MILK Brief #21- Colombian Life Microinsurance: An emerging success story

Life microinsurance in Colombia has been a growing and profitable business, contributing materially to both the top and bottom line of companies engaged in the sector. MILK's latest brief provides an overview of our business case work in Colombia, focusing on the experience of the insurer MAPFRE, which reflects these trends with significant growth in its Colombia-based life microinsurance business, but has also enjoyed a privileged position in Colombian microinsurance market, a position which may be changing. MAPFRE's life microinsurance market share in 2012 was 23% for the products we studied, which can in large part be ascribed to being the first to market in partnership with a public utility. The high growth rates in the life microinsurance sector slowed dramatically in 2012 for MAPFRE and others. This leveling off appears to reflect increasingly crowded and competitive distribution channels and a decline in funeral cover sales as a result of a new regulatory restriction.

The life microinsurance sector in Colombia is at a critical juncture. Intensifying competition, effective but expensive distribution and an evolving regulatory environment have raised questions about how the next five years will unfold. Our follow-up paper later in 2013, including additional data on MAPFRE's operations as well as several other insurers and distribution partners in Colombia, will shed additional light on how the market is expected to develop beyond this juncture.