such as limiting the supply to credit life insurance, annual compensation caps, health service coverage limits, among others. 2. Operational efficiency approach: Here we are referring to those aspects that involve a minimum contracting or administrative cost, such as groups automatically covered for belonging to public or private bodies such as trade unions or cooperatives and those that use low cost revenue collection methods, such as the deduction of saving interest in microfinance institutions. 3. Optimum delivery modelsDelivery models involving no added cost should be set up, such as the partner-agent model, the communitybased model or agreements with major service companies

In addition to the above and in the interests of avoiding claims costs, it is important to conduct prevention campaigns that avoid the risks or lessen the likelihood of their occurring. (E.g., the HIV/AIDS prevention campaigns) Another cost cutting possibility is negotiation with end service suppliers, the typical case of health insurance, to establish tariffs in line with the services. In conclusion, the affordable premium is a result of striking the right balance between risk allocation and costs. This is the key to access to the

microinsurance market, understood as an activity geared towards selfsustainability.

HOW DOES MICROINSURANCE ACTUALLY WORK IN PRACTICE? WHAT ARE ITS IMPLICATIONS?
When we get down to an analysis of the actual microinsurance activity we soon find that the traditional insurance premises no longer fit. We are dealing here with a market based mainly on informal operators under no regulation or supervision, with all the concomitant insecurity for clients and the very continuity of the activity itself. The scenario we are faced with is not very promising. Many of the operators are unregulated and controlled by no supervisor, and few tried and tested figures are to hand on such basic aspects as the claims ratio. Furthermore, we are working here with criteria of solidarity rather than proportionality and with minimum exclusions and across-the-board premiums in group contracting arrangements, etc.

The work of national regulators is essential in addressing this situation and setting up a stable and enduring microinsurance market, promoting those aspects that are most conducive to the development of the system in light of the particular situation in each national market. The legal framework has to take in the singular needs for driving this activity, considering such aspects as: the activity licences of the microinsurance institutions, the typical and atypical delivery channels, simplified contract models, fleet-footed and efficient operations and processes for transformation from informal to formal activity, vetted by the supervisory body, with the support and initiative of the formal operators, especially the bigger insurance companies. (Witness the initiatives implemented in many measures by the regulators of India, Peru, Brazil...). The graph below shows the process for transforming the informal model into a formal model, emphasising the fundamental role of the regulator and the various operators. (J.Garayoa 2009)

Figure 3.- Regulators planning stages. Drawn up by the author.

This figure shows how the integration process is kicked off by the microinsurance legislation laid down by the regulator, taking into account the idiosyncrasies of this sector. This incorporates a transformation plan to suit the market involved, setting up incentives to offset the difficulties of the process. This whole plan needs to be vetted and controlled by the supervisor as part of its general control remit. Figure 4 shows the inputs of both the formal and informal operators and also the regulators role, without forgetting the role of the formal operators in terms of knitting the whole thing together.

Figure 4: Source, drawn up by the author.

In view of the situation sketched out above, it seems that any serious approach by the formal insurance sector to the microinsurance market would call for a complete change of mindset. It is essential to find feasible alternatives that strike the right balance between affordability and sustainability and the informal and formal market. Groundbreaking innovations are also needed in the delivery channels and low cost technological models, establishing viable risk control and evaluation methods and agreeing to waive the mean yields of traditional insurance activity in the interests of social responsibility. Above all there is a need for medium- and long-term business strategies that make these options affordable for emerging markets with high growth rates in terms of both volumes and margins. It should be pointed out here that economic sustainability would at first depend necessarily on possible partial subsidies. Hence the importance of support from the international organisations and the great multinationals of the insurance sector. It is essential to reach a critical mass and build up a level of knowledge and experience to underpin the corresponding actuarial bases and risk criteria and phase in the rest of the conventional insurance principles, based on the law of large numbers.

The whole development process referred to above calls for time and this needs to be taken on board by any organisation of the insurance sector that wishes to move into the microinsurance market. IS MICROINSURANCE FEASIBLE FROM THE SOCIAL AND BUSINESS POINT OF VIEW? This question in turn begs another two: 1. What is at stake when we are deciding whether or not to move into microinsurance? 2. Is it worthwhile from the social and business point of view to hurdle the microinsurance barriers? The answer will come from an analysis of the figures we furnish below, which cost out the social commitment of improving the situation of low income segments and making them less vulnerable while also showing the business potential of this market and strategic approaches for breaking into the market in the short and medium term. The wealth pyramid below gives some idea of the market potential. (The incomes are calculated as dollar equivalents.)

