«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
The ILO’s STEP programme helps grassroots organizations set up microinsurance schemes with a package of TA, management tools (including MIS software) and funding.4 In many of the STEP-supported schemes, the 4 Besides TA at the provider level, STEP also works at the meso level, providing technical assistance to build the capacity of federative organizations and support organizations promoting microinsurance.
At the policy or macro level, the programme organizes advocacy activities, principally aimed at governments, to raise awareness of the usefulness of such insurance schemes and to promote an environment conducive to their development.
554 The role of other stakeholders managers had no previous experience with insurance. The TA provider guides the feasibility study, and provides the expertise for calculating premiums and setting up the scheme. Technical assistance also includes capacitybuilding and monitoring, development of annual work plans, assistance in training material development, accounting and reporting and staff training.
Some of STEP’s TA recipients include AssEF (Benin), VimoSEWA, Grameen Kalyan and BRAC MHIB.
3.3 International development organizations and consulting firms The Canadian Cooperative Association (CCA) provides technical assistance through a Philippines-based actuarial technical advisor who has assisted microinsurers including CARD MBA and the Cooperative Life Insurance Mutual Benefit Society (CLIMBS). Besides actuarial services, the advisor assists with the development of IT systems to facilitate the management of microinsurance data. He also works closely with the board, management and staff. With them, he reviews and addresses the insurance risk, and develops management and control systems.
Together, CCA and CARD MBA have created RIMANSI (Risk Management Solutions, Inc.), a microinsurance resource centre that provides technical assistance, administration, assistance with regulatory compliance and reinsurance to MFIs and cooperatives in south-east Asia (see Figure 37). In its first year of operation, it supported five MBAs in the Philippines and three microinsurance schemes in Cambodia. Its main approach is to franchise CARD MBA’s technology and replicate it.
CIDR is a French NGO involved in various development fields since
1961. It aims at organizing persons in the informal economy to help them assume responsibility for their economic, technical and financial needs. In particular, CIDR works in microfinance, microenterprise development,
microinsurance and the management of health services. Through its microinsurance TA, CIDR promoted different approaches in different areas:
Microfinance Opportunities is a client-oriented microfinance resource centre. Established in 2002, its speciality in providing TA is the provision of market research. Microfinance Opportunities has pioneered the analysis of consumer demand for microinsurance and assessing risk management strategies of low-income households. To translate the demand research into product design, Microfinance Opportunities often works with the MicroInsurance Centre, a specialist consulting firm focusing on improving access to appropriate insurance products by low-income people. In particular, it assists commercial insurers to develop strategies and products to successfully enter the low-income market.
Opportunity International (OI) is a global network of microfinance institutions operating in 29 countries with a loan portfolio in excess of US$175 million and 840,000 active borrowers at the end of 2005. In 2002, OI became the first microfinance network to recruit an insurance team to help its affiliates develop insurance products. It employs a modified partner-agent model and has developed a range of life, property, disability, unemployment, health, livestock and crop insurance products in nine countries.
556 The role of other stakeholders Besides serving its own MFI partners, OI has provided some microinsurance technical assistance to external projects including the development of crop insurance products for the World Bank in Africa. In the course of 2005, OI made a strategic decision to establish “The Micro Insurance Agency”, a specialist insurance brokerage providing distribution and administration of microinsurance to a range of MFI networks, SACCOs, cooperatives and rural banks.
SOCODEVI is a specialized NGO formed by a network of cooperatives and mutuals in Canada originating from the insurance and financial sector, agriculture and agro-business, forestry and consumers co-ops. SOCODEVI focuses on the promotion and strengthening of the cooperatives as a tool for sustainable development. For twenty years, SOCODEVI has provided technical assistance in microfinance, insurance, agriculture and forestry to partners in Africa, Latin America and Asia.
In insurance, SOCODEVI’s approach is to set up cooperative and mutual enterprises that offer high-performing, diversified and accessible products adapted to the members’ needs. SOCODEVI helps insurers improve their competitiveness while developing their management and marketing capacities. SOCODEVI’s cooperative development programmes involve volunteers from its own membership, so there is a stronger commitment by the TA provider than just completing an assignment. For microinsurance projects, the consultants come from member insurers, commanding a lot of credibility with the organizations where they provide the expertise. Through the years, SOCODEVI has mostly supported insurance organizations in Latin America, including ServiPerú and Columna in Guatemala.
