What is microinsurance? Microinsurance is a modern type of insurance for protecting low-income population's property like their crops & livestock - in emerging markets and developing countries.
What Is Microinsurance?
One of the most interesting types of modern insurance out there is microinsurance. So what is microinsurance? Microinsurance refers to ensuring low-income people against very specific types of problems. This is an exchange for premiums that are proportionate to the risk cost and the likelihood of it happening. This means that microinsurance works exactly the same way as other types of insurance, but it is targeted specifically towards low income people who otherwise may not be able to get insurance. This type of insurance targets the section of the population that mainstream insurance does not usually even address.
Types of Microinsurance
Microinsurance can refer to just about any problem that could arise out there. For example, someone may need life insurance to protect themselves against the breadwinner of the family suddenly dying or coming injured so they can no longer earn money. It can also be used to protect business owners against risks that are common in their industry. For example, farmers can be protected against having a bad crop. What is microinsurance? There are great many possibilities when it comes to the type of microinsurance that can be written for an individual with a lower income.
Microinsurance may be offered for a significantly large list of risks. Health risks are part of common microinsurance plans, including illness injury and death, as our property damage and loss. Crop insurance, livestock insurance, fire insurance, health insurance, theft insurance, life and death insurance as well as disability and insurance that protects against natural disasters can all be found within microinsurance.
Microinsurance has made a huge impact in many countries where people live on less than four dollars a day. Of course there are still problems that exist in some countries, but microinsurance continues to progress and in a certainly a helpful tool in those countries for low income people making less than four dollars a day when it works.
Those who study microinsurance have concluded that the biggest challenge facing this industry is how the insurance is delivered to clients. The models of delivery will vary based upon the insurance organization or provider, and if policies are not carefully created and monitored by third-party sources, then microinsurance may do more harm than the good it can do. Here are some models of microinsurance that are currently on the market.
One model is the partner agent model. This is where a partnership is formed between a microinsurance scheme and an agent at an insurance company. In some cases, especially when dealing with health insurance, a healthcare provider will also be involved. The microinsurance party is responsible for delivering products to the clients as well as marketing them, while the agent designs and develops the insurance plan.
Another is the full-service model, where the microinsurance party is in charge of everything from the design of the insurance plan to marketing and delivering the product to the clients. They also work with the healthcare providers and health insurance programs.
The provider driven model is a microinsurance program that is run by the healthcare provider. It is similar to the full-service model but all of the operations including the delivery of the insurance products, the design of the insurance scheme and everything else is all done by the healthcare provider. Both this type of delivery model and the full-service model offer a great deal more control, but there are limitations when it comes to products and services.
Finally, there is the mutual model. With this model, it is the policyholders that are in charge of managing insurance operations in working with healthcare providers to offer services.
The Future of Microinsurance
There is no doubt that microinsurance is one of the most exciting and interesting aspects of the modern insurance industry. Customers and businesses both are trying to find solutions to their problems, especially when it comes to insurance, and microinsurance gives them the ability to choose exactly the right features that offer the protection that they need for the shortest amount of time.
What Is Microinsurance? - The Bottom Line
We hope this article on what is microinsurance? has been informative. There are number of startups that are getting into the microinsurance industry and it will be interesting to see where things go over the next few decades because everyone can agree that current insurance plans rarely work for those targeted by microinsurance.