Microinsurance could be an opportunity for insurers in the recession
Microinsurance, which means insurance for low income individuals, could provide business opportunities for adventurous insurers in the downturn.
A new report claimed that microinsurance, as well as helping developing countries deal with climate change and build sustainable projects, can provide opportunity for commercial insurers too.
Launching the report, Lloyd’s Finance Director, Luke Savage, said: “Bringing insurance to three billion low income individuals is a real opportunity to reduce poverty and give individuals the ability to invest in sustainable projects without the fear of loss from natural catastrophes or other destructive forces.”
““But it is not a one way trade. There are benefits for commercial insurers too, which include larger and diversified risk pools, first mover advantage into new markets, market intelligence and innovations that can be applied to other business activities,” he said.”
The size of the potential microinsurance market is estimated to be between 1.5bn and 3bn policies worldwide, including health, life, agricultural and property insurance.
Over 135m people are currently covered with microinsurance which equates to around 5 % of the potential market, said Lloyd’s.
Further, the report claimed that the demand for microinsurance is set to rise on the back of the global recession, with 50-90m more people predicted to be plunged back into poverty over 2009.