Recently, I've been approached by a PhD student seeking for my advise with respect to her thesis topic on microinsurance. She has strong interest to research on the topic however she kind of stuck to proceed further on the topic. During the discussion, I posed her several questions as follows to gauge her actual understanding on the subject matter:
1. What is the meaning of microinsurance or microtakaful?
2. Who is the target market for such program?
3. Is Malaysia a country seriously needed such program? compared to say Indonesia, Afrika, etc.
4. Why none of the insurance/takaful company is trying to lead this program?
5. Etc, etc.
Based on the questions and feedback, I concluded to her that microinsurance in just a concept and not actually an insurance products. You can choose any of the suitable products to market under such concept or program. It may be life or general insurance products however common products are life products.
Target market is obviously lower income group of population. However, another question arise from here i.e. whether the group is self employed or those employed on full time basis. Here is the trick and gray area pertaining microinsurance. Full time workers in Malaysia are required to participate in SOCSO (social insurance scheme) and EPF (employees provident fund) which I personally feel that the protections are rather sufficient for those category of population. Thus, the target shall be those self-employed with low income category. A question arise then whether those unemployed shall be considered under microinsurance. Well, if we add these people then it is the responsibility of the government to provide such insurance or social insurance. So the conclusion is that the self-employed is the target market for microinsurance. Another problem may arise here is that we may have difficulties to collect complete information pertaining this self-employed group to study further as no single entity which is maintaining the statistics pertaining the group.
Based on the above, I personally feel that Malaysia may not desperately need such program as SOCSO and EPF already well established and 'maybe' well managed. Those self employed may also participate voluntarily.
Insurance/takaful companies are not very keen to venture into this program in view of small premiums and profits however potential high claims. The companies already participate in such programs like al-khairat, special packaged for asnaf zakat (tithe), etc. Nevertheless, the volume may not be feasible for reasonable profits or return.
Countries like Indonesia may be a good place to promote such microinsurance since we can easily find millions of underprivileged citizens all over the country especially major cities like Jakarta, Bandung, etc. More or less about 40-50 million citizens are categorized as hardcore or very poor in Indonesia. Malaysia can be considered a much better country in terms of prosperity or wealth distribution among the citizens.
Thus, I recommendation is to switch to other practical and interesting topics to be researched.
