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RIO DE JANEIRO—Efforts by insurers to develop microinsurance products for developing countries hold great potential, but insurers need to take a collaborative approach for the efforts to succeed, Brian Duperreault, president and CEO of Marsh & McLennan Cos. Inc., said Tuesday.
By pooling resources and sharing information, insurers will be in a better position to offer products to billions of people without access to insurance and tap a market with the potential to generate $40 billion in directly written annual premiums, he said during a presentation at the International Insurance Society Seminar in Rio de Janeiro.
People and businesses in developing countries face high exposures to health risks and natural disasters, Mr. Duperreault said. “Yet despite the clear benefits at the societal and individual levels, only a small percentage of this population has access to insurance.”
Insurers face several challenges as they seek to develop insurance products for developing economies, he said. The products must be tailored for developing economies rather than reflect similar products offered in developed nations. And the pricing of the products can't be so high that the products are unaffordable—but it can't be so low that insurers are unable to make profits.
In addition, there is little consumer education on the benefits of insurance, distribution networks are lacking and regulatory barriers deter insurers from entering markets, he said.
“No single company has been able to crack the code, and I think it's because we've been going about it the wrong way,” Mr. Duperreault said. “For any of us to succeed, all of must be involved.”
He proposed that insurers work together to develop a facility to combine their efforts in expanding microinsurance. The facility would enable the insurers to get better access to research and data and give them a stronger voice in negotiations with governments, he said.
Brazil should be the first market where insurers collaborate on microinsurance offerings, Mr. Duperreault suggested. The country has the potential to generate 100 million microinsurance policies with premiums totaling $1.7 billion to $4 billion, he said.
MMC “firmly believes that a collaborative effort is needed,” and the New York-based brokerage will lead efforts to stimulate collaboration between insurers, he said.
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RIO DE JANEIRO—Adhering to the Principles for Sustainable Insurance will enable insurers to play a bigger role in society and help them develop products and services that meet the needs of customers, a range of experts said at the launch of the principles in Rio de Janeiro on Tuesday.