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Technical Assistance for the
Promotion of Microinsurance

The Experience of Opportunity International

 

By Richard Leftley, Opportunity International Network

 

The Opportunity International (OI) network of 39 microfinance institutions (MFIs) served over 675,000 low-income persons at the end of 2004. Wherever possible, OI’s microfinance partners strive to become (or start as) regulated financial institutions so that they can provide a range of financial services to large volumes of customers. The members of the Opportunity International network strive to achieve a triple bottom line of client outreach, financial sustainability and client transformation.

 

The provision of microinsurance is an important component in this 3-pronged objective. Insurance can benefit large numbers of people since clients and their family members can be covered. Furthermore, when offering insurance in partnership with an insurance company, microinsurance is not capital intensive, so growth is not limited by the ability to mobilise loan capital. These partnerships also facilitate the second objective of financial sustainability, as insurance lowers loan losses while generating fee-based income for the MFI. Thirdly, insurance helps to transform clients by providing peace of mind and assistance when they need it most.

 

To promote microinsurance, Opportunity International has hired in-house insurance expertise that provides demand- driven technical assistance to its implementing partners. OI’s insurance team implements a six-step product development process intended to produce the best insurance products for the lowest rates, usually in partnership with insurance companies. Instead of relying on insurers to manufacture the product, this process restructures the relationships in the partner-agent model by empowering the MFIs to design their own products and effectively negotiate with the insurance companies.

 

This paper draws largely from the experiences of five MFIs that have introduced insurance with OI’s technical assistance. Each one has a different story and unique lessons, reinforcing the advantages of Opportunity’s product development approach to promoting microinsurance. The organisations are:

 

  • UGAFODE
  • CETZAM
  • OIBM
  • TSKI
  • Opportunidad Microfinanzas

 

Drawing primarily on the experiences of these MFIs, this paper highlights a number of valuable microinsurance lessons in the areas of market research and marketing, product design, claims management, structuring partnerships and providing technical assistance. This paper covers these major topics:

 

  • Market Research & Marketing
  • Product Design
  • Claims Management
  • Structuring Partnerships
  • Providing Technical Assistance

 

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