Microreinsurance Applications: Filling Supply and Demand Gaps

Discussing the scope of reinsurance in the microinsurance market
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This paper makes an attempt to bring the microinsurance market and the reinsurance market closer together. It explains what reinsurance is, why it is relevant to microinsurance, and how it is being used in microinsurance today. It also tries to identify the gaps between microreinsurance supply and demand, with the primary goal of devising strategies for the development of further reinsurance activities that can support microinsurance market growth and sustainability. The paper covers the following sections in detail:

  • Introduction to the insurance and resinsurance markets with a focus on the various challenges and imperfections in both markets and the difference between microreinsurance and traditional reinsurance;
  • Microreinsurance value chain with a focus on reinsurers, intermediaries, donors, and delivery channels;
  • Forms of microreinsurance with a focus on non-proportional/excess of loss reinsurance, pro rata reinsurance, and index based reinsurance;
  • Core functions of microreinsurance with a focus on capacity, surplus relief, results stabilization, catastrophe protection, market entrance or exit, and expertise;
  • Microreinsurance demand and supply with a focus on the reasons behind the gap between the two;
  • Potential of the global microreinsurance market.

About this Publication

By Bernhardt, A.