170m low-income people benefiting from micro insurance

According to new research released by the Munich Re Foundation and GIZ, the micro-insurance sector in Asia and Oceania has reached 172 million lives and properties covered, representing a 40 percent annual growth rate between 2010 and 2012. India is leading the market at over 100 million, whilst Malaysia and Indonesia emerge as having the most vibrant micro-insurance markets with a growth rate of 185 percent and over 100 percent respectively, over the same time period.

Despite these encouraging achievements, the micro-insurance sector today covers less than 5 percent of the people living in Asia and Oceania. “When low-income people are unable to manage risk, they cannot break out of the cycle of poverty,” says Craig Churchill, chair of the Micro-insurance Network and head of ILO’s Micro-insurance Innovation Facility. For this reason, “access to effective insurance by low-income people is essential to sustainable development.”

Currently life insurance is the main risk for which people are covered (83m), followed by accident (77m); health (27m); agriculture (26m); and property (7m) insurance. In addition, over 1.6 billion are estimated to be covered by subsidised schemes referred to as “social micro-insurance” or social protection schemes.

“Market-based micro-insurance needs to be complemented by schemes with governmental involvement to increase outreach, especially in the field of agriculture and health. It is important that approaches based on insurance principles are being developed jointly, involving the insurance industry, regulators and client representatives, as well as donors,” comments Dirk Reinhard, vice chairman of the Munich Re Foundation.

Capacity development along the value chain is a key factor for the sector going forward. According to Antonis Malagardis, programme director of the GIZ Programme ‘Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia’ (RFPI Asia) “The capacity development strategy of RFPI Asia prioritises the development of trainers and experts on inclusive insurance regulation, particularly in key areas such as agriculture, disaster risk management, SMEs and Islamic insurance.”