Microinsurance Expansion and the Global Protection Gap
Despite the robust expansion of microinsurance, a significant 88% protection gap persists globally. This gap leaves 9 out of 10 people unprotected from escalating risks such as climate change, health crises, disasters, conflicts, and biodiversity loss, as disclosed in a recent report by the Microinsurance Network (MiN).
The report, titled ‘The Landscape of Microinsurance 2024’, was prepared in collaboration with the United Nations Development Programme’s Insurance and Risk Finance Facility (UNDP IRFF). It draws on data from 294 insurers across 37 countries, spanning regions including Africa, Latin America & the Caribbean, and Asia & the Pacific. The research covered 985 microinsurance products offered in 2023.
Microinsurance has increasingly been recognized as a vital tool for building financial resilience, particularly in response to climate risks, economic shocks, and health-related uncertainties. The number of individuals covered by these products has surged by 70% over the last three years, reaching 344 million people across the studied regions. In 2023 alone, these microinsurance products generated $6.2 billion in written premiums.
However, the report also highlights that only 12% of the estimated 3 billion people who could benefit from microinsurance currently have coverage, leaving a vast 88% protection gap. According to analysts, these 3 billion individuals represent a potential $41 billion in microinsurance premiums across the 37 countries examined.
Lorenzo Chan, President and CEO of Pioneer Inc. and Chair of the Microinsurance Network Board, remarked, “Microinsurance is making significant strides, but ongoing investment is crucial for achieving scale and sustainability. We commend the progress outlined in the Landscape of Microinsurance report, reflecting the industry’s dedication to expanding financial protection for underserved communities.”
Chan also emphasized the need for continuous momentum, urging insurance providers and distributors to focus on product development that meets evolving needs while ensuring simplicity, affordability, and accessibility. “Improving claims ratios and payment times is essential for gaining the trust of vulnerable communities,” he added.
For the first time, the Landscape study collected data on premium subsidies, highlighting their pivotal role in agricultural insurance, where 58% of products receive some form of subsidy. This finding underscores the potential for subsidies to accelerate the development of other insurance lines, such as property and income insurance.
Matthew Genazzini, Executive Director of the Microinsurance Network, stressed the importance of collaboration between stakeholders, stating, “Public-private partnerships are vital for scaling microinsurance coverage and reaching the most vulnerable populations. Governments and insurers must collaborate on targeted subsidies to manage risks that low-income households cannot afford independently, especially climate risks.”
He further noted that enhancing data systems and sharing would promote market competition, leading to more innovative and sustainable microinsurance solutions. “By working collectively, we can improve affordability, accessibility, and trust in microinsurance, meeting the evolving needs of those who need it most,” Genazzini concluded.
This report was produced with the support of Luxembourg’s Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, Luxembourg’s Ministry of Finance, AXA EssentiaALL, Munich Re Foundation, Barents Re, Swiss Re Foundation, AON Philippines, and the Insurance Federation of Egypt.
