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Developing a Business Case for a Microinsurance Intermediary in South Africa

Is South Africa ready for a microinsurance agency?
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This report presents the findings of the authors visit to South Africa in 2006 to develop a business case for a microinsurance intermediary in South Africa.The report makes the following introductory remarks:

  • FinMark Trust and Opportunity International met in 2005 and realized that they had significant common ground,
  • FinMark Trust agreed to fund Opportunity International to conduct a market survey and to develop a conceptual business plan for a microinsurance agency (MIA) in South Africa.

The market analysis that studied client needs, regulatory landscape, insurance suppliers and the method of distribution found that:

  • The low-income market in South Africa has many options for mitigating risks, especially in relation to death.
  • The competition in the South African market has led to competitive rates and significant interest in the low-income sector.
  • Although regulatory requirements are stringent, the process of developing an agency is not difficult and a (MIA) subsidiary could be easily established.
  • Potential customers and distributors include the:
    • Non-government organization (NGO)-microfinance sector,
    • The commercial microfinance sector,
    • Groups partnering with banks, the informal insurance sector, etc.

The report then explains in detail the proposal for the South African MIA. It discusses:

  • The potential entry strategy,
  • Required infrastructure and staffing,
  • Insurance company partner,
  • Funding,
  • Potential advantages and disadvantages,
  • Expansion strategy.

It ends with recommendations for the establishment of an MIA in South Africa.

About this Publication

By Leftley, R.
Published