In short

• Microinsurance offers reinsurers a range of advantages, including increased market penetration, supporting low-income communities and delivering on sustainability agendas.
• Munich Re and Swiss Re already run microinsurance projects in South-East Asia, Latin America and Africa.
• Future projects can further address the protection gap, particularly in emerging markets.

Microinsurance — a protection designed to serve low-income individuals and businesses in developing countries — emerged in the 1990s, when the International Labour Organization began experimenting with cheap insurance policies in developing countries.

But what began as a form of charity has developed into a major opportunity for innovative, low-cost models of insurance to penetrate previously untapped markets.

The Microinsurance Network (MiN) defines microinsurance products as having modest premium levels based on the risks insured.

The insurer is the risk carrier, and the product must be working towards profitability, or at least sustainability, and be managed on the basis of insurance principles.

Katharine Pulvermacher, MiN’s executive director, based in Luxembourg, says microinsurance started out using a donor model, which has evolved into more of a partnership approach with products subsidised by governments, NGOs and corporates.

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