Introduction to Microinsurance
Microinsurance is a financial product designed to protect vulnerable individuals against specific risks, such as accidents, illnesses, natural disasters, and more. These policies have small premiums tailored to the policyholder’s needs, income, and risk level. Microinsurance aims to make insurance more accessible and affordable for a broader population.
Government Support and Current State
The Mexican government, through the Secretaría de Hacienda y Crédito Público (SHCP), has repeatedly emphasized the importance of promoting microinsurance to reach more people, especially considering the low insurance penetration in the country.
Ricardo Rosado, President of AMASFAC: “Unfortunately, there hasn’t been much progress in microinsurance, and I believe this is mainly due to a lack of awareness and knowledge about these options. Although insurance penetration in Mexico remains low, there’s a lack of understanding about the available options for all types of people.”
Microinsurance Features and Distribution Channels
Microinsurance policies typically have small coverage amounts, simple documentation, and low-cost distribution channels. Ricardo Rosado, President of AMASFAC, noted that microinsurance is commonly used in banks and department stores, often without the policyholders’ knowledge due to minimal charges.
Challenges in Increasing Insurance Adoption
Barriers to Access
According to the National Financial Inclusion Survey (ENIF) 2024, the primary reason people lack insurance is due to perceived unneededness, lack of income or employment, high costs, unfamiliarity with how insurance works, or not being offered such products.
Héctor Santana, Head of the Insurance Unit at Hacienda: “There are challenges requiring innovation and talent within the insurance sector, such as offering products to vulnerable segments and incorporating risk coverage in emerging markets resulting from corporate relocations.”
Microinsurance Coverage and Growth
“El Panorama del Microseguro 2024,” a study by the Microinsurance Network, reports that 37 countries analyzed have microinsurance coverage for over 344 million people, surpassing the 331 million insured individuals in the previous year.
Despite this growth, the study highlights that a significant market remains unattended in terms of both customer numbers and premiums.
Key Questions and Answers
- What is microinsurance? Microinsurance is a financial product offering small-scale insurance coverage tailored to vulnerable individuals’ needs, income, and risk levels.
- Why is microinsurance important in Mexico? With low insurance penetration and a significant uninsured population, microinsurance presents an opportunity to make insurance more accessible and inclusive.
- What are the main barriers to microinsurance adoption? Lack of awareness, perceived unneededness, high costs, and insufficient knowledge about insurance options are the primary barriers.
- How is microinsurance distributed? Microinsurance policies are often offered through banks, department stores, and other non-traditional channels with minimal costs.
- What does the future hold for microinsurance in Mexico? Despite progress, there’s still a large unattended market for microinsurance in terms of customer numbers and premiums.
