Beruflich Dokumente
Kultur Dokumente
Micro-insurance in Fiji
Fiji and PNG
Pacific Microfinance Workshop,
Nadi, July 16, 2009
• Poverty Ratio: 35% Overall; 40% in rural and 29% in Agriculture Forestry and Fishing 28% 83%
• Per capita income -3900 F$; skewed picture Community, Social and Personal
Services 20% 29%
• Decline in contribution of major sector like tourism,
sugarcane and garment sector Manufacturing 14% 48%
• 39% of the population have access to bank accounts % of women in total 30%; Mostly in Hotel and Restaurants
work force
1
The Insurance Market in Fiji
Opinion of the Regulatory Authority about MI
• The insurance companies and brokerage firms are
• The Reserve Bank of Fiji has issued new directives for licensed under the provisions of Insurance Act 1998
driving micro finance through formal financial institutions • The sector is regulated by the Financial Institutions
Group in the Reserve Bank of Fiji. Fiji insurance
• There is no indication as of now as to whether Reserve industry consists of ten insurance companies.
Bank of Fiji plans for any specific directives for micro – Life insurance-
insurance. • Life Insurance Corporation of India
• Colonial Fiji Life Ltd
– Health and medical insurance-
• Colonial Health Care (Fiji) Ltd
• Fiji Care
Insurance Penetration
Micro-Insurance initiatives by MFI’s
• The penetration of life insurance in terms of GDP stood at
1.4% whilst for general insurance the figure stands at
• Micro Finance Institutions have designed in house
2.0%
insurance scheme to cover there members
• The global penetration of insurance during the same time – Fiji Teachers Union Cooperative Thrift and Credit Ltd
was around 7.5% charges 1% of loan outstanding as a mortgage
• Limited to urban salaried households and Corporate protection scheme
insurance – Credit Union League on the other side charges 1.2%
of loan outstanding as a premium for its independent
• Some in-house insurance by credit unions and co- community insurance scheme
operatives – In both the cases the scheme provides cover only to
the extent of credit amount outstanding and in the
event of death of a loanee the loan amount is
adjusted from the fund.
2
Current coping mechanisms
Perception about risks – Community Protection: The idea of caring for and sharing
with others is an important aspect of the value systems of
the Fijians people and they are protected by the strong
• Through FGDs community bonds
– Barely understand the concept of risk
– Burial Expenses due to death is the only expense – Individual Savings: The government run micro finance
which the poor clearly foresee schemes have helped the poor to save for meeting
– Inadequacy of Savings to meeting high expenses occasional social or seasonal expenses. The money
– Other risks identified in the focused group discussion saved by the clients is not enough to protect the clients
were from meeting losses resulting from unforeseen events.
• Vandalism and theft
• Weather Risk to crops, boats and enterprises – Credit - With increasing trend of urbanisation, people are
• Illness and Accident more prone to health and other risks and often do not
enjoy community safety net. Borrowing from informal
sources is often resorted.
BEYOND THE REACH OF THE MARKET • Those who have heard of it consider it to be meant for
(Market redistribution zone)
salaried or wage earners class who can pay high
premiums on regular intervals
MARKET CAN REACH FUTURE (3-5Yrs)
(Market development zone) 40,000
380,228 People in outer • Most of the insurance products ( Ex: Health evacuation/
MARKET CAN REACH NOW island and People
(Market enablement zone) (Formal in the lowest three
endowment etc) available are suited for high income
131,167 working deciles of income class.
(Additional sector)+mF
distribution
HAVE NOW 30% salaried clients
class, 30% of (approximatel
54,632 wage class, y around
(Salaried20%, 20% 30% of self 40,000)
wage class) employed)
3
Environmental Support
• Knowledge about local risks by MFIs and NGOs is quite low
• No learning derived from in-house insurance by credit unions
and co-operatives Micro-insurance in Papua New
• Willingness of the insurance companies to move into the sector Guinea
– Looking for a critical mass
• Support of the Government or any other donor agency is not
significant
• Impediments to move into unchartered areas by insurance
companies- absence of data, support services, channels of
distribution, etc.
4
The Insurance market in PNG The Insurance market in PNG
• General Insurance Companies operate under
• The life Insurance companies operate under license from the Office of Insurance
license from the Bank of Papua New Guinea Commissioner and are governed by the
and are governed by the Life Insurance Act Insurance Act 1995. there are 12 insurance
2000. companies in PNG and the prominent once are
– Kwila Insurance Corporation Ltd – QBE Insurance (PNG) Limited,
– Life Insurance Corporation (PNG) Ltd – American Home Assurance Co
– Workers Mutual Insurance (PNG) Ltd – Tower Insurance Limited
– Pacific MMI Insurance Limited – Pacific MMI Insurance Ltd
– Capital Life Insurance Company Limited (formerly Pan – Mitsui Sumitomo Insurance Co Ltd
Asia Pacific Assurance (PNG) Ltd)
– Motor Vehicle Insurance Limited (Owned by Govt of PNG)
5
Perception about risks Perception about risks
• The following risks were identified in the group
• Through FGDs discussion
– Common risks such as death and health related problems – Untimely Death
are addressed through strong community social net
• Funeral Expenses are high in PNG and are quite common.
‘Wantok’. Hence, it not perceived as a risk by an Traditionally funeral takes place in own village. Air travel is
individual and/or the family the only means of transport making it very costly
• Lack of commercialization in agriculture- not much – Illness/ Accidents
of financial implications on losses or any damage • People in PNG prefer to go to private health centers where
which charge high treatment cost. In absence of insurance
• Absence of micro-enterprise and hence low cover they take loans at high interest (70% per annum)
understanding of associated business risks – Loss of Asset
• People have risk to their dwelling from fire and other perils.
• Simple living style has implications on financial
– Weather risk to crop due to drought/cyclone (induced)
habits, financial literacy and development of micro-
finance and micro-insurance.
6
Environmental Support Overall Conclusion
• Lack of infrastructure and communication facilities • Micro-Insurance market is almost non-existent in both
are impediments to provision of financial services the countries
• Knowledge of MI and capacity of the MFI, Banks, • Insurance is only limited to urban areas and to
NGOs of micro-insurance is limited corporates and salaried class
• Unwillingness of the insurance companies to move • The regulators, insurance companies and donors, at
into the rural sector due to absence of support present, do not have any road map for micro-
mechanisms such as historical data, health service insurance in both the countries
providers, loss assessors, re-insurance, etc. • Low understanding of risk and financial mitigation
mechanisms in both countries
• Support through Govt sponsored program or by
• Market Education is a pre-requisite
donor agencies is minimal.
– Educate the stakeholders like customers, intermediaries,
insurance companies and regulators.
Overall Conclusion
(Cont.)
• Product Development
– Developing products that really respond to the needs of clients and in a
way that is commercially viable.
– Historical data which is required by the industry for product design and
development is not properly collected and organised.
– Bring more re-insurers to the market
– MFIs are unaware of product development, processes for insurance roll-
out, building collaborations with financial institutions, including insurance
companies- Technical and managerial support has to be provided.
• Distribution channels
– Develop a channel for delivery of micro insurance through other existing
financial/ non-financial product distribution channels. Stand alone micro
insurance may not be viable.
• Promoting initiatives for taking insurance to the rural areas and
poor, especially through Donor and Government support