Insurance may improve migrants’ resiliency and recovery from crisis
Date: Wednesday, February 15, 2017
By Emily Zimmerman and Barbara Magnoni, EA Consultants
Migrants face great risks and pressures in their lives, even in “normal” times. They suffer greater prevalence of health problems, work in unsafe conditions, and earn low and uncertain incomes that contribute to higher poverty rates than native-born individuals. Our own experience researching the financial needs of migrants has taught us firsthand that these many immediate worries, together with migrants’ concerns about the safety and wellbeing of their families at home, constantly compete for their attention and money. Migrants are also more isolated from community and family support networks, social services, and safety nets, even when they are legally eligible to receive those benefits. Their many existing conditions of vulnerability leave migrants open to greater harm from a conflict or natural disaster; at the same time, their more limited access to resources and support persists during and after crises.
All of this suggests a need for creative tools to improve migrants’ resiliency in normal times and to respond to crisis events when they occur. Among its guidelines, the MICIC Initiative asserts that states and other stakeholders should “empower migrants to help themselves, their families and communities during and in the aftermath of crisis” (Guideline 3). Insurance may contribute to this objective, playing a limited but crucial role in building resiliency before a crisis and/or helping migrants to respond and recover. Social or private insurance might cover a wide range of risks, such as:
The cost of repatriation to the migrant’s home country if the migrant can no longer work due to a medical condition, and the cost of medical evacuation if the migrant needs medical care that is not available in the host country (e.g., mandatory insurance purchased by agencies that place Filipino workers abroad, which also covers a host of other risks).
Small life insurance policies that provide a cash benefit to families and/or cover the cost of repatriating the migrant’s body to their home country in the event of an untimely death (e.g., through a voluntary scheme offered to migrants in Spain through CaixaBank).
Health insurance in the host country, which may be offered by extending benefits available to citizens to migrant groups or by creating a special product to meet certain migrants’ needs (e.g., reimbursement to medical providers for emergency care from the German government and access to general practitioner consultations by certain undocumented migrants in France).
Insurance that addresses migrants’ risks may take a variety of forms. In a 2016 MICIC issue brief, we outlined models and considerations for states and private sector actors to design insurance for migrants and their families for crisis-related risks. Insurance products fall into three categories (drawing from Magnoni et al., 2010), depending on the country in which the insurer is based and where the risk occurs: migrants’ host (receiving) countries, home (sending) countries, and hybrid models spanning both. Delivery can also take different forms, including sales directly to migrants or purchase of insurance on migrants’ behalf by sending or receiving governments, employers, or placement agencies.
There is great potential value in using insurance products to address migrants’ needs, but insurance solutions should be carefully crafted, and may not be appropriate in all contexts and for all risks. States, NGOs, and/or private sector actors designing an insurance program for migrants should be mindful of its complexity and limitations, considering and addressing in particular the four challenges of insurability, affordability, scale, and servicing:
Insurability. Although insurance can be suitable for a wide variety of risks before or directly related to a crisis, not all risks are insurable. Events covered by insurance cannot be completely certain to happen, nor can the possibility of their occurrence be completely impossible to assess.
Affordability. Migrants face many competing pressures on how to spend their (often limited and uncertain) income – as a result they should not generally be expected to pay for comprehensive coverage. This leaves two alternatives: 1) to offer small, affordable products directly to migrants, or 2) for entities such as governments, employers, or recruiters to purchase or subsidize insurance for migrants, which allows the possibility of offering more comprehensive coverage.
Scale. To be commercially viable, insurance products must cover a relatively large number of individuals. Scale can be reached quickly through compulsory products, but compulsory insurance is not always feasible or preferable. Scale can also be reached more gradually by marketing an affordable product to a large target population, though this requires patience and modest expectations for the program’s commercial return.
Servicing. Even under the best of circumstances, insurers can sometimes be slow to process and pay claims. Servicing is particularly complicated in a crisis situation, when infrastructure is weakened but damage is widespread and many people may be eligible for benefits at once. The stakeholders creating an insurance program should pay careful attention to how, and whether, it will function in a crisis to ensure that it is actually available in the time of need.
Evidence from existing practice, together with these concerns, suggests that insurance may be a valuable but limited solution to migrants’ needs, increasing resiliency and improving their ability to respond to crises. As a final note of caution, as with any solution, careful attention should be paid to those who may be overlooked, including irregular migrants who are often among the most vulnerable.
Emily Zimmerman is a former Senior Research Associate at EA Consultants, where her work centers on researching the financial needs and use of financial services by low-income and otherwise vulnerable individuals, with a focus on risk, resiliency, and insurance.
Barbara Magnoni is the President of EA Consultants, where she leads research studies, evaluations and implementation of new projects and advises governments, international organizations and financial institutions on financial inclusion, gender, and microinsurance.