Microinsurance potential market between 1.5 and 3 billion policies: Lloyd’s report

Microfinance Focus , Nov. 22, 2009 : Microinsurance, insurance for low income individuals, can play an important role in helping communities in developing countries mitigate and adapt to climate change, and to provide the security needed to develop long term sustainability projects, according to a report published by Lloyd’s, one of the world’s largest specialist insurance.

In a new report produced by Lloyd’s 360 Risk Insight and the Microinsurance Centre, Insurance in developing countries: exploring microinsurance and other commercial opportunities, the size of the potential market is estimated to be between 1.5 and 3 billion policies, with significant demand for a range of products, including health, life, agricultural and property insurance. Over 135 million people are currently covered with microinsurance which around 5 % of the potential market. Annual growth rates are currently over 10%.

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.”

Further he said, “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 demand for microinsurance is set to rise on the back of the global recession, with 50-90 million people predicted to be plunged back in to poverty over 2009. While recessionary pressures will influence the amount seeking microinsurance, the policies and business itself will be further shaped by numerous variables, including: economic growth; urbanisation; financial sector development; climate change; and information technology.

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