For the past several weeks we’ve walked through a case study of how microinsurance responded to 2013’s Typhoon Haiyan in the Philippines. Today we will look at the long-term changes resulting from that response.
Based on interviews with customers, providers and intermediaries, microinsurance made a big difference in the recovery from the typhoon. In some areas residents received little government or charitable assistance in rebuilding their homes, so insurance brought much-needed relief.
The Microinsurance Network study asked claimants how they spent their benefit payments. Generally, half went toward repairing their homes, and half into reestablishing their livelihood.
The experience of the aftermath of the typhoon has increased insurance awareness. Providers and intermediaries report that more people are asking about insurance now. Two providers said that as life claims were being settled, beneficiaries would ask about calamity insurance.
The disaster has been a learning experience for the providers as well. Some are seeing geographic gaps in their coverage, and are actively seeking to expand into the rural communities and marginalized urban areas where coverage was sparse. One insurer is going into rural communities with vans displaying the slogan, “Microinsurance on Wheels” to sell products; another is hiring more agents to help and reach more people.
Providers are also redesigning their products to better suit local market requirements, and more are seeking reinsurance.
In general, these organizations are considering their options on how to protect their policyholders, whether through calamity insurance products or education programs.
Among the lessons learned by insurance providers:
- Small amounts of insurance covering many people helps everyone, especially those without international aid. More people need coverage, especially in rural areas.
- People without loans are less likely to be insured, as loan providers are often the sellers of consumers’ first insurance policies.
- There is a need for more non-life products, such as property, crop, business and livelihood interruption insurance.
- Providers and intermediaries need a liquidity policy that enables quick claims payment in times of disaster.
- Detailed disaster planning between provider and intermediary is key for a quick response and claims settlement.
- Use of satellite phones and higher satellite resolution are needed to improve communication and crisis mapping.
The insurance industry at large can learn a lot from the Typhoon Haiyan case study. The lessons are many and touch on a variety of aspects: emerging markets, developing products based on customer need, customer responsiveness, innovative claims handling, and the value of ecosystems of partners to deliver what customers require.
In addition, the use of satellite phones and satellite mapping to settle claims shows how technology can supplement, not replace, the human touch in the insurance process.
I would love to hear from readers about their experiences with the emerging field of microinsurance. Please feel free to contact me here and let’s discuss!