Last week we discussed how microinsurance providers handled claims settlement in the wake of 2013’s Typhoon Haiyan in the Philippines. Today we will examine the indispensable role that intermediaries play in the microinsurance process, especially at the claims end of the relationship.

Like agents and brokers in any traditional insurance transaction, microinsurance intermediaries are in face-to-face contact with prospects and policyholders. The intermediary network is composed of brokers, cooperatives and microfinance institutions (MFIs). This relationship is even more important in the world of microinsurance, where the customer-intermediary relationship drives not only distribution but also the claims process.

MFIs usually have regular contact with policyholders, especially those that collect loan payments from their customers on a weekly basis. Cooperatives may see the less active members only a few times a year. One cooperative said it relied on field staff, cluster officers and members to locate policyholders through word of mouth.

Although insurer representatives were on the ground after Haiyan, they relied on intermediaries and their networks to find the affected customers and file a group claim on behalf of all customers who lived in the declared areas. Intermediaries maintain close relationships with their customers, their friends and families, and are often aware of their whereabouts. The strength of the customer-intermediary relationship was the underlying factor in assisting policyholders quickly.

Initially claims were paid promptly as most intermediaries had funds on hand to pay customers before receiving the money from the insurers. The table below shows when customers were paid by the intermediaries, not when the insurers reimbursed their partners.

Microinsurance claims paid in the month after Typhoon Halyan
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The network of intermediaries was essential in assisting customers with the requirements to get timely settlement. However, in the aftermath of Haiyan, they did much more than that. The intermediaries’ branches worked together as communication centers when the phone service was down in hard-hit areas, and as storage points for relief goods on their way to stricken areas.

Some microinsurance providers set up claims assistance centers in the hardest-hit areas to expedite claims processing. Others took cash in hand to the stricken areas as banks were not operational. Carrying large amounts of cash into this environment was a calculated risk because of the prevalence of theft. Here also, the intermediary network played a role in disbursing claims payments.

In some instances, insurers were slow to reimburse the intermediaries. This caused some delay in claims payment, which upset customers and necessitated mediation on the part of the intermediaries.

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Next week we will examine the long-term impact that microinsurance is having on the population of the Philippines.

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