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Economic Rationale for Microinsurance The role of the World Bank

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Economic Rationale for Microinsurance The role of the World Bank Olivier Mahul Program manager Insurance for the Poor World Bank Insurance for Poor: Historical ... – PowerPoint PPT presentation

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Title: Economic Rationale for Microinsurance The role of the World Bank


1
Economic Rationale for Microinsurance The role of
the World Bank
  • Olivier Mahul
  • Program manager
  • Insurance for the Poor
  • World Bank

2
Insurance for Poor Historical context
  • Fatres Roman burial insurance societies
  • Friendly Societies in the late middle ages
  • Non-governmental social insurance arrangements
  • UK 5 million people covered by 26,000 friendly
    societies in the early 20th century
  • Similar arrangements in Europe and North America

3
Two steps forward, one step back
Trends in household poverty in 35 North Indian
Villages (poor households, )
Source Anirudh Krishna (2004) Escaping Poverty
and Becoming Poor Who Gains, Who Loses, and
Why? World Development Vol. 32, No. 1, pp.
121136, 2004.
4
Reasons for descent into poverty
5
Insurance for the poor does not really work as an
individual product
6
Moving towards a public-private partnership
  • The public sector may not be the best manager of
    financial services
  • But insurance for the poor is unlikely to be
    scaled up without government support
  • Public-private partnership
  • Delivery of agriculture and health services to
    the working poor
  • Premium subsidies to those below the poverty line

7
Is health insurance an oxymoron?
Community Based Health Insurance Program in Rwanda
8
Life insurance
  • So-called life insurance being issued by some
    microfinance institutions is Personal Accident
  • Low probability of payout
  • Confirmation of death is easy
  • Profitable for both the MFI and the insurer
  • Is it a good deal for the insured?
  • Full life cover can be exposed to extreme adverse
    selection and fraud
  • Funeral insurance is a fundamental need for the
    poor

9
The WB role in insurance for the poor
  • Developing business models
  • Microeconomics of providing insurance and risk
    related services to the working poor households
  • Promoting market development programs
  • Developing market-based risk funding systems that
    can be scaled up
  • Threefold approach
  • Investments in building market infrastructure
  • Technical assistance in developing new products
  • Integration into social protection approach

10
The WB role in insurance for the poor
Social protection policy
Market models
Planners
WB-FPDSN Insurance for the Poor
Searchers
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