Figure 5.- Wealth Pyramid. Source: Drawn up from figures of the United Nations World Development Report 2005. (WB. 2005).

Analysing the market structure shown in the above graph, and without taking into account the lowest extreme-poverty stratum, dependent on state aid, we are going to focus on the potential market with minimum payment capacities, a sine qua non of self-sustainability.

The indigent or extreme-poverty stratum would fit only in social or mixed microinsurance schemes focussing mainly on healthcare, which will be dealt with in their own right. As regards quantifying the potential market, we can put a figure on it of three billion people, since we have deducted the indigent stratum from the total figure of 4 billion in the low income segments. Despite the abovementioned difficulties, there is no doubt that an attractive new market is opening up for national insurance companies and the major insurance multinationals, in terms of the breadth of the business, the number of people involved and the income they generate. (We should not forget the figure of 5 billion dollars of annual income.)

Figure 6.- Source: Drawn up from the data of Figure 3. (Adapted from Microcare).

There follow some significant figures on the emerging market: 1. 50% of the base of the population pyramid live in China and India; Latin America weighs in with 10%. 2. The insurance level of the population in the base of the pyramid is 1.3% in Africa, 2.5% in Asia and 6.8% in Latin America. (Martnez J 2007) On the basis of these figures, and after publication of the book The Fortune at The Bottom of the Pyramid (Prahalad 2004), many traditional insurance companies have reacted by starting up research projects on how best to adapt their traditional models, products and delivery channels and even changing their institutional culture to bring it into line with a new business vision towards the low income segment (in this cultural change the social aspects coexist with traditional business aspects).

Likewise the regulators and supervisors of many of the developing countries have proactively supported the birth of a microinsurance industry. Witness, among others, the telling cases of India, Peru, Colombia and the process underway in Brazil. Another important contribution along these lines has been made by the International Association of Insurance Supervisors, IAIS, analysing the new models towards which the regulation of the microinsurance subsector has to be adapted to create a climate favourable to the development of this industry (depending on the regulatory policy of each country, there are regulators more or less interventionist in microinsurance matters, with different market responses). At this point it is well worthwhile mentioning the work carried out by the international organisations, one-off operators and donors in microinsurance matters. The most important are: 1- Microinsurance Innovation Facility: This was created in 2008 within the ILO, with economic inputs from the Bill and Melinda Gates Foundation, 2- The Microinsurance Center: Created in 2000 from an initiative of Microsave-Africa, offering microinsurance training and bringing experiences to wider notice. 3- Microinsurance Network: Before 2008 formerly called the Microinsurance Working Group of the Consultative Group to Assist the Poor, CGAP, one of the first microinsurance agents on a worldwide scale, which began its activities in 2003; its stakeholders include the World Bank and 60 donors, insurers and other interested collaborators. It is this organisations definition of microinsurance that we have been working with. 4- The Munich RE Foundation: Established in 2005, this foundation takes an active part in the study and promotion of microinsurance, one of its most important remits being organisation of the annual International Microinsurance Conference. 5- STEP Strategies and Tools against Social Exclusion and Poverty: This is an international programme set up by the ILOs Social Security Department for carrying out field work and broadcasting the results by means of the online service, GIMI, Global Information on Micro- Insurance, involving the participation of researchers, agents, donors, development organisations and other microinsurance stakeholders. This nutshell analysis shows that the development of the microinsurance market is now well underway. Certain geographical and social characteristics mark it off from the traditional insurance market while it also holds other elements in common, such as identifying social needs to be

met and a demand for specific risk management products to be satisfied, for a highly representative segment of the world population. At the moment this population is hardly able to afford the minimum wherewithal for creating and preserving wealth and ensuring dignified living conditions.

