The lowest income individuals throughout the world are in need of insurance programs the developed world has long embraced, says the report. The coverage needs involve illness, death, natural disaster, livestock disease, accident and property loss.

While there is a strong need, it does not mean that there is a growing demand for insurance products, the report adds. Many societies still choose alternative risk management tools such as informal risk-sharing agreements, conservatism, savings, borrowing—usually at exorbitant rates—or forfeiting education in exchange for labor.

Today, the dominate use of microinsurance is for death and accident coverage.

Because of the low income level of many individuals in under-developed nations, insurance cannot be afforded without the help of some subsidy either from the government or a non-government entity. However, for there to be long-term sustainability the insurance industry must “survive without such direct assistance,” A.M. Best says.

This means reducing costs by partnering, for example, with service providers that deal in “high-volume, easily accessible products” such as cell phone companies or grocery stores, to sell insurance products.

Sales can also be done by community members as the traditional door-to-door salesman once did in the United States.

To reduce claims administration costs, Best suggests such things as health insurance plans omitting screening for pre-existing conditions by making payout simple but limited. Another example, property coverage can be paid when a particular event reaches a certain threshold, such as earthquake magnitude, regardless of the damage.

Some carriers have gone into the microinsurance and done well, while others “have managed to be profitable in this space” through the use of business models that “diversify risks, increase brand awareness and enter a market at its most nascent stages,” notes Best.

The combination of technology advances and innovative corporate and partnership structures will allow insurers to penetrate deeper into the developing world market at the “lower echelons of the income pyramids across the globe.”