Microfinance Focus, August 3, 2011: According to a publication ‘Public Private Partnerships in Microinsurance’, released by The Microinsurance Network, insurance companies should be prepared to invest in insurance awareness raising of their potential customers and in strengthening the microinsurance capacity of delivery channels for a successful public private partnership (PPP).

Listing out some of important factors that are vital for the success of PPP in microinsurance, the paper says that involvement of top management is needed for innovation and structured dialog between management and implementing units will result in efficient and effective delivery.

The paper’s findings show that not all available products in the market respond to demand or represent good value for customers. Furthermore, several needs still have to be met. For example, coverage for maternity, HIV/AIDS, pre- and post-hospitalisation and pharmaceutical costs is rare. There is a need for innovative products covering catastrophic risks at all levels and for index microinsurance to be a part of a larger risk transfer such as natural catastrophic (NatCat) insurance at national level.

Grievances mechanisms and other forms of consumer protection mechanisms are not yet in place for microinsurance-specific products and processes. PPP can play a role in establishing such systems.

The paper reports that the number of public-private partnerships is on the increase. However, the scope for enhancing the partner spectrum is considerable. At the moment, most PPP consist of a limited number of actors such as private insurers, brokers, TPAs, health care providers, government and donor agencies. It is therefore important to adopt a wider approach that focuses on additional ‘untypical’ partners and environments.

Only a few lessons learnt are available within the PPP framework. There is therefore a significant need for experiences to be documented and shared in order to increase effectiveness and efficiency of PPP. In addition to this, the sharing of knowledge would motivate public and private parties to embark on more innovative PPP in microinsurance.

PPP that strive for complex changes along the value chain need local and international multi-stakeholder support. In addition, it must be remembered that microinsurance is only one of many instruments for managing risk. Successful PPP, that aims to offer insurance to low-income people, must focus on a systemic approach from inception and include all these elements in order to establish strategies and policies that focus primarily on the needs of the clients.

The paper was stimulated by a discussion in June 2010, especially targeted at institutions that may be considering a PPP arrangement with a new actor in microinsurance. The discussion took place within the Microinsurance Network in June 2010, and was followed by an online Microinsurance Debate on Public-Private Partnership, which took place from 28 February to 2 March 2011.