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Insurance is a largely invisible yet ubiquitous part of our economies. Our health, movements, purchases, homes, and even lives are usually covered by insurance. Without insurance, the unpredictability of the future would be too great and it would be difficult to take risks and innovate. In other words, insurance typically allows people to break the psychological and financial barriers which normally prevent them from engaging in potentially riskier activities thus forgoing greater reward and innovation. Insurance has contributed to macroeconomic development through economic growth, stabilization, distribution, and innovation.

Index-based insurance is an innovative financial service that can help smallholder farmers manage some of the risks related to weather conditions. On one hand, the increasing availability of this financial service offers a big opportunity to both farmers and providers. On the other hand, the complexity of this risk management tool can lead to poorly-understood index insurance products that may do more harm than good. This Briefing Note has been produced as part of the Global Action Network to advance agriculture insurance, a partnership between the Facility, USAID and the BASIS Assets and Market Access Innovation Lab/I4 Index Insurance Innovation Initiative at the University of California Davis.

With 1.5 billion people worldwide getting access to financial services through a post office, postal networks are powerful tools to advance financial inclusion. Posts possess or can develop characteristics such as client understanding, product diversification, national outreach, rural advantage, and trust with clients that have the potential to transform postal networks into well-suited providers of insurance. Insurance is a relatively easy way for posts to diversify their sources of revenue.

Small businesses are vital to economic development. However, they are exposed to a wide range of risks, ranging from theft of assets to illness of a key worker or a natural disaster. Furthermore, they struggle more than larger businesses to cope with these risks. Insurance represents an important tool to help them better manage such risks.

“Can health microinsurance (HMI) schemes achieve sustainability?” As with many seemingly simple questions, there is no simple answer. The answer to this question is of interest to a variety of parties. Insurance providers seek to understand if there is a viable business case for offering an HMI product. Health-care providers and pharmaceutical companies are interested in whether or not HMI can be a means for broadening coverage. Donors and other funding organizations want to know if HMI is a viable investment as a means to improve health-care access, health outcomes and financial protection for the low-income population. Governments consider how to use HMI schemes as a step towards universal health coverage.

Briefing Note 35 presents results from a review of the financial performance of five schemes in India, Pakistan and Bangladesh.

The microinsurance sector has grown from 78 million policies in 2007 to 500 million in 2012 and the exponential growth is expected to continue, since the potential market is estimated at 3–4 billion policies. However, for every scheme that has succeeded, many more have struggled to reach scale, become viable or provide client value, and some have failed altogether. Many innovations have resulted from efforts to convert these near-misses to successes. Briefing note 36 draws on the experience of 12 such attempts to identify the most common challenges that caused severe problems. The challenges are organized in five clusters: Viability, Client Value, Operations, Partnerships and External.

Given their limited capacities to cope, low income people can experience major setbacks when hit by even seemingly small shocks and can experience serious losses of wealth and welfare when big shocks strike. And merely the spectre of shocks can lead to underinvestment that makes even a smooth climb out of poverty take much longer than it otherwise might. 

Briefing Note 34 presents highlights from an analysis of risk within the Kenyan Financial Diaries, considering how 300 low-income people think about, experience and prepare for risks in their lives.

Insurance is an effective mechanism to complement or extend social protection schemes. By using insurance mechanisms and the insurance industry, governments can achieve various public policy objectives, such as improved food security and universal health coverage. Effective public-private partnerships (PPPs) can achieve scale and improve the quality of social protection programmes by leveraging the skills and resources of the partners. This brief presents ten recommendations that governments and insurers should follow when designing and implementing a PPP in insurance.

Most providers of health microinsurance (HMI) can do more to understand the illness and claims patterns of insured clients. The objective of this study is to demonstrate that analysing claims data equips HMI practitioners with valuable insights to improve the client value and viability of HMI programmes. This brief summarizes a study that performs a comparative analysis of three South Asian HMI programmes – run by VimoSEWA, Uplift Mutuals and Naya Jeevan. These providers share a common geographic region and offer broadly similar insurance for hospitalization services to low-income households.

Across the world, insurers have shifted away from traditional agents and brokers to partner with various alternative distribution channels – ranging from churches, trade unions and mobile network operators to banks, retailers and even civil service organizations - as a way of reaching critical mass at low cost. This brief examines two of these channels – banking and retail correspondents – studying four examples in four countries.