16. Micro-Insurance: Types – The Partnership Model

In the Partnership type of micro-insurance model, a formal public or private insurance company is the service provider, which offers an insurance product in health, life, maternity benefits, childcare, assets, livestock etc. An intermediary organisation (CBO/NGO etc) makes a partnership with the insurer and cater to micro-insurance services for the poor segments of the community

The formal insurer and the intermediary organisation jointly design the micro-insurance products, test and refine the prototype with the use of market research tools and clearly delineate their roles and obligations through the development of a partnership agreement. In this relationship, the major role of the intermediary organisation is to market and sell the product whereas the formal insurer’s role is to bear the risk and deliver the agreed benefits with the highest efficiency possible.

The advantages of this model are:

The members have better access to formal insurance companies
The intermediary organisation does not have to set up a micro-insurance structure and can rely on the expertise and insurance services of the company.
The intermediary organisation and MIS do not bear the risk
Possibility of intermediary organisation to pressure for quality of services and better prices
The formal insurance companies can reach the poor and informal economy workers
The formal insurance company can increase their scale of operations and sales in reaching to the masses

The disadvantages of this model are:

Tight control of the claims by the formal insurance company
Fragility of contractual agreements
Procedures and formalities set by the formal insurer can be unfriendly for the members
No ownership and decision-making power of the community