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Insuring the Low-Income Market: Challenges and Solutions for Commercial Insurers

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  • Craig Churchill

    (International Labour Organization, Social Finance Programme, Employment Sector, 4, rte des Morillons, Geneva 22 CH 1211, Switzerland.)

Abstract

In many developing countries, commercial insurers are beginning to become interested in serving the low-income market by providing microinsurance. To do so, they have to overcome both operational and regulatory obstacles. Ironically, certain regulations actually give commercial insurers an advantage in serving the low-income market, by restricting competition from specialized microinsurance companies. However, this opportunity is unlikely to last indefinitely. Commercial insurers that are keen to reach out to new markets, such as the huge volume of low-income people in many countries, would be wise to move quickly to overcome key operational issues. In particular, insurers need to recognize that microinsurance is not just existing products with smaller insured sums, but rather requires a significantly different approach from conventional insurance. Key starting points include (a) improving the insurer's familiarity with the preferences and behavior of poor persons, and (b) educating the market about insurance to create low-income consumers. The Geneva Papers (2007) 32, 401–412. doi:10.1057/palgrave.gpp.2510132

Suggested Citation

  • Craig Churchill, 2007. "Insuring the Low-Income Market: Challenges and Solutions for Commercial Insurers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 32(3), pages 401-412, July.
    • Handle: RePEc:pal:gpprii:v:32:y:2007:i:3:p:401-412
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    Citations

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    Cited by:

    1. Uddin, Mohammed Ahmar, 2017. "Microinsurance in India: Insurance literacy and demand," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(2).
    2. Biener, Christian, 2013. "Pricing in Microinsurance Markets," World Development, Elsevier, vol. 41(C), pages 132-144.
    3. Mohammed Ahmar Uddin, 2017. "Microinsurance in India: Insurance literacy and demand," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(2), pages 182-191, May.
    4. Aleksandrova, Mariya, 2019. "Social protection as a tool to address slow onset climate events: Emerging issues for research and policy," IDOS Discussion Papers 16/2019, German Institute of Development and Sustainability (IDOS).
    5. Devendra Kumar Jain & Asif Chida & R. D. Pathak & Raghbendra Jha & Stephanie Russell, 2022. "Climate risk insurance in Pacific Small Island Developing States: possibilities, challenges and vulnerabilities—a comprehensive review," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(3), pages 1-21, March.
    6. Chen, Bingzheng & Feng, Frank Y. & Powers, Michael R. & Qiu, Joseph, 2019. "Risk-revealing contracts for government-sponsored microinsurance," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    7. Bente Corneliu, 2011. "The Opportunities And Challenges Of Microinsurance," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 330-335, July.
    8. Heenkenda, Shirantha, 2016. "Inclusive Insurance Sector: An Innovation business model for Microinsurance Delivery in Sri Lanka," MPRA Paper 72480, University Library of Munich, Germany.
    9. Akotey, Joseph Oscar & Adjasi, Charles K.D., 2016. "Does Microcredit Increase Household Welfare in the Absence of Microinsurance?," World Development, Elsevier, vol. 77(C), pages 380-394.
    10. Isaac Akomea-Frimpong & Caleb Boadi & Roger Owusu-Boafo, 2021. "Determinants and challenges of supplying microlife insurance in Ghana," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 331-357, July.
    11. Yu Yan & Michael Faure, 2021. "Government interventions in microinsurance: evidence from China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 440-467, July.
    12. Amos Gitau Njuguna & Abigael Arunga, 2013. "Risk Management Practices: A Survey of Micro-Insurance Service Providers in Kenya," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 4(1), pages 132-150, January.
    13. Biener, Christian & Eling, Martin & Schmit, Joan T., 2014. "Regulation in Microinsurance Markets: Principles, Practice, and Directions for Future Development," World Development, Elsevier, vol. 58(C), pages 21-40.
    14. James C. Brau & Craig Merrill & Kim B. Staking, 2011. "Insurance Theory And Challenges Facing The Development Of Microinsurance Markets," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 16(04), pages 411-440.
    15. Shirantha Heenkenda, 2016. "Inclusive insurance sector: An innovativebusiness model for micro-insurance delivery in Sri Lanka," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 6(1), pages 1-12, January.

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