Page 22 - Life Insurance Today June 2015 SAMPLE

responsible for all insurance-related costs and losses, license and assigning part of their capital to the
but they also retain all profits. Under this model MFIs licensee through a reinsurance treaty. The licensee is
has full control over the micro insurance. incharge of designing the product, setting the prices
as well as handling the losses and gains.
4. Provider-driven model:
Under this model, the service provider and insurer are Intermediaries of Micro Insurance:
the same. Similar to the full-service model, the insurer
is responsible for all operations, delivery, design, and Micro- insurance business is done through the following
service. intermediaries:
4 Non-Government Organisations
5. The "franchise" model
In this model, the professional insurer franchises their 4 Self-Help Groups

4 Micro-Finance Institutions

Differences Between Conventional Insurance and Microinsurance

Particulars Conventional Insurance Micro Insurance
Target Group Targeted at low-income persons.
Intermediates Targeted generally at wealthy or middle
Responsibilities of agent class clients in emerging markets. Often sold by licensed or unlicensed
intermediaries.
Insurance Amount Sold by licensed intermediaries. Agents manage entire customer
Premium Mode relationship, sometimes collect the
Pricing Method Agents and brokers are responsible for premium also.
sales and services. Direct sales are also Small sums insured.
Procedures and Controlling common. premium payments may be Frequent
or irregular
Policy terms and condition Large sums insured. Under Community or group policy pricing is
based on national data and estimates or
Claim Procedures Typically premium plans are regular comparisons to risk rated schemes
annual, quarterly, monthly Follow limited procedure to minimize costs

Premium amount is based on individual It is always contain Simple language, few to
risk rating like age and specific risk no exclusions and contains general terms
assessment appropriate to market
Claims process for small sums insured
Required Screening requirements like is simple.
"Know Your Customer", anti-money
laundering guidelines, medical
examination and other tests

It is a complex policy document. It
involves many exclusions and it usually
follows annual terms.

Claims process for large sums insured
may be quite difficult. It involves
Extensive verification of documentation

Conclusion and usually leads to deeper poverty. Micro-insurance
provides opportunities for protection of the poor and
India is enjoying rapid growth and benefits from a young their families against perils. The emerging opportunity of
population. But 70 percent of the population is still rural, micro-insurance is not only to promote business perspective
often very poor, and handicapped by poor health and health but also, social development and protection to the poor
services, and low literacy rates. Serious illness, accident and people.
natural disaster threatens the very existence of poor people

Our job is to bring the dead facts to life.

18 June 2015 Life Insurance Today

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