The Business Case for Microinsurance Intermediaries: Part II

This paper summarizes the lessons learned with respect to developing a business case for microinsurance intermediaries. It is based on interviews with key stakeholders of five microinsurance intermediaries: MicroEnsure, PlaNet Guarantee, AKAM microinsurance initiative, Aon Bolivia, and Star Microinsurance Services Ltd. The paper is a follow up of an earlier study conducted in January 2013, which concluded that in their early stage of development, multi-national microinsurance-only intermediaries were struggling to achieve financial sustainability. It analyzes the possible business cases relative to eight factors: program age, scale, business model, product type, distribution, enrollment mode, subsidy, and competition. Key findings include:

• Premiums are normally so small that making a business case by earning 10% to 15% commissions on tiny premiums is hugely leveraged to scale;
• Firms with a single country focus built on an existing commercial platform get to profitability more quickly;
• In order to become financially sustainable, microinsurance intermediaries need to diversify from providing a single type of insurance products to a diverse range of products;
• Clear cut successes tend to be at smaller scale with simple products, often built on a platform of government or donor subsidy or through the implicit support of a corporate parent.