The Truncated Commercialization of Microinsurance and the Limits of Neoliberalism

Abstract

Microinsurance — defined as low‐cost insurance products targeting low‐income populations — exemplifies key themes in contemporary neoliberalism, and has figured prominently in neoliberalism's turn to discourses such as ‘risk management’ and ‘financial inclusion’. The development of commercial markets for microinsurance, however, has in practice been highly variable and often very limited. This article considers the implications of this process of ‘truncated commercialization’. It draws on a Polanyian analytical framework that emphasizes the contradictory regulatory dynamics involved in the commodification of labour. The article applies this approach by tracing multiscalar efforts to promote microinsurance, examining the emergence of the concept in the efforts of the International Labour Organization to promote social security for informal workers in the 1980s and 1990s, looking at the adoption of explicitly commercializing imperatives in the work of the International Association of Insurance Supervisors in the 2000s, and, finally, considering a case study of South Africa. The truncated commercialization of microinsurance, it is argued, provides a useful lens through which to see the practical impossibility of neoliberal development strategies.

Waiting for the market? Microinsurance and development as anticipatory marketization

“…This condition is highly uncertain with respect to microinsurance. Indeed, we might argue that a basic, unavoidable problem is that the constitution of profitable new markets for microinsurance is difficult or impossible where underlying streams of peoples' income are limited and irregular (see Bernards, 2018a). These concerns are longstanding for microinsurance advocates (see Wipf et al 2006).…”

“…Not only has microinsurance failed to help the poorest manage the depredations of widespread precarity and climate breakdown (see Johnson, 2013;Isakson, 2015), markets for microinsurance have simply failed to materialize on the scale or in the forms which promoters expected. This article explores, not so much the reasons for these failuresdiscussed in detail by, inter alia, Binswanger-Mkhize (2012), Peterson (2012), Isakson (2015), Taylor (2016), Bernards (2018a), Johnson et al (2019) but the reactions to them. I show how networks of donor agencies and consultants have increasingly focused on efforts to construct cheap and mobile calculative infrastructures in hopes of enabling profitable microinsurance operations.…”

“…Risk, vulnerability and resilience are increasingly central to global development ( Best, 2013 ; Sharma and Soederberg, 2020 ). ‘Microinsurance’ policies targeting the poorest are a key component of this agenda (see Johnson, 2013 ; da Costa, 2013 ; Aitken, 2015 ; Isakson, 2015 ; Bernards, 2018a ). Important promoters include international organizations like the World Bank, the Consultative Group to Assist the Poor (CGAP), the International Labour Organization (ILO) and the International Association of Insurance Supervisors (IAIS); bilateral donors, notably the UK and Germany; and philanthropies, especially the Gates Foundation and MunichRe Foundation.…”

Centring labour in financialization

“…Yet, we can tell a much more troubled story about the extension of the 'invitation to live by finance' (Martin 2002) elsewhere. One example is the continued failure to develop markets for 'microinsurance' (see Bernards 2018). The National Treasury department, working closely with the International Association of Insurance Supervisors and the World Bank's Consultative Group to Assist the Poor, sought to encourage the development of commercial microinsurance from the 2000s (see National Treasury 2008).…”

Weedy Finance: Weather Insurance and Parametric Life on Unstable Grounds

“…Governments now rely on insurance facilities for catastrophe bonds to finance disaster recovery (Johnson 2013a; Z. Taylor and Weinkle 2020). Meanwhile, at the local level, aid organizations have peddled microinsurance IBAI policies for agricultural products as diverse as cattle (Bernards 2018) and teff (Peterson 2012). While parametric insurance remains relatively niche, the wider market for weather derivatives was valued at US$32 billion in 2007–2008 (Randalls 2010, 712).…”