Localizing a microinsurance program

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Milliman provides deep expertise and a broad array of insurance and financial perspectives to microinsurance efforts all over the world.

Microinsurance has the potential to help millions of low-income people reduce their vulnerability to risk. To achieve this in a sustainable way and grow the microinsurance sector, those promoting, providing, regulating, supervising and reinsuring microinsurance solutions need to base their strategic and management decisions on sound advice.

Actuaries have been providing technical support and advice to insurers for hundreds of years—with many of the early insurers facing similar challenges to the ones that microinsurers face today. As recognized insurance experts, actuaries should be involved in the process of ensuring that only the very best advice reaches stakeholders and insurance providers who plan to serve the low-income market.

Milliman can assist governments, commercial insurers, non-governmental organizations (NGOs), cooperatives and all other microinsurance stakeholders with technical support. Our statistical, mathematical and economic skills combined with our global experience makes us well qualified to help you find suitable solutions.

Actuarial design, pricing and monitoring

All insurance relies on meeting the needs of the insured members and delivering the benefits promised on a consistent basis. In communities where insurance may be a new means of managing life risks, nothing is more important to the sustainability of the microinsurance sector than appropriate product design, adequate pricing, ongoing financial monitoring and ensuring the operational efficiency of microinsurance providers.

Product design

Products need to be designed to suit the potential insured members. While the issues that low-income people face are similar, needs differ between countries and communities. We understand that each situation is unique and believe in tailoring each solution to the specific needs of our clients.


One of the major challenges in pricing microinsurance is that there is often little data to work from. (This issue is discussed in the paper Health Microinsurance: Healthcare and Incidence Rate Questionnaire, available for free download.)

Correct pricing is critical to the success of microinsurance. Initial underpricing may lead to greater membership, but the scheme will be unsustainable without ongoing subsidies; overpricing will make high volumes of membership unattainable. Our prototype health microinsurance model provides some insight into methods for pricing.

Microinsurance relies on products being priced with small margins and high volumes of membership or business. This ensures that the average experience is as stable as possible and that internal management has the flexibility to react to change.

Employing the correct financial modelling skills can make it possible to set the best pricing margins and can help to ensure that members are sold appropriate products at appropriate prices.

How we can help

Our microinsurance services include:

  • Feasibility studies to ascertain microinsurance viability given a target population
  • Data collection for adequate pricing where little or no data exists
  • Appropriate product design
  • Pricing, benchmarking and repricing
  • Determining key metrics to monitor
  • Internal process reviews to identify capacity gaps in your organisation
  • Training and capacity-building workshops on topics such as design, pricing, underwriting, risk management and key performance indicators

Our experience

Our London office has a growing body of experience, including microinsurance projects in Vietnam, India, China, South Africa and Swaziland. While our speciality is health microinsurance, we also work with composite insurers.

A few examples of projects we have worked on:

  • We assisted a non-governmental organization (NGO) design and price a maternity healthcare product offered to a specific industry group in India. This project also involved negotiations with a commercial insurer, which was to be the risk carrier.
  • We collaborated with other actuaries and market research companies to collect information to ascertain the demand and need for microinsurance in Swaziland. This study helped shape a strategy for determining which products to potentially pilot in other African countries.
  • We assisted a union in Vietnam with developing a capacity-building plan to deliver a bundle of benefits to its members. Part of the plan was identifying the key metrics to measure and monitor over time.

Next steps