Begum, a 40-year-old Indian lady, and her husband owned a piece of land and a cow, which just about enabled them to keep a roof over their family's heads. When Begum's husband had an accident, was hospitalized and then sadly died of his injuries, the family would have been faced with financial ruin had the couple not had the forethought to take out a survivors' and invalidity insurance policy which cost them the equivalent of 3.20 euros a year.
At the moment, those who have at least this minimal level of insurance are still only a small minority. Many people in rural areas of Asia, Latin America and Africa have absolutely no opportunity to take out insurance, even if they could spare a few cents a month to do so, as covering them at such low premiums is not considered a viable business for insurers.
Allianz explores micro-insurance opportunities in Asia
Allianz is currently working with international help organizations to explore how insurance companies can contribute to reducing poverty by offering low premium protection in Asia.
Many people in rural areas of Asia, Latin America and Africa have no insurance. Allianz wants to help Photo courtesy of ASA
A public-private partnership
Allianz is challenging this belief and is cooperating with the United Nations Development Program and the German Agency for Technical Cooperation (GTZ) to investigate the market potential of in Asia. Werner Zedelius, Member of the Board of Management of Allianz AG responsible for Growth Markets, and Heinz Dollberg, responsible for the Asia Pacific region at the Munich headquarters, have signed a strategic cooperation agreement on micro-insurance with the two development aid organizations.
"The initial aim of this public-private partnership is to analyze the demand for micro-insurance in India, Indonesia and Laos," says Zedelius. "Once we have done that, we will launch pilot projects based on the results of the research."
The project had been in its planning stages since autumn last year, but the recent tsunami disaster heightened the importance of this initiative, since not only did tsunami survivors lose their families and loved ones, many also lost everything they owned. And only a very small number of those affected would have been able to afford insurance, or would have been aware of the protection it could offer.
"The initial aim of this public-private partnership is to analyze the demand for micro-insurance in India, Indonesia and Laos," says Zedelius. "Once we have done that, we will launch pilot projects based on the results of the research."
The project had been in its planning stages since autumn last year, but the recent tsunami disaster heightened the importance of this initiative, since not only did tsunami survivors lose their families and loved ones, many also lost everything they owned. And only a very small number of those affected would have been able to afford insurance, or would have been aware of the protection it could offer.
In a pilot project with "Activists for Social Alternatives" (ASA), Allianz already offers low-premium life insurance to men and women in the state of Tamil Nadu, India
Photo courtesy of ASA
Village communities organize social networks
The first micro-insurance pilot projects are already underway in India. A major force in driving these efforts is the regulatory authority’s mandate that private insurers must source at least 15 percent of their business from rural areas. To achieve this, Allianz is working with non-governmental organizations similar to cooperatives.
"Cooperating with aid organizations facilitates our operations and allows the business to generate a profit, even in rural areas," explains Dollberg.
In the state of Tamil Nadu in southern India, more than 35,000 men and women have already taken out an insurance policy through "Activists for Social Alternatives", an organization that collaborates with Allianz and its joint venture partner Bajaj. The average monthly premium is the equivalent of less than 20 cents. Two thirds of the premium paid covers the administration costs of our partner, while five cents go to Bajaj Allianz.
"Cooperating with aid organizations facilitates our operations and allows the business to generate a profit, even in rural areas," explains Dollberg.
In the state of Tamil Nadu in southern India, more than 35,000 men and women have already taken out an insurance policy through "Activists for Social Alternatives", an organization that collaborates with Allianz and its joint venture partner Bajaj. The average monthly premium is the equivalent of less than 20 cents. Two thirds of the premium paid covers the administration costs of our partner, while five cents go to Bajaj Allianz.
Contributing to the worldwide fight against poverty
"Micro-insurance will never generate huge revenues," says Zedelius, "the amounts involved are simply too small to allow this. However, building a network of communities that are protected by insurance is a very effective way of helping to reduce world poverty."
Dollberg adds that, "By means of efficient processing and group policies, micro-insurance can be made financially sustainable. In the medium term, it opens the door for us to a huge potential market."
In India, Allianz's project partner GTZ has already demonstrated the potential of such cooperative deals: together with eleven partner organizations and in only seven years, the development aid agency has provided insurance cover to half a million people.
The Allianz Group is also working with the United Nations on the Global Compact Initiative. The UN is urging its members to make headway on what are known as the "Millennium Development Goals", which the heads of state and government worldwide have committed themselves to achieving by 2015.
The most important Millenium Development Goal is to halve worldwide poverty by the year 2015. The fact that Begum was not forced to pick up a begging bowl after the death of her husband is a small but significant contribution to that goal.
Dollberg adds that, "By means of efficient processing and group policies, micro-insurance can be made financially sustainable. In the medium term, it opens the door for us to a huge potential market."
In India, Allianz's project partner GTZ has already demonstrated the potential of such cooperative deals: together with eleven partner organizations and in only seven years, the development aid agency has provided insurance cover to half a million people.
The Allianz Group is also working with the United Nations on the Global Compact Initiative. The UN is urging its members to make headway on what are known as the "Millennium Development Goals", which the heads of state and government worldwide have committed themselves to achieving by 2015.
The most important Millenium Development Goal is to halve worldwide poverty by the year 2015. The fact that Begum was not forced to pick up a begging bowl after the death of her husband is a small but significant contribution to that goal.
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