David Saunders caught up with Doubell Chamberlain, Cenfri’s managing director and soon to be chair of Board of the Microinsurance Network, to reflect on the 12th International Microinsurance Conference (IMC), his vision for the Network going forward. and where he believes microinsurance is headed.
Missed our session on “Is this microinsurance’s Uber moment?” hosted in partnership with FSD Africa and with panellists Tang Loaec, Founder of P2P InsurTech provider Tong JuBao, Kelvin Massingham, Regional Director, Hello Doctor (Sema Doc), Luc Noubissi, Senior Insurance Specialist, CIMA?
Yes, the first IMC I attended was in Cape Town in 2006 and since then I have only missed one, in Jakarta in 2012, so I have attended ten in total.
Firstly, the involvement and commitment of the organising institution, the Insurance Association of Sri Lanka. They really took ownership of the event and set the tone right from the start by arranging Sri Lanka’s Minister of Finance Ravi Karuanayaka, to deliver the keynote address, where he called for the industry to go beyond credit and support broader public policy objectives such as disaster risk, health and agriculture.
Secondly, and in line with what the Minister said, was the maturing and mainstreaming of the discussions. It is evident that the issues we are dealing with are no longer at the periphery of insurance market development. Rather, they are now at the core of broader public policy discussions.
I think we (the microinsurance community) have always had a seat at the insurance market development and broader public policy table, through platforms like the IAIS and G20, but we are now seeing a clearer alignment between the issues we are focused on and the issues being discussed on those platforms. The same can be said for the private sector. Despite finding ways to make microinsurance viable, most insurers do not yet consider it even in their top five business opportunities when compared to other, more lucrative opportunities. However, technology may finally be redefining this, either for existing insurers or for new entrants who are fundamentally changing the insurance game.
Climate change for one. Microinsurance has always been seen as a way to mitigate the impact of disasters for those in the lower-income bracket. But the launch of the InsuResilience Initiative in 2015 by the G7 – under the German presidency – aims to reach 400 million people by 2020, and gives a mandate for scale, coordination and sustainability like never before. This is likely to crowd in support from other donors and governments, as well as create interest from the private sector for disaster risk insurance that we have yet to see. For example, Blue Orchard, who attended and presented at the recent IMC, indicated they had already made provisions for a Climate Insurance Fund, with a target investment of USD 0.5 million to 5 million over five to seven years.
The lessons we’ve learned from experimenting in the climate risk protection space over the last decade – highlighted by people such as Ulrich Hess from GIZ and Arup Chatterjee from ADB – are critical inputs into these discussions.
Another example was the regulatory discussion, facilitated by the A2ii, which was based on the culmination of more than a decade of support to regulators in inclusive insurance markets, and shows that the issues being dealt with are now at the core of insurance market development. Some issues, such as mobile microinsurance, have moved to the core due to their scale in certain markets, but others, like actuarial capacity, have always been at the core of insurance market development and now the microinsurance discussion is “growing up” to meet it.
For example, in Ghana, the National Insurance Commission is in the process of implementing a new approach to building local actuarial capacity in the market through a tiered actuarial framework. Actuarial capacity is a major challenge in developing countries where insurance companies often have to outsource actuarial skills to higher-cost foreign experts due to the absence of local expertise. Allowing this type of innovation in the actuarial space would have raised all types of flags a decade ago.
Missing might be too strong, but we certainly need to raise the profile of some discussions. The first that comes to mind is growth. Cenfri has been working with FSDA to explore the role of insurance in capital market development and also its contribution to growth more broadly. Most developing countries suffer from underdeveloped capital markets which result in less financing for their growth-related activities. Understanding the role that insurance can play by intermediating premiums into capital is an important channel to explore for growth.
Other areas which we’ve not looked at, but are starting to get traction with some insurers, is the idea of insurers getting into the business of risk management rather than risk transfer, including investing in infrastructure that reduces risks. For example, investing in traffic lights and systems in developing countries to reduce the risk of car accidents for auto insurance, or advising cities on urban design and infrastructure to reduce risk. I think the timing for these types of conversations are right, and with support from people such as Thomas Loster and organisations such as the Munich Re Foundation, I think the time is right to push these new angles for next years’ IMC taking place in Peru.
It can be quite a struggle to entice people to attend the last session of a 3-day conference. So I dreamt up the most provocative title I could…
OK, so, much of the technology discussion in microinsurance has focused on mobile distribution. As I wrote in my blog before the conference, this isn’t yet making microinsurance any more attractive to insurers, and even MNOs are questioning its contribution to loyalty and increased spending in comparison to other more lucrative opportunities. And maybe, most importantly, it is unclear whether mobile microinsurance is making it (microinsurance) more attractive for consumers.
But I wanted to push the discussion beyond this to a new generation of technology trends that are enabling a paradigm shift in insurance that addresses these pain points for consumers and providers and gives potential to microinsurance. The P2P model, shared by Tang Loaec, was one example of how technology is enabling new ways of risk-sharing that could be of more value to consumers. Others, like the Sema-Doc model shared by Kelvin Massingham are using technology to shift from traditional risk cover to risk management where adults have access to a range of mechanisms to prevent and mitigate risk.
I think these are the real drivers of innovation that will be critical for us to explore in next year’s conference and we should be open to giving more space to technology firms and others outside of the traditional microinsurance space.
While I suspect that much of my optimism may dissipate over the coming years, there is a window of innovation, which if supported appropriately, may just change microinsurance the way Uber has changed transport.
Microinsurance, like any other development agenda, goes through ebbs and flows. In the last decade, there was a period of rapid innovation were new entrants and products targeted the low-income space. This was driven by pioneer regulators in countries such as the Philippines, South Africa, India, to name a few, as well as insurers and third-party intermediaries like MicroEnsure and BIMA.
However, there was much uncertainty around this innovation and it required coordination across multiple stakeholder groups. The Microinsurance Network played a critical role in helping the industry and regulators navigate it. I think we are now going through a new stage, with the changing landscape of the financial services, particularly the latest wave of Fintech and Insurtech, which will again require collaboration and coordination across market players, regulators and donors. As mentioned earlier, the risk debate is also evolving from inclusive insurance to the broader consideration of risk for development.
As before, the Network and its members will play a critical role in facilitating the coordination across stakeholders in exploring such new territory. I think there is much-shared value to be unlocked in this space and I look forward to working with the community to grow that value within the Network.