Do expenses equal profits?
A simple question on the surface, yet one that conceals complex challenges faced by those working in the microinsurance sector, particularly in emerging markets.
This was emphasized by several experts from Kenyan insurance companies during the microinsurance sessions held at the insurance conference in Luxor.
The experts confirmed that the equation in this sector is not just about numbers, but about the ability to strike a precise balance between profitability on one hand, and maintaining customer trust and satisfaction on the other.
They noted that focusing solely on profit, while ignoring operational costs or compromising service quality, will eventually lead to losing clients — not due to any deception, but simply because the real value expected by customers was not delivered.
The speakers stressed the importance of targeting the right clients for each insurance plan and operating within an efficient system that maximizes the capabilities of partners, including service providers and insurance intermediaries.
To ensure success and sustainability in microinsurance, the experts recommended the following:
Establishing a dedicated team to expedite claims processing, as this is the critical moment that defines the relationship between the client and the insurer.
Forming a pricing support team to help develop realistic and suitable products for target demographics.
The experts also pointed out that the profit margin in microinsurance should not exceed 10%, especially given that claim ratios may reach up to 90%. This reflects the true social and economic nature of microinsurance services.
This perspective was among the key insights shared during the microinsurance sessions in Luxor, which focused on reshaping how insurance companies view their customers — especially youth and low-income segments — and on answering their most pressing question: Can I afford insurance?