10/11/2011
Partners: Allianz Group, UNDP and GTZ (now GIZ )
The Allianz Group (Allianz) is a leading global provider of insurance, banking and asset management, which believes that microinsurance in emerging economies represents a market of great potential growth and profitability. By working in partnership with local organisations, such as non-governmental organisations (NGOs), trade unions and microfinance institutions, Allianz is reaching out to clusters of villages across southern India, Indonesia, Egypt and soon, West Africa.
In 2006, the United Nations Development Program (UNDP) approached Allianz to work together on a market potential study to analyse the demand, acceptability and affordability of microinsurance products. This public-private partnership was strengthened when the German Agency for Technical Cooperation (GTZ) joined the project. Since 1 January 2011, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) has brought together under one roof the long-standing expertise of DED, GTZ and Inwent. The result was a three-country study covering the demand and market prospects of microinsurance in India, Indonesia and the Lao People's Democratic Republic. Drawing from the lessons of the Allianz-UNDP-GTZ study, Allianz' Indian subsidiary, Bajaj Allianz, joined forces with CARE International to launch a three-year partnership aimed at providing microinsurance to over 100,000 people in the southern Indian state of Tamil Nadu, one of the areas hardest hit by the 2004 tsunami.
The project was designed to deliver affordable life and non-life insurance products catered specifically to farm workers and fishermen in the coastal communities of Tamil Nadu. Currently, this covers around 100,000 people. The roll-out costs for those Indian projects amounted to € 300,000. In India, Allianz also offers a savings insurance through partnerships with rural banks and microfinance institutions, particularly in the states of Andra Pradesh and Maharastra. In the first year, one million people purchased the product, which is being sold by local microfinance institutions through women self-help groups.
Indonesia is another country that has experienced a series of natural disasters, from earthquakes, volcanic eruptions and floods to the devastating 2004 tsunami. Having started operations in Indonesia in 2006, only three years after, Allianz had already acquired around 200,000 new customers via microinsurance contracts, but that was just a fraction of the market. A study predicted that there could be up to 12 million potential customers in less than ten years' time. In 2009 in Africa, only 3.5 million people were covered by microinsurance: amounting to 4% of all people covered by microinsurance in the 100 poorest countries.
Recognising an opportunity to contribute to local development and tap into new markets, Allianz and its local operator, Assurances Générales de France (AGF), reached an agreement with PlaNet Finance to provide microinsurance in a number of African countries. Despite greater wealth, there was a noticeable lack of microinsurance in North Africa. Thus, the partnership chose to begin the first project in Egypt, where it is offering death and disability insurance to over 30,000 low-income customers followed by market entry in Senegal and Cameroon.
Despite past successes and future ambitions, there are still a number of obstacles that hinder the growth, reach and impact of microinsurance. In addition to greater education around the benefits of microinsurance among the poor, there is also a need to explore innovative solutions around technology to improve efficiency and reach, which will help make microinsurance a more viable business.
This case studied has been published by the World Business Council for Sustainable Development (WBCSD), a CEO-led global coalition of some 200 companies advocating for progress on sustainable development. Its mission is to be a catalyst for innovation and sustainable growth in a world where resources are increasingly limited.