International Labour Organisation (ILO)’s Impact Insurance Facility has advised microinsurance operators to persevere and never to expect overnight success.
The facility, in a report titled “Timing success: A review of failures in microinsurance schemes” stated that it is vital that microinsurance products are timed in relation to the level of development of the insurance market in a country.
The organisation pointed out that if overly complex products are introduced too early, they are usually difficult to sell and may even damage clients’ trust in insurance. Internal time frames are just as important.
A recent review of failures in microinsurance found that issues of timing were behind many commonly-experienced challenges, the facility noted, adding that an organisation’s mind-set regarding investment and returns’ horizons plays a critical role in their success or failure.
The operators were also advised to note that microinsurance schemes may experience several setbacks before profitable models are found especially as seven out of the 12 schemes covered in the study stuck with microinsurance, learnt from their experiences, and are still active in the sector, while the remaining five failed altogether.
The facility added that it is essential to promote a culture in which mistakes can be made, analysed and corrected over time, saying establishing suitable timescales reduces pressure for immediate results, and setting and monitoring intermediate targets helps to ensure these timescales are maintained.
Targets need not only be linked to output measures such as policies sold or premium collected, but can also be linked to activity measures, such as education campaigns conducted or villages reached.
Organisations need to accept that setbacks may be frequent and that a long timescale will be needed to see microinsurance flourish.
Commenting on the issue, the founder of IDEO.org said: “Failure is an inherent part of the (design) process, because we’ll just never get it right on our first try. In fact, getting it right on the first try isn’t the point at all. The point is to put something out into the world and then use it to keep learning, keep asking, and keep testing.”