Background Catastrophic life events in the form of illness, accident, job loss, failed harvest or death may have increased impact for the poor, as they often don’t have enough savings to absorb the shock or access to cheaper source of credit following the disaster. Each peril turns into a financial disaster that leads them deeper into poverty. Greater risk management systems are needed to support low-income people, to help them avoid increased financial strain. Insurance is one of possible solutions. Many factors inhibit the poor from accessing or using insurance, including:
inadequate or poorly designed products,
poor service delivery standards (i.e., claims documentation and settlement),
difficult regulatory and operating environments for providers (i.e., dealing with non-traditional service delivery and distribution channels),
inadequate information leading to conservative pricing of risk or high initial premiums,
poor perception of risk, primarily due to lack of awareness or financial illiteracy
Improving risk management and developing better tools for spreading risks among the poorest will be critical to alleviating poverty in Indonesia. Over the last couple of years insurers have been active in the microinsurance space. New products such as life and disability insurance (i.e., beyond the traditional credit life insurance), life insurance bundled with savings (i.e., endowment products) for financing education needs of children, insurance against flood risks (i.e., flood index insurance) and the Government sponsored health insurance, Jamkesmas, have opened new vistas for insurers in general and the poor in particular to actively manage their risks. In spite of the spurt there seems to be a huge demand – supply gap in terms of access to insurance for the poor. It is estimated that not more than 1.5 – 2.0 million out-of more than 34 million poor people living below the poverty line in Indonesia (approx. 1.7 US$/day/capita PPP) have access to insurance (excluding Jamkesmas). In order to unlock the potential of this market and expand access, innovation and creativity needs to be unleashed. New and unconventional partnerships (refer Annex) need to be forged. It is in this spirit that the World Bank in partnership with Insurance Council of Indonesia is launching the 1st Microinsurance Development Market Place.
Purpose and Objectives Over the past few years, insurance companies and private entrepreneurs have translated new ideas, approaches, practices, methods and technology into tangible impacts in the area of microinsurance, introducing new products, improving the delivery of insurance services – health, education, natural disaster and social security both within and outside Indonesia. The main problem is that these innovations have largely been localized, are not known, and are unable to be scaled up often for lack of resources and exposure to what’s happening elsewhere. The objectives of the proposed market place are:
To provide an opportunity to showcase innovations in microinsurance across various aspects (including. new products, innovations in distribution and service delivery, use of technology incl. cell phones) and emerge as a platform for bringing together the innovators and the agencies interested in innovations. Thus the event will lead to the creation of Partnerships.
To identify & recognize grassroots level innovations.
Overall to create an enabling environment for new approaches to be tried out in the area of microinsurance particularly in the challenging socio economic contexts.
Agenda:
Wednesday, 26 October 2011 The first day of the marketplace will consist of a series of plenary sessions that discuss several major areas or sub themes. It will begin with an introduction to microinsurance at the 1st preliminary session. It will then followed with second session on Microinsurance Product Development, Demand and Supply-Side Issues, this session will deal with a critical prerequisite to the success of microinsurance – microinsurance product development – to ensure that appropriate products get delivered to the market in an effective manner. The 3rd plenary session will be about Distribution and Claims Management of Microinsurance Products; the session will provide insights into issues and challenges in distribution and claims management and administration of insurance to low income households and the unorganized, this session will also explore alternative distribution channels and innovations in claims management techniques and will highlight successful international experience. The last plenary session will be about The Regulation of Micro Insurance – Emerging issues based on international experience, this session will gather perspectives from the market and from regulators on the appropriate enabling environment for development of the microinsurance business.
Thursday, 27 October 2011 The second day of the marketplace will be occupied with a conference on innovative ideas in microinsurance in parallel with exhibitions of the Existing practices in international market (from 10 companies/organizations) and innovative ideas (by 10 finalists).
