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Cambridge Institute for Sustainability Leadership (CISL)


21 June 2019 – A new study from the University of Cambridge Institute for Sustainability Leadership has, for the first time, analysed how mutual microinsurance, a community-owned model of insurance, contributes to the recovery outcomes of low income households following a natural disaster.

The report, looking at mutual microinsurance through the lens of the Sustainable Development Goals, indicates greater resilience for those households covered by mutual microinsurance than those without.  

In many developing and emerging economies mutual insurers are not recognised legally, hampering their ability to function optimally and to support those most in need of their products. Despite the mutual insurance sector making up nearly 30 per cent of the global insurance market, there has been very little research into the viability of mutual microinsurance as a business model and its value in improving the conditions of individuals, their families and communities.

The report, from the University of Cambridge Institute for Sustainability Leadership (CISL), Mutual microinsurance and the Sustainable Development Goals: An impact assessment after Typhoon Haiyan, assessed the operation of the largest mutual microinsurance provider in The Philippines, where 500,000 members live in the region affected by the devastating Haiyan Typhoon of 2013.

It analysed the recovery outcomes of 160 households post-typhoon, including those that had mutual microinsurance, and those without. The study found that households with mutual microinsurance life cover recovered better after the disaster than those without.

CISL’s Executive Director, Sustainable Economy, Jake Reynolds, said:

“Losses from climate risks and natural hazards are increasing, with vulnerable communities in low-income countries most affected. The growing focus by policymakers on the role of microinsurance in meeting this challenge is welcome. This study, the first to focus specifically on mutual microinsurance, suggests the scaleable potential of this type of protection.

“The need for adaptation and resilience in the face of climate change is urgent, as are the messages in this research. Until uncertainties surrounding the regulation of mutual microinsurance are addressed, the scope, scale and effectiveness of interventions by governments, donors and international institutions will continue to be hampered. It is time for insurers and policymakers to investigate this area further in order to understand how they can expedite delivery of the SDGs.”

In response to the findings, CISL makes three recommendations:

  • Governments should work towards aligning policy on inclusive insurance – that aims to protect vulnerable or low-income populations in emerging markets – more closely with national and international SDG targets.
  • Regulators should include access to effective mutual insurance for low-income communities as a distinct entity within inclusive insurance, adding it to the wider intervention options to increase climate resilience.
  • The insurance sector (mutual and non-mutual) should deliver better for low-income populations, working with communities and regulators to understand and shape individual country needs.

Typhoon Haiyan was one of the strongest tropical cyclones ever recorded with winds of nearly 200mph. Affecting the Philippines, the storm killed more than 6,000 people, made 1.9 million homeless and displaced 6 million.

Paquito Sabido from Barangay Salazar in Tacloban City took part in the study. In 2013, he was knocked unconscious in the typhoon. When he woke his wife and children were gone. After two days he found his children sheltering on the second floor of a building, but his wife had not survived. His wife’s mutual life insurance policy enabled Paquito to recover his business, and access further finance to rebuild their home.

Within the overall findings that household outcomes after the devastation of Typhoon Haiyan were positively affected by the presence of insurance, mutuality was also seen to have specific attributes. Members felt their wellbeing was prioritised through assistance programmes, loan moratoria, and financial advice post-typhoon. Well-established community networks checked on each other’s welfare, distributed emergency aid to members and made the validation and payment of claims more efficient in a very testing environment.

The provider, CARD Mutual Benefit Association (MBA) covers 20 million lives, with 35 per cent of those living below the poverty line. Mutual insurers represent nearly 30 per cent of the global insurance industry and distinguish themselves by being a community-owned model and because it is owned by its members, it requires specific regulatory support to protect low-income vulnerable customers.

The report is launched Friday June 21, 2019 at the Insurance Development Forum (IDF) in Singapore.