Making Insurance Work for Microinsurance Institutions

This how-to manual guides managers of microfinance institutions (MFIs) through the complexities of offering basic insurance products, either on their own or in partnership with an insurance company. Insurance is one solution to help low-income households and microfinance institutions to manage risks, but it is not the only solution and it is not always the best solution. Written for senior managers and directors of MFIs that offer insurance or are planning to do so, this manual helps readers to determine whether it is appropriate to offer insurance, which type of insurance product(s) to offer, and through what institutional structure.

This bulk of this manual is dedicated to four aspects:

  1. The fundamentals of the insurance business, including benefit design, insurance terms, pricing and controls;
  2. The design of five basic, short-term, credit-linked insurance policies, both mandatory and voluntary;
  3. Outsourcing part or most of the insurance responsibilities to a formal insurance company or to skilled consultants;
  4. The financial management and operational integration of an insurance business into a microfinance institution.

While low-income households have many needs and vulnerabilities, the contents of this manual are limited to basic life and disability products because they respond to an important need while being less difficult for MFIs to offer. The insurance business is highly complex and carries significant risk, thus basic life insurance is a good starting point for an MFI.

This manual is also relevant, however, to organisations that want to offer other types of insurance, such as health or property, because it provides a strong introduction to insurance fundamentals and offers valuable advice on how to design, negotiate and manage a relationship with an insurance partner. While it may be possible for an MFI to offer basic insurance on its own, or with some technical support from insurance experts, more complex products should be offered in partnership with an insurer.

Related Resources