OpenQuote for Microinsurance
We have been attracting a lot of interest from the Microinsurance market; the reasons for this include the simplicity and speed of insurance product development within OpenQuote, and the benefits Open Source offers with no associated licensing, distribution or transaction costs.
This interest has driven us to start investigating how we can best help serve the market, so we are now working with experts in the field to design and develop an Open Source Microinsurance solution based around OpenQuote.
What is Microinsurance
Microinsurance is an extremely exciting, relatively new development in the insurance industry. It is a form of insurance designed to protect those around the world on very low incomes from the risks they face in life which can, and often does, lead to a fall into poverty from which they cannot recover.
Due to the nature of the Microinsurance market, any solution needs to be cheap, flexible and requires new, innovative ways of thinking when it comes to distribution.
A major consideration for low income households is that premiums must be kept to an absolute minimum, a few cents a day for life insurance is not uncommon. Small premiums are achievable by keeping the insurance products and processes as simple as possible, whilst maximising distribution.
The communities to whom Microinsurance is targeted have no access to mainstream insurance services, so they have no previous experience of the benefits that insurance can provide. This also means they have never had the opportunity to develop any form of relationship or trust with insurance companies and so a process of education is required. Demonstrating the benefits takes time, so working with individuals and organisations already trusted by these communities can provide a good platform to encourage policy take up.
The World Health Organization (WHO) says 3.2% of Indians will fall below the poverty line because of high medical bills, with about 70% of the population exposed to such a risk. (Source The Times of India)
To put that statistic into perspective, 3.2% translates to over 39 million people who will fall into poverty because of medical bills (equivalent to over half the UK total population), whilst 70% translates to nearly 850 million people for whom Microinsurance could provide security (well over double the US population). It is these people Microinsurance is designed protect.
The project is currently in the design phase, with options being reviewed for funding the development effort. As the project progresses, regular updates will be posted on both this, and the OpenQuote Community websites. If you feel could contribute to the project please don’t hesitate to contact us.
A final, but important note about Microinsurance, is that it is not about short term profiting from the sales of insurance policies, it is about helping communities and households create sustainable environments of financial security, where perhaps state help is not available or adequate. Undoubtedly there are profits to be made, but the scales and efficiencies required to achieve this will take time to accomplish. Any organisation entering the market should only do so with a long term view in mind.