Microinsurance can loosely be defined as insurance for the low-income population of developing economies. Micro-insurance has the potential to play a crucial role in reducing poverty and in improving living standards for low income communities around the world.
Actuaries can make a difference to micro-insurance through ratemaking, exercising actuarial judgement and the application of pricing techniques
Ratemaking may be particularly relevant, since products have to offer value for money in order to be sustainable. The quality of data varies and often the data is poor quality or missing: situations which require actuarial judgement. Actuaries can potentially apply various pricing techniques to improve current methods, in addition to applying their skills in designing products which are simple and more acceptable (for example by reducing or removing exclusions).
Actuaries can also help in the risk financing, reserving and monitoring of micro-insurance business
In collaboration with other professionals, actuaries can help with the assembly of an actuarial toolkit, consisting of simple models and guidance documents, which could be freely accessible to groups of policyholders and other parties involved in micro-insurance, to improve the available knowledge in this field.
The MIG's current objectives are to:
- provide suitable and relevant educational material for members of the actuarial profession and others who are interested in microinsurance. This will include writing papers for academic journals, articles for publications such as ’The Actuary’ and speaking at conferences and seminars
- provide training on microinsurance topics in person and on-line as appropriate
- with the support of the IFoA's Executive teams, to organise seminars and conferences alone, or with other organisations, on the topics of microinsurance
- with the support of the IFoA's Executive teams, to engage with academics, supranational bodies (such as the International Labour Organisation and the World Bank) and practitioners in order to spread knowledge and best practice about microinsurance
- develop actuarial tools which can be made available to practitioners in developing countries as models of how microinsurance produces can be priced and reserved for
- keep abreast of developments with microinsurance in low-income populations of developing economies, fostering a sense of international cooperation in this area
- maintain close links with the International Actuarial Association’s subcommittee on microinsurance
- share regular news and updates on microinsurance with others in the MIG via a quarterly newsletter.
For more information about the actuarial toolkit project, funded by the Institute and Faculty of Actuaries (IFoA), visit the toolkit website.
- 16 June 2020
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