According to the definition of the Microinsurance Centre,
Looking at numbers, the potential for microinsurance is striking: insurance penetration stands at less than 1% across all Middle Eastern markets. The three main obstacles for reaching this underserved population are:
Finding a low-cost distribution model, widely accessible to the majority of the target population: traditional insurance channels – such as agents or brokers – are not suitable due to their lack of scale or reach and high cost.
Collecting premium is another key issue to overcome: as less than 20% of the population in the Middle East and Northern Africa has a bank account, the number of customers eligible for traditional insurance is capped at similar levels too.
Effective customer service, policy administration and claims management are key differentiators for insurers in the value chain: however, the currently prevailing manual processes developed by insurance companies are not scalable for the large number of potential mobile microinsurance customers.