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Regional Workshop on Access to Insurance for the Poor What is the role of the reinsurer?

Regional Workshop on Access to Insurance for the Poor What is the role of the reinsurer?. Stefan Mosel Rio de Janeiro, Brazil May 2007. Relationship between reinsurance and microinsurance. Reinsurance Insurance for insurers. ?. Microinsurance Insurance for people with low incomes.

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Regional Workshop on Access to Insurance for the Poor What is the role of the reinsurer?

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  1. Regional Workshop on Access to Insurance for the Poor What is the role of the reinsurer? Stefan Mosel Rio de Janeiro, Brazil May 2007

  2. Relationship between reinsurance and microinsurance • Reinsurance • Insurance for insurers ? Microinsurance Insurance for people with low incomes Innovative Solutions

  3. Traditional functions of reinsurance Innovative Solutions

  4. Reinsurance is necessary for property microinsurance and catastrophic risks Earthquake in Armenia (Colombia) in 1999 Innovative Solutions

  5. Features of property microinsurance Adapted pricing models are needed that take account of the high vulnerability! Reinsurance facilitates rapid growth(surplus relief) Assuming and diversifying catastrophe risks is one of the reinsurer’s main tasks But: the portfolio, or rather the total premium produced, is large where thousands of people are insured The reinsurer will accept microinsurance business only if it knows and approves the processes (IT, sales, underwriting, loss adjustment, etc.) Innovative Solutions

  6. Access to reinsurance for microinsurance schemes – Principal requirement Economic sustainability • The clientele and their property are more vulnerable than in the case of traditional insurance. • In relation to the sum insured, the premiums for microinsurance are higher than in the case of traditional insurance. Example: Traditional property insurance Property microinsurance • Sum insured : USD 100,000 / Deductible 2% • Commercial rate : 3 per mille • Annual premium : USD 300 • Monthly premium : USD 25 • Sum insured : USD 6,000 / Deductible 2% • Commercial rate : 9 per mille • Annual premium : USD 54 • Monthly premium : USD 4.5 The microentrepreneur is only interested in the premium in absolute terms! Innovative Solutions

  7. Munich Re and microinsurance • Microinsurance of persons (Life) : • There is generally great uncertainty about the technical bases (mortality and morbidity) for this economic sector. • Property microinsurance (Non-Life):Property microinsurance is different from traditional products as regards both its structure and the sales and loss adjustment processes. Given that the property of these clients is very vulnerable, the rating of this business differs from traditional business. With its worldwide microinsurance projects, Munich Re provides support with product development, pricing, underwriting processes and, above all, proportional capacity in order to facilitate rapid and profitable growth. Innovative Solutions

  8. Contact persons • Stefan Mosel • Head of Latin America South Department • smosel@munichre.com • Andreas Moser • Member of the Innovative Solutions Team • Latin America and the Caribbean • amoser@munichre.com Innovative Solutions

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