Despite strong growth in microinsurance, an 88% protection gap remains, with 9 out of 10 people globally unprotected from rising risks such as climate change, health crises, disasters, conflict, and nature loss, according to a recent report by the Microinsurance Network (MiN).
The ‘Landscape of Microinsurance 2024’ report, done in collaboration with the United Nations Development Programme’s Insurance and Risk Finance Facility (UNDP IRFF), drew on data from 294 insurers across 37 countries. Participating countries include Africa, Latin America & the Caribbean, and Asia & the Pacific region, covering 985 microinsurance products offered in 2023.
Microinsurance as a Tool for Resilience
Microinsurance has been increasingly used as a tool to build financial resilience, particularly in response to climate risks, economic shocks, and health-related uncertainties. The number of people covered by the reported products has increased by 70% over the past three years, reaching 344 million across 37 countries in three regions. For the year 2023, these products generated $6.2 billion in written premiums.
Despite this growth, the report revealed that only 12% of the estimated 3 billion people who could benefit from microinsurance are currently covered, leaving an 88% protection gap.
Industry Insights and Future Directions
Lorenzo Chan, President and CEO of Pioneer Inc. and Chair of the Microinsurance Network Board, commented: “Microinsurance continues to grow, but sustained investment is needed to improve scale and sustainability. We applaud the significant strides that the Landscape of Microinsurance has made so far, reflecting the industry’s commitment to expanding financial protection for underserved communities. However, momentum must continue.”
Insurance providers and distributors should focus on developing products that address evolving needs while ensuring simplicity, affordability, and accessibility. Improvements to claims ratios and payment times are critical to earning the trust of vulnerable communities.
Market Potential and Subsidy Role
According to the report, the microinsurance market has huge potential. Analysts estimated that around 3 billion people in the 37 countries included in the study represent approximately $41 billion in microinsurance premiums. The report also highlighted the role of premium subsidies, particularly in agriculture insurance, where 58% of products receive some subsidy.
This underscores the opportunity for subsidies to accelerate the development of other product lines, such as property and income insurance.
Collaboration and Innovation
Matthew Genazzini, Executive Director of the Microinsurance Network, emphasized collaboration between stakeholders: “To expand microinsurance coverage, public-private partnerships are crucial to facilitating scale and reaching the most vulnerable. Governments and insurers must work together on targeted subsidies to support risks that low-income households cannot afford on their own, particularly climate risks.”
Improving data systems and sharing will foster market competition, ultimately leading to more innovative and sustainable microinsurance solutions. By working collectively, we can enhance affordability, accessibility, and trust in microinsurance, ensuring it meets the evolving needs of those who need it most.
The report was completed with support from Luxembourg’s Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, Luxembourg’s Ministry of Finance, AXA EssentiaALL, Munich Re Foundation, Barents Re, Swiss Re Foundation, AON Philippines, and the Insurance Federation of Egypt.
