Microinsurance in emerging economies represents a market of great potential growth and profitability. As insurance markets in many rich countries become saturated and growth prospects limited, insurance companies are looking to new opportunities in emerging markets. In India alone, more than 250 million people are in need of microinsurance. And worldwide, the Allianz Group (Allianz), a leading global provider of insurance, banking and asset management, predicts that by 2011 the microinsurance market will double the size it was in 2008.
The Allianz Group's work on microinsurance began in early 2005, as the Management Board of Allianz in Munich , Germany, realized that the South-East Asian Tsunami of December 2004 did not leave much of an impact on the balance sheet of the company, despite being one of the worst natural catastrophes in the last 100 years. As Heinz Dollberg, head of the Asia-Pacific division of Allianz, explains, "the risks faced by the poor are much the same as those for most individuals, but research has shown that they experience those risks with greater frequency and with a relatively greater financial impact."
On a global scale, Allianz aims to reach 3 million clients with microinsurance products by the end of 2009. As Mr. Dollberg argues, while in the short-term, the scale of microinsurance will not translate directly into profits, adapting product and service offerings to the needs of the poor will help unlock the potential of this market for the future and solidify the company's presence in new markets in the medium to long term. Moreover, offering microinsurance in new markets also provides critical learnings about emerging markets and builds relationships with customers whose wealth may grow in the coming decades.
Read the full text of how Allianz is reaching out to clusters of villages across southern India, Indonesia, Egypt and soon West Africa. You can also watch a brief video of Allianz’s work in Indonesia.
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