A comparison of two models to measure business success in microinsurance

Abstract

Microinsurance is an insurance product offered to low-income earners charactrized by low profitability resulting from low premiums and high transaction costs. Insurance companies are socially challenged to also include this market segment in their portfolio of insurance products to contribute to economic development and servicing the lowincome market. Business success in the microinsurance segment is, therefore, more than calculating profits. This article offers guidance to measure business success in this market. Two models were constructed to measure business success: One generalized and the other an industry specific model. These models are compared to determine which one would be the more suitable to employ as a tool to measure business success in the microinsurance industry. The analysis indicated that the generalized model is better model to use. However, the industry specific model also proves to be valuable and is more suitable for specific company applications than general industry analysis.