See photos below.
The 2 day ICIMIF workshop precedes the conference and took place at the Blue Pearl Hotel. It was interesting. There are about 40 people there representing about 15 different countries. I was the only American, and only four were from North America. Although the sessions were all in English there were only two of us with English as a first language. I think this an advantage but then I guess that means they all know English well enough to participate in a 2 day workshop in English. I'm not sure I could pull that off in French, the only other language I know. It was interesting that during lunch everyone wanted to talk about the American elections. They quizzed me on why we have electoral college and states vote in blocks rather than by popular vote. Hmmm. After I recovered from the idea that not only did they know about our election and who was running, but they knew how voting occurred, I answered in about the best way I could, "That's just the way we do it." I may have been able to put together a more learned answer, but that's really probably the closest to the truth.
Workshop was well-facilitated and had a nice mix of the "usual suspects' at microinsurance conference and a lot of new faces from Kenya and Tanzania. It was nice catching up with some of old friends during lunch and I especially enjoyed the discussions and computer simulation with African MFI and microinsurance leaders. The purpose of the workshop was to help address the dual issue of providing a proper insurance product for the poor while maintaining sustainability (profitability) of the insurer.
Here are some insights from the day.
Some challenges identified include
1. Length of time to become sustainable. Usually 3 years for many products (life insurance might be quicker and health insurance longer)
2. Connecting the needs of the microinsured policyholder with the operations of the microinsurer. Policies are often "off the shelf" and incomprehensible by microinsureds, and may not cover their needs. Micro Insurers live in different worlds than the people that purchase their products. Need better understanding.
3. There are already informal ways of managing and pooling risks. These are understood by the poor. Insurance needs to find ways to link to these informal mechanisms.
4. There is a need for training microinsurance staff but challenge is in reaching them. Online offers some possibility but the design must reflect the technology available. Internet connections exist but can be unreliable. (For example we lost internet connection on the workshop several times. And this was in a nice hotel. Internet connections in even less technologically advanced areas is even for inconsistent.
The second half of the day focused on key performance indicators (KPIs) for microinsurers and this was followed by a computer simulation. KPI's include the following categories:
Product Value
Expense ratio- <25 br="br">
Claims ratio- >65%)
NI ratio - around 10 percent (at least that holds true for a mutual)
Customer Satisfaction
Retention rate > 85%
Coverage ratio need to have at least 25% of market for products like health insurance or else you get adverse selection
Growth rate
Service Quality
Claims -Days to Settle
Claim rejection ratio-
Financial Prudence
Solvency ratio (assets/liability
Liquidity (cash over ST liabilities
They didn't mention it but I would have included premium earned to surplus ratio of less than 3 to 1.
Companies can get in trouble by growing to quickly and if they are highly levered their mispricing can lead to insolvency (So IMHO I'd add that).
Looking forward to tomorrow.
Jim
