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…

Life insurance and the theory of decreasing responsibility

Life insurance and the theory of decreasing responsibility

In other words, these policies allow you to plan your finances and get the level of protection you need at any given moment. For this very reason, the question of when it is advisable to take out a life insurance policy goes hand in hand with specific phases of life,...

5 tools for saving money on your inheritance

5 tools for saving money on your inheritance

The big difference is that you know when you have to pay your taxes, but you don't know how much time you have to plan your inheritance. The solution? Do it as soon as possible so that nothing is left to chance. This is how you can really save your loved ones time and...

New ways of taking out insurance, same efficiency

New ways of taking out insurance, same efficiency

Digital channels play an especially important role in the early stages of the purchase decision. Currently, approximately 75% of consumers search online for information about car and health insurance and almost 60% look for home, life and savings insurance, according...

Alexa and OK Google help you with home insurance

Alexa and OK Google help you with home insurance

Adjusting lights, changing the temperature and activating alarms can be done without having to lift a finger: virtual assistants like Alexa and Google respond to our voice and can be used to control these functionalities, making them more direct, immediate and simple....

Passive or active investment, which is for you?

Passive or active investment, which is for you?

And what if that were not the only way to invest? Within the different strategies there are two basic options: active investing and passive investing. You are most likely to be familiar with the former and less familiar with the latter. Passive investing allows you to...