further discussed below).<sup>23</sup> One area where governments do have a key role is in providing an enabling environment, including a ‘well-specified regulatory regime and legal framework’. Mahul (2012) has proposed a protocol for setting the balance between private and public involvement:<sup>24</sup>

- 1.Underwrite agricultural insurance through the private sector wherever possible.

2.Involve the government in the following –

- i. Data and infrastructure

- ii. Education, training etc.

- iii. Technical support on product design and rating

- iv. Creation of enabling environment (legal and regulatory)

3.Be cautious with the introduction of subsidies – design them to support well-defined social objectives and not to become a fiscal burden

- 4.Government may have a role as a reinsurer of last resort.

# **The global microinsurance market – current status**

Swiss Re. (Sigma 6/ 2010) estimates that at the time of writing there were approximately four billion people living on under US$4 per day (2005 dollars, PPP), of which 1.4 billion were living on less than US$1.25 per day.<sup>25</sup> They argue that the 2.6 billion living on more than the poverty line could effectively be serviced with commercially viable microinsurance, while those below could be serviced by a combination of microinsurance and government support. The largest potential commercial markets are in the Asia and Pacific region, with Sub Saharan Africa having the largest proportion of below poverty line population. Potential microinsurance premium volume is estimate as up to US$40 billion. Swiss Re. reports that credit life is the largest selling microinsurance product,<sup>26</sup> and points out that the major beneficiaries of this class are the microfinance providers.

A series of landscape papers written by various development organizations and covering commercial microinsurance has been published online by the Munich Re. Foundation.<sup>27</sup> While the definition of microinsurance has been widely debated these studies have adopted a pragmatic approach that identifies the target populations and specify that the premium amount is commensurate with income levels of those populations. The first study, published in 2007 by the Microinsurance Centre identifies the needs of the poor, with health insurance being the most common first priority and property related insurances coming in second. Three regional studies, covering Africa (MFW4A; Munich RE. Foundation; and AfDB, 2012), Latin America (IADB, 2012), and Asia and Oceania (Munich Re. Foundation; GIZ, 2013), have recently been published. Key findings are summarized in Table 3.

> 23 Deblon and Loewe (2012) argue that microinsurance should be viewed within a broader social protection framework and develop an analytical framework for determining its possible roles.

> 24 Also see Hill et all (2014) for a recent survey of lessons learned regarding government subsidies for health and agricultural insurance.

> 25 See HTTP://research.worldbank.org/PovcalNet/ for data.

> 26 Life insurance suffers considerably less than other classes from the Clarke-Dercon constraints.

> 27 http://www.munichre-foundation.org/home/Microinsurance/MicroinsuranceLandscape.html

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