Microinsurance continues its upward trend

According to the second volume of the survey "Protecting the poor: a microinsurance compendium", published in April 2012 by the International Labor Organization (ILO) and Munich Re Foundation, nearly 500 million low- income people benefited in 2011 from microinsurance mechanisms, compared to just 78.5 million in 2006 and 135 million in 2009.

Noticed as of 2008, the microinsurance boom is accounted for by many factors such as:

• the numerous innovations designed to offer better insurance services for a larger number of people,
• the diversification of distribution channels (banks, retailers, mobile telephone operators, …),
• the growing interest exhibited by private insurance companies in this market, thus creating additional substantial capacities. Today, out of the 50 biggest insurers worldwide, 33 are providing microinsurance whereas in 2005, they were only 7,
• the proactive involvement of regulators through the enactment of incentives and the granting of subsidies,
• the density of vulnerable populations, especially in the Indian sub- continent.

Growth of microinsurance per region

Microinsurance market has grown six fold in six years. This growth varies from one region to another and the coverage rate of low-income people differs from one continent to another.

In Asia

The Asian market remains by far the most buoyant with a coverage rate of 10.3% of the population. It counts 400 million insured, which accounts for 80% of the world microinsurance market. India alone, where this trade is widespread, provides coverage for 300 million individuals, that is, 60% of the global market. Microinsurance is equally successful in China, Bangladesh and Pakistan.

In Latin America

In 2006, the vast majority of the 8 million people dotted with a microinsurance policy is located in Peru and in Columbia. As of 2010, the Brazilian market became the most buoyant in the region with 30 million micro-insured. The survey also found that nearly 15% of the people covered by microinsurance live in Latin America.

In Africa

The 2006 statistics, found that 4.5 million people, excluding South Africa, underwrote a microinsurance policy. In 2009, this figure rose to 14.7 million for the entire continent and 25 million in 2011, that is, 2.4% of the whole population.

Even though microinsurance is exhibiting a two-digit annual growth rate (13% excluding South Africa), the bulk of the market remains unexploited. ILO has evaluated this potential at 700 million people, which accounts for nearly 25 billion USD of premiums per year. This figure may be achieved if 5% of household budget is dedicated to this segment.

A Swiss Re survey found that no less than 4 billion vulnerable people worldwide are devoid of coverage, that is, a microinsurance market potential evaluated at 40 billion USD.