Vanguard, MONDAY, FEBRUARY 4, 2013 — 35
Insurance
Microinsurance to hit one billion mark by 2020 Stories by ROSEMARY ONUOHA
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icroinsurance, which currently p r o v i d e s coverage to 500 million people, could pass the one billion mark by the end of the decade, Chairman of the Microinsurance Network and Head of the ILO’s Microinsurance Innovation Facility, Craig Churchill, has said. A statement by the Microinsurance Networks, said the microinsurance sector, which has shown a rapid growth over the last 10 years, is expected to double by 2020, as governments, insurance companies and providers worldwide broaden the geographic scope and range of insurance services available to low-income people. He noted that with this rapid expansion, the Microinsurance Network – an exchange and learning platform for microinsurance since 2002 – acquired its own institutional legal status in May 2012. “Becoming independent enables the Network to assume a greater leadership role in the sector, serving its mission of promoting the development and delivery of effective insurance services for low-income people,” explains the Network’s Executive Director Véronique Faber. According to her, since its inception the Network has benefited from the support of its diverse membership, the German Development Cooperation (BMZ), and particularly the Luxembourgish government which has assumed an increasingly important role in the global microinsurance sector. She added that in many developing countries, microinsurance providers are playing an important role in increasing resilience of low-income people to daily and catastrophic risks such as crop failure, illness and impact from climate change. “The expansion of the sector is being facilitated by the emergence of alternative distribution channels and public-private partnerships, the adoption of technological
innovations as well as an increased awareness amongst insurance companies of the business case for microinsurance says Eugenio Velasques from Bradesco Seguros e Previdência, one of the leading insurance companies in Brazil.
Furthermore, the development of appropriate insurance regulations and setting of standards measuring impact and client value, are playing a key role in achieving long term sustainability of the sector. Network said it will be
focusing on its four strategic outcomes in 2013 which includes increased supply; improved client value; conducive environment and enabling infrastructure, explains Ms Faber. Amongst other initiatives, this will entail the drafting of guidelines for agricultural microinsurance schemes and the compilation of lessons from health microinsurance.
From left: Jurgen Rigterink, Chief Investment Officer, Fmo; Andrew Alli, President & CEO Africa Finance Corporation; Oliver Andrews, Director & Chief Coverage Officer, Africa Finance Corporation, during the AFC FMO launch of Project Development Facility, at a ceremony held at FMO Headquarters in the Hague, Netherlands
Global pension fund assets hit $30trn G
lobal institutional pension fund assets in the 13 major markets grew by nine per cent during 2012 to reach a new high of US$30 trillion, according to Towers Watson’s Global Pension Assets Study. The growth is the continuation of a trend which started in 2009 when assets grew 17 per cent, and in sharp contrast to a 21 per cent fall during 2008 which took assets back to 2006 levels. Global pension fund assets have now grown at over seven per cent on average per annum (in USD) since 2002, when they were under half their current level. In the United States, institutional pension fund assets hit an all-time high of $16.9 trillion in 2012, having increased 10 per cent during the year.
The study reveals that the growth in assets helped to strengthen pension fund balance sheets globally during 2012. Furthermore, the ratio of global assets to GDP is just below the level reached in 2007. According to the study, pension assets now amount to 78 per cent of global GDP, which is significantly higher than the 72 per cent recorded in 2011 and substantially higher than the 61 per cent recorded in 2008. “Given the extreme economic and market volatility we have experienced during the past five years it was a relief for many pension funds to finish the year in better shape than when it started, for a change,” said Carl Hess, global head of investment at Towers Watson.
“While volatile markets are expected to continue for the foreseeable future, pension funds are now generally better equipped to deal with them. During the past five years we have seen many funds deal with their governance shortfalls and as a result a growing number of funds have either more qualified people working on their investments or they have outsourced the running of all or part of their portfolios to third parties. In addition, pension funds are implementing investment strategies that are more flexible and adaptable and which contain a broader view of risk so as to make greater allowance for extreme events,” he said.
BRIEFS Insurers should capture group business opportunities
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he Managing Director RiskguardAfrica Nigeria Limited Yemi Soladoye, has urged insurance underwriters to develop products to capture business opportunities within professional groups and alliances. Soladoye said that there are enormous untapped business opportunities within professional and cultural groups which can boost the profitability of operators. He noted that the business culture of operators has stemmed the growth of the industry, adding that the operators are comfortable with going to brokers to collect cheques. He said, “The business culture of operators has not helped the situation. The operators like going to a broker to collect cheques, forgeting the fact that under the Market Development and Restructuring Initiative (MDRI) there is focus on groups and alliances. Take for an example, a group like the Nigerian Bar Association (NBA), I am sure it has about 20,000 members, if an insurance company designs a product for all members of NBA, and each of them pays N10,000 in a year, that would amount to N200 million. “The cost on this type of business is always low. This and many other types of business initiatives are what the MDRI focuses, which the underwriters are slow and failed to adopt.” He noted that for the industry to thrive, the operators must embrace new trends and strengthen their retail marketing strategy.
•Yemi Soladoye