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How to Build a Micro Insurance Company: The Four Pillars for Success

Four white pillars on blue background, with Products, Underwriting, Technology, Distribution in block capitals above

In a world brimming with uncertainties, the need for accessible and adaptable insurance solutions has never been clearer. This is where micro insurance steps in, offering a safety net to those who often fall through the gaps of traditional coverage.

This is enabled by micro insurance companies – such as us! – who are built with four fundamental pillars: products, underwriting, technology, and distribution. These elements form the foundations upon which a micro insurance venture stands, determining its ability to reach individuals and provide them with timely protections. Each pillar is crucial in order to serve embedded micro insurance products at scale, on a global level, and – most importantly – profitably.

Here, we examine the pillars needed for a successful micro insurance company, how we utilise each within our own business, and what they mean for our development process, partners, and end-customers:

Simple and Relevant Insurance Products

Micro insurance products are the first essential element – nobody can be insured without a product to offer them! Where traditional insurance products are comprehensive and cover significant aspects such as life, health, home, and car; micro insurance products are simply worded and focus on the small stuff – everyday disruptions that people face such as accidental damage, minor medical expenses, and income gaps. Developing micro insurance products is all about creating solutions to meet the unique needs of individuals with customized product offerings that address specific risks.

These products aren’t concerned with the specific losses or damages that occur – instead, fixed pay-outs are made once defined parameters are met. This approach allows micro insurance to operate in spaces where traditional insurance may provide limited coverages. Early success is being seen within the sharing and gig economies.

Products Designed for Everyday Risks

We have developed a range of simple and relevant digital reinsurance solutions designed to fill protection gaps in the world’s emerging economies that traditional insurance is not suited to cover. The products are split into three distinct categories, each covering different aspects of people’s lives. Within each category are a set of trigger events, which when activated allow insured individuals to make a claim. We work with our insurance and platform partners to tailor these triggers to their requirements and create a digital reinsurance solution that fits them perfectly. A partner’s micro insurance product is embedded into their platform or service and offered to their customers during the sales journey.

Crucially, these products are repeatable. This means that once we have developed a particular product in a market, we can roll it out over and over, tweaking as required for each partner. Rapid development and deployment enable platforms to take their insurance product from concept to customer in weeks.

Putting Money in People’s Pockets

Our MiIncome category covers people’s personal income. Our triggers are designed to protect people’s incomes when threatened by specific circumstances. MiIncome Layoff covers the income of workers that receive involuntary unemployment while they find a new job (for a fixed number of months). MiIncome Health provides income coverage for time that individuals are unable to work due to injury, sickness, or death. Lastly, MiIncome Resilience protects individuals from events that disrupt income, such as weather, transit, and family matters.

Our MiIdentity category protects people’s physical and digital lives. For ‘real world’ protection, MiLife Injury provides coverage for unexpected medical expenses such as Emergency Room visits, meaning people can look after their health without the worry of how to pay for it. In the ‘digital world’, MiLife Identity, coupled with our robust MiIdentity platform, provides protection in cases of identity theft and resultant monetary fraud, reimbursing people for lost funds when targeted by malicious actors.

Our MiIncident category offers coverages for personal property, possessions, and disruptions. MiIncident triggers provide coverages for events that impact individuals in their daily lives. Protections are designed as warranties for tech devices such as mobile phones, IoT sensors, and smart home devices, and inconvenience payments when traveling such as a delayed flight or lost suitcase.

Each of our products give insured individuals peace of mind that should they face the misfortunes that they are covered. Once triggered, our products support our partners in providing timely inconvenience payments to their customers, quickly putting money in their pockets to help bounce back comfortably.

Innovative Underwriting

The next step is to underwrite the products in order to insure people. Simply put, underwriting is the process by which insurance companies assess risks and determine the terms, conditions, and pricing of insurance policies.

For consumer insurance policies, this involves analyzing factors like an applicant’s health, age, occupation, and lifestyle to make informed decisions about coverage eligibility and premium rates. Reinsurance – the transfer of a portion of a primary insurer’s risks to other insurers – involves a different type of risk evaluation. Reinsurers (that’s us!) assess the risks that primary insurers take on, with reinsurers focusing on assessing and modelling portfolios before deciding to offer reinsurance. This process helps spread and manage risk, enhancing the stability of the insurance market.

There are many underwriting companies out there that can assist, however, legacy systems, processes, and convoluted distribution chains have lumbered much of the industry with  high costs and premiums for end-customers – which isn’t ideal for micro premiums. Fortunately, there is another way!

Data-driven Underwriting, Backed by Lloyd’s

To keep our premiums low and be able to sell our products globally, we set our sights on underwriting in-house. First, we built an underwriting team consisting of underwriters, actuaries, and operations and compliance experts. Next, we undertook the monumental task of opening a Syndicate with Lloyd’s of London, MIC Global Syndicate 5183, which we achieved in June 2022 – after an immense amount of hard work and dedication from all involved!