4 Conclusion: Providing quality technical assistance Despite the diverse nature of these illustrative TA providers, there are some common threads that draw them together. Most organizations fall into the cooperative and mutual camp, which is quite logical since one of the core principles of cooperatives is to support the development of other societies. A second theme comprises organizations that have emerged from microfinance to promote insurance as well. Lastly, the international technical cooperation agencies have a slightly different interest as they tend not to focus just at the institution level, but also strive to deal with relevant meso and macro issues.
On the basis of this list of TA providers and their experiences, and drawing from the literature on technical assistance, it is possible to highlight some preliminary lessons. In general, the process of providing TA requires careful examination to ensure that proper incentives are in place to enhance the quality of the service. The SEEP Network has examined this issue in the context The provision of technical assistance 557 of microfinance, and identified seven key principles (the 7 Cs) that are necessary to ensure excellent TA (see Box 105).
To derive the maximum benefit from the scarce investments in technical services and to create positive returns on investment in technical assistance, the SEEP Network developed a framework for delivering quality technical assistance. Although its 7C criteria were designed with the provision of TA to microfinance institutions in mind, they have relevance, and are adapted here, for microinsurance providers.
1. Client demand-driven This principle addresses the need for the TA recipient, the microinsurance provider, to own the TA process and drive the choice of technical services.
The principle implies that the microinsurance management team undertakes a self-assessment to define the organization’s technical needs and then obtains the technical services required to improve performance.
2. Context This principle addresses the need to identify the external contextual variables that can influence the choice and effectiveness of technical service delivery, including economic, cultural, political and institutional variables.
3. Concrete results This principle encourages microinsurers to define and agree to clear results with time limits (and interim steps if appropriate) to be delivered by the TA
provider. These deliverables should include concrete outputs for:
– individuals, in terms of their level of knowledge, skills, or attitudes, – systems (e.g. information or financial), in terms of their performance and/or capabilities and – the institution, in terms of performance goals related to the technical service.
It is important to note that deliverables should be appropriate for the size, age and capacity of the institutions receiving and providing the technical services.
5. Focus on Change (baseline indicators) Inseparable from the idea of Checkability, this principle requires a microinsurer to collect baseline information on its own performance to measure the results of technical assistance. Benchmark indicators may include staff attitudes, knowledge levels, skills, and system and institutional capabilities or performance.
6. Cost-effectiveness This principle ensures that cost-effective measures will be used to select and verify the delivery of technical services. The principle encourages microinsurers to measure the results of technical services against their total cost (direct and indirect) in order to discern whether such services are worth the expense incurred.
7. Clear accountability This principle encourages microinsurers to build mutual accountability mechanisms into technical assistance contracts. It emphasizes the need to assign clear roles and responsibilities for each party to achieve specified results, using incentives and/or penalties to ensure that the TA recipient and provider fulfil their commitments to each other.
Source: Adapted from Goodwin-Groen, 2003.
This 7 Cs framework is an effective guideline for improving the quality of technical assistance. Indeed, receivers of technical assistance sometimes complain that the quality and impact of the services did not justify the cost.
Often, TA services are supply-driven, with the technical assistance matching the providers’ expertise rather than the receivers’ needs.
In the process of providing quality TA, some key factors need to be kept
1. Insurance products must be kept simple and easily understandable.
2. Product benefits should be in line with an affordable premium for the targeted customers.
3. Commitment and strong leadership are required from senior management and the board to accept and implement the needed changes.
4. If the TA recipient requires a long-term intervention, then the TA provider must have a long-term commitment so the two can forge an effective working relationship.
5. Although it may appear efficient, it is not appropriate to promote the same formula or product menu in different countries. While the process of providThe provision of technical assistance 559 ing technical assistance may be the same, the results of that process can be quite different depending on the capacity of the TA recipient, its market and the regulatory environment.
6. The TA provider needs a) expertise in the particular technical area and b) the ability to impart that expertise to others, possibly in a context quite different from the one the expert is used to working in. These two qualities can be difficult to find in one individual.
7. TA providers must recognize and respect the absorption capacity of the organization and its staff; a step-by-step or phased approach usually works best.
8. The TA recipients should not only understand what they have to do, but also understand why they have to work differently and be motivated by the new vision.
9. TA providers need to build the capacity of microinsurers to increase the target market’s understanding of the benefits of insurance.
10. Effective technical assistance includes continuous monitoring with standards, indicators and benchmarks.
One way to increase the quality of TA, improve accountability and ensure that it is demand-driven is to ensure that the TA recipient actually pays for the technical assistance or at least shares some of the costs. There are a few examples already of multinational insurance companies hiring microinsurance experts to help them develop strategies to serve the low-income market.
However, funding for technical assistance often flows from a donor to a consultant or a network organization that then provides technical assistance.