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Microinsurance in Evolutionary Stage in Developing Nations

The growth of microinsurance in developing countries is currently at the same point that insurance in developed nations was 100 years ago, one report suggestsand companies willing to enter into this unconventional business are already seeing some profit.

By Mark E. Ruquet | Updated on April 05, 2012

The growth of microinsurance in developing countries is currently at the same point that insurance in developed nations was 100 years ago, one report suggests—and companies willing to enter into this unconventional business are already seeing some profit.

A special report from A.M. Best Co., “The Potential of Microinsurance,” suggests insurance programs for the world’s lowest-income individuals have challenges ranging from adverse selection to lack of profitability, but insurers “increasingly are inclined to include microinsurance in their long-term strategies.”

The programs are similar to low-cost transactions, simple-risk coverage and low-net-worth clients that were once found in home-service or industry-life policies around the turn of the 20th century in the United States and United Kingdom, the ratings agency says.

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