Regional Workshop on Access to Insurance for the Poor
What is the role of the reinsurer?
Stefan Mosel
Rio de Janeiro, Brazil
May 2007
Relationship between reinsurance and
microinsurance
Reinsurance
Insurance for insurers
?
Microinsurance
Insurance for people with low incomes
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Traditional functions of reinsurance
Functions of reinsurance (summary)
Relevant for microinsurance
To limit annual fluctuations in claims
experience
To be protected in the event of disasters
(covariant risks)
Substitute for own capital (capacity)
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Earthquake in Armenia (Colombia) in 1999
Reinsurance is necessary for property
microinsurance and catastrophic risks
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Features of property microinsurance
Adapted pricing models are
needed that take account of
facilitates rapid
growth
the high vulnerability!
Highly
vulnerable
clientele
Reinsurance
Natural
catastrophes
Mass business
(surplus relief)
Assuming and
accumulation
diversifying
catastrophe risks is
one of the reinsurer’s
Importance
of training
Property
microinsurance
Informality
main tasks
But: the portfolio, or
rather the total premium
produced, is large where
thousands of people are
insured
Problem
of fraud
Premium per
policy is small
Simple,
intelligent
processes
The reinsurer will accept
microinsurance business only if it
knows and approves the processes
(IT, sales, underwriting, loss adjustment, etc.)
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Access to reinsurance for microinsurance
schemes – Principal requirement
Economic sustainability
 The clientele and their property are more vulnerable than in the case
of traditional insurance.
 In relation to the sum insured, the premiums for microinsurance are
higher than in the case of traditional insurance.
Example:
Traditional property insurance
Property microinsurance
 Sum insured : USD 100,000 / Deductible 2%
 Sum insured : USD 6,000 / Deductible 2%
 Commercial rate : 3 per mille
 Commercial rate : 9 per mille
 Annual premium : USD 300
 Annual premium : USD 54
 Monthly premium : USD 25
 Monthly premium : USD 4.5
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The
microentrepreneur
is only interested in
the premium in
absolute terms!
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Munich Re and microinsurance
Microinsurance of persons (Life) :
There is generally great uncertainty about the technical bases (mortality and morbidity) for this economic
sector.
Property microinsurance (Non-Life):
Property microinsurance is different from traditional products as regards both its structure and the sales and
loss adjustment processes. Given that the property of these clients is very vulnerable, the rating of this
business differs from traditional business.
With its worldwide microinsurance projects, Munich Re provides support with
product development, pricing, underwriting processes and, above all,
proportional capacity in order to facilitate rapid and profitable growth.
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Contact persons
Stefan Mosel
Head of Latin America South Department
[email protected]
Andreas Moser
Member of the Innovative Solutions Team
Latin America and the Caribbean
[email protected]
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