Do life microinsurance schemes with low claims ratios offer value?
Do life microinsurance schemes with low claims ratios offer value?
5 November, 2014 •Microinsurance is seen as a mechanism through which low-income consumers can manage their risks, reduce their vulnerability and improve their welfare. The guaranteed benefit provided by insurance also allows for the development of critical services, which may otherwise not have been available to the community. While extending coverage by insurance products was the initial focus of microinsurance stakeholders, much emphasis is now being placed on ensuring that clients are aware of their cover and are able to use it in times of need.
This report from Bowman Consulting considers a method of measuring the value of life microinsurance with a view to answer the question of whether microinsurance products that have low claims ratios necessarily mean that their consumers are receiving poor value. It also considers whether there is a level of claims ratio below which consumers should not consider microinsurance as a viable risk-coping mechanism because the value it offers is too low.
