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Prospects for Microinsurance in Transition Settings

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Prospects for Microinsurance in Transition Settings – PowerPoint PPT presentation

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Title: Prospects for Microinsurance in Transition Settings


1
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2
Prospects for Microinsurance in Transition
Settings
  • MFC for CEE and NIS
  • Annual Meeting 2005
  • Bucharest, Romania
  • Michael J. McCord
  • President, The MicroInsurance Centre
  • mjmccord_at_bellsouth.net

3
What makes a country appropriate for
Microinsurance?
  • Large population is a benefit, but not the only
    concern (Albania vs. Georgia)
  • Deficiencies in the social security structures
  • Existence of private insurance industry
  • Flexible political conditions enabling
    development of customized products and procedures
  • Insurance provision gaps in existence or quality
  • Strong demand from the low-income market
  • Excited insurers and intermediaries (champions)
  • Well managed economy (inflation, currency values,
    stable policies)

4
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5
Georgia Insurance Industry at a Glance
Insurance State Supervision Service of Georgia
Insurers Association
Companies Act
Insurance Brokers (2002 8/14) (700K290/410
for 73K comm.) (about 4 of gross premiums) (Aon
80)
Microinsurance Products (Aldagi / Constanta)
(Using current exchange rate of GEL1.96 to US1)
6
Premium Growth
7
Life versus Non-Life
8
Insurance Penetration (Premiums to GDP)
Europe and World 7.8 // Sri Lanka 1.2 //
Kenya 1.9 // India 2.0
9
Insurance Density (Premiums per Capita)
Europe 918 // World 363 // India 6 //
Russia 40 // Estonia 60 // Turkey 200
10
Loss Ratios
11
SOME Options1 A Microinsurance Broker
  • Problem
  • Tremendous interest from all parties. Limited
    understanding.
  • Impact
  • Problems with product development, delivery,
    innovation, and quality. Will delay new products
  • Intervention
  • The introduction of a specialised microinsurance
    broker

12
SOME Options2 A Custodial Company
  • Problem
  • Confidence is very weak in insurance companies.
    Private pensions are beginning to grow. Several
    companys ownership is offshore.
  • Impact
  • Without confidence pensions will not grow to
    potential. Companies could abscond with funds,
    seriously damaging market and the poor.
  • Intervention
  • The introduction of a custodial company to
    control possession of pension funds.

13
SOME Options3 Caucuses Centre for MI in Georgia
  • Problem
  • Tremendous interest from all parties. Limited
    understanding.
  • Impact
  • Problems with product development, delivery,
    innovation, and quality. Will delay new products
  • Intervention
  • 3 year Caucuses Centre for Microinsurance in
    Georgia

14
Issues for Consideration
  • Potential for unstable regulations
  • Market mistrust of insurers and institutions
    (impact on pensions)
  • Requires high credibility (entrepreneur,
    examples. Know brokerage and micro-market.
    Professional custodians. International name?)
  • Relatively small market, but regional
    possibilities (replication in other countries,
    branches in Armenia and Azerbaijan)
  • Profitability? (possible given very preliminary
    numbers)
  • Demand? (insurers, MFIs, others interested,
    clients? Need additional market research)

15
What else is happening in MI?
Working Group on Microinsurance
(Some members GTZ, ILO DFID, MIC, KfW, IRDA,
plus SIDA, World Bank, USAID, Interpolis, and
others)
16
The MicroInsurance Centre Developing
partnerships to insure the worlds poor
www.microinsurancecentre.org
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