Seguros y pensiones para todos

Microinsurance: maximizing opportunities

Microinsurance: maximizing opportunities

Home > Blog > Microinsurance: maximizing opportunities

03.Sep.2020

Microinsurance came about as a result of the popularity of microcredits: inclusive, affordable, sustainable and responsible.

It all happened 46 years ago. Muhammad Yunus was a young professor teaching economics at Chittagong University in Bangladesh. And as he himself relates, he began to hate himself. “I used to teach these elegant economic theories, while people were starving in the streets. We teachers were all so smart, but we knew absolutely nothing about the poverty that surrounded us”.

$27 to change the world

Yunus left the campus and met with the inhabitants of the village of Jobra, an exceptionally poor settlement near the university. He made a note of its needs and concluded that its 42 residents could get by on $27. First, he thought about just giving them the money from his own pocket. Later, he had a better idea: microcredits. The rest is history: this revolutionary system has lifted millions of people around the world out of destitution and earned him the Nobel Peace Prize in 2006.

Vulnerability and risk

The philosophy of microinsurance was born as a result of the popularization of microcredits. The risk exposure of people with limited resources is enormous: an illness, a death, an accident, etc. can exacerbate your poverty level in an extreme way. When there are no protection mechanisms, these people turn to friends, moneylenders, sell their goods, their work equipment… and this makes it even more difficult to get out of poverty.

Beyond commercial insurance

In general, microinsurance targets population and organizational segments that are not served by traditional social security and commercial insurance schemes. They are characterized by their low premiums, low coverage limits and specific distribution systems. What does this type of insurance cover? The main coverage is for accidents, medical emergencies or death, but they have started to cover a greater range of unforeseen events: funeral expenses, the settelment of loans, or help for specific diseases, such as cancer.

Terms and conditions

As an inclusive product, microinsurance must meet a number of conditions: it must be affordable. In other words, it must have a price that allows it to be bought; sustainable, since it needs to be offered on a regular basis; suitable, so it matches the needs of the population at which it is directed; and, finally, responsible, since it has to ensure an appropriate price/value ratio according to the conditions of the population at which it are directed. Ultimately, microinsurance has to understand the needs of these users and provide them with the protection they need according to their circumstances.

You may also like…

Roadside assistance: the insurance that gets you out of trouble

Roadside assistance: the insurance that gets you out of trouble

What roadside assistance insurance offers, as its name suggests, is help and a whole series of solutions when your vehicle is immobilized due to a mechanical breakdown or mishap: transfers in tow trucks, cabs, ambulances, etc. Roadside assistance is, therefore, the...

The ICT talent revolution in the insurance sector

The ICT talent revolution in the insurance sector

This new way of understanding insurance company management uses technology to create new products and personalized services for its customers and relies on innovations such as big data, blockchain, artificial intelligence, cloud computing, machine learning and the...

Your pets, even more secure

Your pets, even more secure

The aim of this regulation is to establish obligations to protect animals, care for them in decent living conditions, guarantee their rights, promote their healthy development, prevent their ownership from causing danger to others, train them with non-violent methods,...

What is your investor profile? We will help you find out

What is your investor profile? We will help you find out

The Spanish National Securities Market Commission (CNMV) defines your investor profile as the relationship between the risks you are willing to take and the returns you expect to earn. In other words, how much you are willing to risk, or not, for the possibility of...

The 7 stages of financial freedom. Which one are you in?

The 7 stages of financial freedom. Which one are you in?

Dividing that journey into stages will help you gain perspective on where you are and how stable your personal finances are. It will also help you see your progress much more clearly and keep your motivation high. There is no one single way to divide up these stages...