rising to the challenge of global development initiatives 4 nov 2013 · 2018-07-22 · rising to...
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RISING TO THE CHALLENGE OF GLOBAL DEVELOPMENT
INITIATIVES: CASE STUDY OF WEATHER INDEX PILOT IN
MOZAMBIQUE
MICROINSURANCE INNOVATION SEMINAR, Lusaka, 4 Nov. 2013
Presentation by Israel Muchena Technical Director – Hollard Mozambique
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CONTENTS • Background info • Why explore microinsurance • Mozambique Case Study • Guiding principles • Enabling regulatory framework • Key observations • Next steps
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KEY INDICATORS Size of Population: 24.09 m
GDP Growth: +/-7.5%
Life Insurance: $22.7 m General Insurance: $126 m. Penetration: Less than 1%
Bankable population: 12% of
population (2009) Population below the poverty line:
52% Mobile phone users: 7.85m (2011)
MOZAMBIQUE
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WHY EXPLORE MICRO-INSURANCE? • “Market failure” of traditional models
• Low penetration • Lack of economies of scale • Low efficiencies & high transactional costs • Saturation • Spread of risk?
• Global financial inclusion mega-trend • Millennium Development Goals & national
initiatives
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BACKGROUND TO INCLUSION EMERGING TRENDS: 1. Smarter use of appropriate technology 2. Improved product offering (demand-
driven) 3. Increased emphasis on the role of
entrepreneurship 4. Support from a broader range of partners
(Development Agencies & Micro-Lenders) 5. Enhanced regulatory framework
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MOZAMBIQUE CASE STUDY • Typical micro-insurance product
• Credit Life • Funeral
• New initiatives in Weather Index • 1st generation – weather stations – lack
of infrastructure & data • 2nd generation – exploration of new
technologies
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5 CRITICAL PROCESSES
! ITEM! DESCRIPTION! NOTES!1" The"right"
solutions"Continuous"Macro3risk"inquiry"
Basis"for"development"of"holistic"solutions"
2" Committed"partners"
Who"shares"common"goals"with"us"&"is"already"engaged"with"positive"relationships"&"infrastructure?"
In"order"to"ensure"Value"Addition"(not"Subtraction)"in"(Placement)"Distribution,"Collection,"Reporting,"Monitoring,"Verification"&"Settlement""
3" Appropriate"Technology"&"(Service)"Distribution"
Global"Positioning"System" How"do"we"locate"covered"people?"
Remote"sensing" How"do"we"effectively"monitor"covered"perils?"
Index"/"Crop"Science" When/where"is"there"a"loss"&"how"much"should"be"settled?"
4" Sustainability" The"business3case"for"the"initiative"
What"do"all"the"partners"gain"from"this?"
5" Enabling"environment"
Regulatory"framework"and"Best"Practices"
Are"we"doing"the"right"things?"
"
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FRAMEWORK FOR RISK INQUIRY
Risk Identification
Risk Evaluation
Risk Control
Financial
Retention Transfer
Physical
Elimination Minimisation
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NEW TECHNOLOGIES EXPLORED • Geographic Information Systems
• Global Positioning Systems • Remote Sensing
• NOAA Climate Prediction Centre via GeoWRSI
• MODIS Satellite via NASA
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2012/13 WEATHER INDEX PILOT
CROP% COTTON%INDEX% MAIZE%INDEX%Index% • Deficit%Rain%
• Excess%Rain%• Low%Temperatures%
• Deficit%Rain%• Excess%Rain%
Insurers% EMOSE/HOLLARD% HOLLARD%Aggregators% IAM/SANAM/OLAM% AgDevCo/DFiD%Covered%Zones% Nampula%Province% Manica%Province%%
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GUIDING PRINCIPLES ! Value for money - we always aim to lower acquisition costs ! Genuine need, correctly targeted ! Low Premium: It is essential that premiums be available in units that
are as small as possible. ! Simple: All policy and sales documentation should be in simple
language and product benefits should be designed to be explainable in simple terms.
! Upgradeable: The insurance needs of the individual change and increase as that person progresses.
! Embedded, where possible: The relatively low awareness of insurance needs can be overcome by attaching a meaningful insurance products to other products that are better understood by the consumer
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ENABLING REGULATORY FRAMEWORK • Full support of the insurance regulator – ISSM • Specific treatment of microinsurance in
Insurance Law (Decreto-Lei nº. 1/2010 de 31 de Dezembro)
• Provision for alternative distribution partners • Distinct capital requirements • Substantial reduction of premium taxes • Emergence of elements of consumer
protection • Support in clearance of new products
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KEY OBSERVATIONS • Our WII initiative has major potential to
cover all 5 key elements of “inclusion” • Huge interest in target markets • Key challenge of premium financing • Crisis of expectation relative to scope of
cover • Basis risk • Building trust
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KEY OBSERVATIONS • Limited underwriting capacity:
• Cotton: 100% reinsurance • Maize: 100% retention
• Claims experience from pilot • Cotton: more than170% • Maize: 0%
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NEXT STEPS • More awareness/education initiatives • Extension to other crops? • Macro-risk inquiry process • Expansion of cotton project
• 2012/13 - 43,000 farmers • 2013/14 – 64,500 farmers • 2014/15 – 129,000 farmers