Developing a Business Case for a Microinsurance Intermediary in South Africa

Publication Date: Mar 2006
Published by: Opportunity International
Document Type: Paper

View this Document   Email this Document

Market analysis report for South African microinsurance agency

This report presents the findings of the author’s visit to South Africa in 2006 to develop a business case for a microinsurance intermediary in South Africa.

The report makes the following introductory remarks:

• FinMark Trust and Opportunity International met in 2005 and realized that they had significant common ground;
• FinMark Trust agreed to fund Opportunity International to conduct a market survey and to develop a conceptual business plan for a microinsurance agency (MIA) in South Africa.

The market analysis that studied client needs, regulatory landscape, insurance suppliers and the method of distribution found that:

• The low-income market in South Africa has many options for mitigating risks, especially in relation to death.
• The competition in the South African market has led to competitive rates and significant interest in the low-income sector.
• Although regulatory requirements are stringent, the process of developing an agency is not difficult and a (MIA) subsidiary could be easily established.
• Potential customers and distributors include the:
  • Non-government organization (NGO)-microfinance sector;
  • The commercial microfinance sector;
  • Groups partnering with banks, the informal insurance sector, etc.

The report then explains in detail the proposal for the South African MIA. It discusses:

• The potential entry strategy;
• Required infrastructure and staffing;
• Insurance company partner;
• Funding;
• Potential advantages and disadvantages;
• Expansion strategy.

It ends with recommendations for the establishment of an MIA in South Africa.