Insurers May be Able to Tap New Growth by Selling to World’s Poorest

Aug 2009
Zambia, August, 26 2009 - Insurers worldwide may be able to tap new growth opportunities by selling coverage to the world’s poorest people, consulting firm Arthur D. Little Inc. said.

Four billion people worldwide, who have to get along with less than 2 a day, are especially exposed to risks such as accidents, illness or natural disasters and may buy so-called microinsurance, which is characterized by low premiums and reduced coverage, Cambridge, Massachusetts-based Arthur D. Little said in an e-mailed statement today.

Insurers, including Zurich Financial Services AG, Allianz SE and Munich Re, are among firms running insurance operations in developing nations. They offer flood protection in Indonesia, life insurance and endowment insurance in India and disability coverage in rural China. The Microinsurance Center, a research and advocacy group, in 2007 estimated a global market of 1 billion low-income people in the 100 poorest countries. Munich- based Allianz put the number at 2 billion worldwide.

Microinsurance supporters see the profitable sale of policies with premiums of as little as 5 cents a month as an extension of the microcredit movement, which makes small loans to the poor to allow them to start businesses. Microcredit gained prominence when one advocate, Muhammad Yunus, won the Nobel Peace Prize in 2006 for his role in founding the Grameen Bank in Dhaka, Bangladesh.

Source : Business Day

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