Insurance cover in emerging markets is steadily increasing, but climate change and extreme weather events are exposing the poorest and most vulnerable to risk as never before, according to the 2018 State of Microinsurance report from the Microinsurance Network.
The report found encouraging signs of insurance uptake in some markets, with penetration rising by as much as 126% in Latin America and the Caribbean.
Similarly, the microinsurance sector in countries such as Zambia has expanded over the last decade from 100,000 to more than 2.2 million lives covered under various microinsurance products, including weather index insurance, personal accident, hospital cash plan, simple term-life cover and funeral insurance policies.
Inclusive insurance was also found to be playing a significant part in achieving the UN Sustainable Development Goals (SDGs) and is helping millions of consumers across emerging markets build resilience and manage risk.
However, global losses from natural catastrophes in 2017 were the highest ever at US $330 billion, of which $195 billion was uninsured, with around four billion people lacking access to financial services including insurance worldwide.
The report was launched during the 14th International Microinsurance Conference (14th IMC) and aimed to showcase global initiatives that are already helping to eliminate poverty and hunger, promote health, gender equality and economic growth, and take action on climate change.
“Insurance alone will not help the world’s poor to achieve lasting prosperity, but it is a critical factor for success,” said Shipango Muteto of conference co-hosts the Microinsurance Technical Advisory Group (TAG) and Chairman of the 14th IMC Organising Committee.
“Microinsurance companies are already providing innovative, affordable insurance products to economically vulnerable people around the world as part of the sustainable development agenda,” Muteto continued. “These products and services truly work for the consumers that use them by accelerating economic growth, increasing resilience and preventing the intergenerational transfer of poverty.”
Dirk Reinhard, Vice Chairman of the Munich Re Foundation, co-organiser of the conference, also commented: “Inclusive insurance is an essential part of sustainable economic development, and is crucial to manage increasing climate risks of many poor people who live in disaster-prone countries.”
“With just 12 years remaining to realise the UN Sustainable Development Goals and less than two years to meet the G7 target to insure 400 million people against the impacts of climate change, inclusive insurance will help ensure no-one is left behind. But we have to accelerate growth, ensure economic viability and increase governmental activities.”
The report noted that InsurTech may represent one opportunity to help accelerate and improve access to insurance in emerging markets, although this will require traditional insurance companies to take greater steps to integrate new technologies and distribution models.
“Bringing insurance companies, digital providers, regulators and policy-makers face-to-face to find solutions to boost resilience and reduce disaster risk is vital if we are to grow the inclusive insurance market quickly and significantly,” said Katharine Pulvermacher, Executive Director of the Microinsurance Network.
“The good news is that there’s been a significant increase in the last decade in the number of low-income people with insurance cover of some kind,” she added. “But for the market to work, insurers need a better understanding of the emerging consumer segment, so that they can design products and services that correspond more closely to customer needs, and that are priced to reflect risk more accurately while remaining affordable and sustainable from a business perspective.”