BIBLIOGRAPHY

World Bank, (2005). World Development Report 2005. Document available at www.worldbank.org Churchill, C. (Ed 2006). Protecting the Poor. A Microinsurance compendium. Edited by Craig Churchill. International Labour Office, CH -1211 Geneva, Switzerland. ILO in association with Munich Re Foundation 80791 Munich, Germany. J. Garayoa, (2009). Los microseguros como mecanismo de lucha frente a la pobreza: presente y futuro. (Un modelo de transformacin). Centro de Documentacin FUNDACIN MAPFRE. Martnez, J., Gonzlez, A., Restrepo, J.M., (Ed 2007). Microseguros o seguros populares: Oportunidades de negocio que reduce la pobreza. Revista FASECOLDA, edition 121, 2007, Carrera 7 n 26-20 Bogot. Microinsurance Centre, ( Ed 2007). Jim Roth, Michael J. McCord, and Dominic Liber. Panorama of microinsurance, in a public document of April 2007, PDF. The Landscape of Microinsurance in the Worlds 100 Poorest Countries. Contact: Michael J.McCord, 1045 N.Lynndale Dr., Ste 2E Appleton, WI54914. Direct access: http://www.microlinks.org/ev_debug.p hp?ID=19163_201&ID2=DO_TOPIC (Cons.25-11-2009).

WEB PAGES:

http://www.munichre-foundation.org http://www.ilo.org/microinsurance www.microinsurance.org www.microinsurancefocus.org http://www.fasecolda.com http://www.worldbank.org

Mission Statement
The Microinsurance Network's vision is for a world where people of all income levels are more resilient and less vulnerable to daily and catastrophic risks through improved access to effective risk management tools. The Network's mission is to promote the development and delivery of effective insurance services for low-income people by encouraging shared learning, facilitating knowledge generation and dissemination, and providing a multi-stakeholder platform. In support of its mission, the Microinsurance Network:

Distils and disseminates lessons learnt to promote client-driven and good-value insurance; Raises awareness on the demand and potential for microinsurance among key stakeholders; Contributes to the development of good practices for the industry.

The Microinsurance Network works with a broad range of stakeholders and maintains in all its activities low-income at its centre, prioritising work and actions that meet clients needs and protects their interests and well-being.

Structure
The Microinsurance Network is coordinated by the Board of directors and asecretariat. The chair has been held by Craig Churchill from the ILO since 2002. Alexia Latortue from CGAP is the vice chair and Michael McCord from the MicroInsurance Centre is treasurer. The Microinsurance Network is organised into a number of working groups, discussion groups and task forces to allow in-depth work on specific topics and issues.

History
The Microinsurance Network was originally established in 2002 as the CGAP Working Group on Microinsurance by donor organisations, multilateral agencies, insurance professionals and other interested parties involved in the promotion and support of microinsurance in developing countries. In March 2002, 16 experts met for the first time in Geneva to discuss the need for an exchange and learning platform to ensure microinsurance fulfils its potential. The result was the first project of the Network: "The Good and Bad Practices in Microinsurance" project. More than twenty case studies, co-funded by Sida, GTZ, DFID and the ILO, were published from 2004 to 2006 and provided the basis for the key publication "Protecting the Poor: A Microinsurance Compendium" in 2006 and the Microinsurance In Focusnotes. A year after the first meeting, in May 2003 in London, the first Working Groups (Operations, Demand and Dissemination) were created to better coordinate the groups activities. After having outgrown its informal systems and procedures, the Microinsurance Network decided in 2007 that it needed a clearer membership and organisational structure to accommodate the expansion of interest and activities in microinsurance and the arrival of more and new stakeholders. The Microinsurance Network was officially launched in 2009. Since then, the Network has grown to have just under 70 institutional members representing over 200 experts in 15 different working and discussion groups. In addition, as of the 31 May 2012, the Microinsurance Network became an independent structure and registered as a non-for-profit organisation in Luxembourg. 2012 is also the 10 year anniversary of the Microinsurance Network.

International Microinsurance Conference

The International Microinsurance Conference brings together experts from around the world and from all types of institutions to exchange experiences and discuss the challenges of extending insurance services to low-income people. The annual event is sponsored and co-organised by Munich Re Foundation. The first International Microinsurance Conference was held in Munich (Germany) in October 2005 and brought together over 90 experts. Subsequent conferences were held in Cape Town (South Africa), Mumbai (India), Cartagena (Columbia), Dakar (Senegal), Manila (Philippines) and Rio de Janeiro (Brazil). The next conference will be held in Dar es Salaam, Tanzania in November 2012. The Microinsurance Network always holds its General Assembly on the day after the conference