4.1. - Accessing technical expertise
It is important to accumulate experience and expertise in providing insurance over a period of time, micro-insurance providers should begin with simple products and limited coverage (Brown & Churchill 2000). Co-operatives succeed when they combine members know how and loyalty with outside expert knowledge and innovation (Ledbeater & Christie 2000). However the costs of external consultants or qualified insurance staff is beyond the means of the micro-insurance provider. Training of co-operative leaders in insurance knowledge is also a costly process as well as time-consuming. The failures of micro-insurance programs to grow is a testament to the complexity of insurance as compared to credit or savings, therefore the need of adequate underwriting, actuarial and business planning expertise cannot be avoided if the insurance scheme is to becomee adequate, affordable and sustainable.
The most appropriate method to overcome this need is for the micro-insurance provider to become an agent for an existing and established insurance company, this arrangement benefits all parties concerned. The micro-insurance provider receives a no risk fee for administrating the business and is able to access the technical expertise, reinsurance and capital capacity of the partner. The partner is ultimately responsible for maintaining reserves, setting the price, paying claims, dealing with external service providers and complying with legal requirements. The policyholder benefits by increased access to a wider range of products with increased coverage and greater sustainability. The partner has access into a new market without taking extensive marketing, distribution and administration costs (Brown & Churchill 2000, Brown & McCord 2000, Ford Foundation 2000, Women’s World Banking et al 2000, Havers 2001). More importantly the partner-agent model facilitates the pooling of risks between the formal and informal sectors. There are some issues that still need to be considered, including the limited availability of partners, the reluctance from them to cover more complex risks, difficulties in ensuring rapid payment of claims and negotiating an equal partnership (Brown et al 2000). The ICMIF has 122 established co-operative insurance organisations in 65 countries that can form partnerships with micro-insurance programs and reinforce co-operative principles (Appendix Seven).