Definition of Microinsurance – Two main parameters form the basis of definition for this survey. First parameter is that microinsurance products should be specially designed keeping in mind the needs of low income clients. As it is hard to assess income levels, we would like to encourage you to report on all of your insurance products (life, accident, health, property, and agriculture) that are specifically designed and provided to people you consider have low incomes.
As a point of reference, we have used a second parameter for defining microinsurance. If the annualized premium of any of the following products you offer – Life, Health and Property is below 2%, 4% and 1% of the PPP (Purchasing Price Parity) GNI $ per capita then it could be termed as microinsurance.
So the two parameters that should be fulfilled are -- products should be specifically designed for low income clients and the premium for the product should meet the above criteria.
Please do note that we are NOT covering social security schemes in this database. BUT, insurance programs where the government pays premium on behalf of the poor or indigent population could be included provided the risk is completely managed by insurance companies like any other insurance product. The premium support by the government could be FULL or PARTIAL subsidy. The data from such programs will be reflected separately in the reports.
GLOSSARY OF TERMS
Balance Date – It is the last date of the accounting year (balance sheet date) for the insurance business
Composite Microinsurance Product – A product that combines the coverage of two products Example – Combining the benefits of both life and health benefits and offered as a single product
Covered lives = Number of individuals covered by the policy
Direct Distribution Costs – Please include the cost of commissions alone.
Gross Claims Incurred -- Cash claims + change in reserves = cash claims + changes in Incurred but Not Reported Reserve (IBNR) + change in Claims In Course of Settlement (CICS)
Please note that a change can be positive or negative. Examples: 1) If the claims paid are 1,000 and the total net Change in Claims Reserves is 150. Then the Incurred Claims are 1,150 (1,000 + 150 = 1,150). 2) If the Claims Paid are 1,000 and the net Change in Claims reserves is -75. Then the Incurred Claims are 925 (1,000 - 75 = 925).
Gross Premium (GP) -- if you are a commercial insurer then GP means the total premiums received for policies issued during the year. It includes both fresh policies issued during the year and renewals.
If you are a co-operative, mutual or community based organization then, GP means the total insurance contributions received from your members during the year. It includes both new member contributions and existing members who contributed this year. Also, please include the category of members who have paid fees to be part of the plan.
Net Earned Premium – premium remaining after ceding to re-insurers and after subtracting the reserve for unearned premium for the year
Informal Insurance Provider – A provider who is not licensed and registered to operate insurance business under company law or any other law in that country
Premium = Gross Premium earned during the year on the particular product by delivery channel
(Question on distribution channels)
Number of Active Policies – It is the total number of policies in force at the end of the financial year. It can be calculated in two ways -- (i) Number of new policies issued + Number of renewals (ii) Number of active policies in previous year + Number of new policies issued in the current year - Number of policies expired in the current year
Number of Covered Lives on Balance Date – There might be a single microinsurance policy issued but more than 5 people in a family are covered under that single policy. So please count all the 5 people.
If the microinsurance policy is distributed through a partner agent model then, please count all the lives covered under a single policy. Example – A microinsurance product is distributed by a Microfinance Institution or a Retailer or a Utility Company. In all these cases, there might be only one policy or a group of policies issued by the underwriting company to the agent but all the clients of the agent could be covered under that single or group policy. So please count all the lives covered.
Number of Policies Expired during the period – Please count all the policies that have not been renewed during the year. So policies expired = Number of active policies at the end of previous year – Number of policies renewed during the current year
Number of Policies Renewed during the year -- Number of active policies at the end of year – Number of new policies issued during the year
Volume = Number of Insurance Policies Written (many are likely to be to groups)
Un-Tied Agents – Agents who are not dedicated to a single insurance company are Un-Tied agents. As they can operate independently and sell products of more than one insurance company or provider