We have a clear and focused product development process where we simultaneously carry out data analysis, risk assessment, decision making, wording development, and premium pricing. This ensures our digital insurance products are designed efficiently, reducing cost and increasing speed to market.

With our underwriting operations in-house, we can better understand our active accounts. As data begins to flow from partners – using APIs – our team analyses the information and creates detailed reports. This enables us to discuss pricing strategy and make informed recommendations to our partners and local insurance partners quickly to drive growth and profitability, while feeding more data into our own pricing models to facilitate future projects.

With underwriting capacity through our Lloyd’s Syndicate 5183 and MIC Re in Anguilla, we are able to offer microinsurance to global partners, accommodating projects of all sizes and scope.

Lloyd's logo with 'Syndicate 5183' and financial ratings
MIC Re and Financial Services Commission Anguilla logos

Advanced Technology Built for Scale and Speed

Selling insurance to customers inevitably leads to claims, which need to be processed and settled. It’s possible to achieve this through spreadsheets and file systems, which is fine when there’s only a few policies to handle… but this method soon becomes complicated and difficult to maintain where there are millions of insureds.

Technology for the Digital Marketplace

We invested in technology early on, creating our own tech company – MiCology. This India- and UK-based team specialises in low-code technologies and the development of powerful AI and machine learning algorithms.

Our highly relevant, affordable, underwritten embedded micro insurance products can easily be added into business’ existing digital processes through our advanced technologies. This accelerates the delivery of our digital reinsurance products when and where customers need them, allowing them to gain access to cover that is not readily available through traditional insurance methods.

With MiConnect, partner systems are operational faster than ever

Our low-code tech platform – MiConnect – enables us to configure partner systems rapidly, using pre-built components that can handle the entire insurance process, from policy management, to claims handling, to complaints. Importantly, these systems are built on cloud platforms, giving flexible scalability as insurance programs grow and more customers sign up.

Speed also comes to claims handling: with our machine learning powered digital claims process, customers have money in their pockets faster.

Configured systems are integrated with our partners’ websites and services via API, so when a claim is raised, we can start handling it swiftly*. The process is automated, with our AI machine calling in real world help when necessary. And the more claims handled, the smarter our machine becomes. Local insurers and platform companies are paid quickly once a settlement is reached, enabling them to help their customers fast.

Our claims process is monitored with real-time dashboards so partners can keep track of all the data relevant to their business – embedded microinsurance in action!

Global Distribution through Local Insurance Partnerships

Products, underwriting, and technology – it’s nearly time to start insuring people! Now these carefully crafted coverages need to get into people’s hands so that they can begin to reap the benefits. This is where distribution partners come in.

Our Lloyd’s of London Syndicate 5183 allows us to utilise Lloyd’s international licenses to write business globally. We have been building a worldwide distribution network of local insurance partners, to which we provide our digital reinsurance solutions. These local insurers are experts in their local markets with all the necessary licenses in place to insure individuals.

Our insurance partners issue insurance policies, taking on the local responsibilities of policy issuance and management, claims payment, and compliance with local regulations. Working with insurance partners enables us to offer coverage in a wider range of markets than would otherwise be possible.

Global Distribution for Partners and Brokers

Embedded micro insurance Distribution platform illustration

Digital Insurance Product & Technology Enablement

for Distribution Partners, Banks, Financial Services, Telecom, Travel

Embedded micro insurance underwriting capacity illustration

Underwriting Capacity

for Insurtechs, Insurance Companies, MGAs

Enterprise illustration

Insurance as a Service

for Enterprise, Sharing/Gig Economy, Mobility, Payment Gateways, eCommerce

Full Stack Digital Embedded Micro Insurance

The elements discussed above are all required to be classed as a full stack offering – this capability enables micro insurance companies to serve embedded micro insurance products at scale and on a global level. We have carefully combined these pillars to build the world-first full stack digital micro insurance company we are today, and in doing so we uniquely differentiate ourselves from similar companies worldwide.

  • A robust product portfolio tailored to the unique needs of diverse communities lays the foundation for trust and relevance.
  • The meticulous underwriting process, brought in-house through our Lloyd’s Syndicate, ensures both long-term sustainability and optimum premiums for end-customers.
  • Cutting-edge technology transforms the insurance and claims process, streamlining operations and improving user experiences.
  • A global distribution network ensures that these valuable services reach the farthest corners, leaving no one beyond the reach of security.

Contact us to find out how these essential elements can be used to create a micro insurance product perfectly suited to your target market, adding value to your business, and increasing customer retention and satisfaction.

* 80% of claims turned around within 48 hours, May–Dec 2023.