Expert Commentary

Potential of microinsurance to help migrants cope with risks

2010 study by the Inter-American Development Bank on the economic circumstances of new immigrants and the need for insurance safety nets.

New immigrants to the United States often confront a variety of pressing economic and social challenges. The purchasing of longer-range, risk-based safety nets such as life and health insurance often remains a casualty of difficult circumstances and the transnational nature of immigrants’ lives. With a large majority of the immigrant population living at or below the poverty line, policymakers are looking at new ways of providing services to manage risks around illness, injury, death and the like, at low cost, for this vulnerable population.

A 2010 study published by the Inter-American Development Bank, “Risk Across Borders: A Study of the Potential of Microinsurance Products to Help Migrants Cope with Cross Border Risks,” assesses the needs for immigrant communities in the United States through a survey of 900 immigrants from Mexico in New York City. The authors explore how insurance policies might be tailored to help meet the unique needs of immigrants, who often have family members in two countries and have limited means and access to the financial system.

Important points in the study include:

  • Average weekly income of Mexican immigrants in New York City was $346.59 (roughly $18,000 annually); only 21% reported having a bank account.
  • Fewer than 10% of the adults surveyed had health insurance for themselves or their spouse, compared with 82% of the overall population of New York; health insurance for dependents was much higher, with 78% reporting having insurance for their children.
  • Given that 81% of immigrants report send remittances to Mexico, familiarity with money-transfer agencies might be leveraged to support insurance payments.
  • Women have particular difficulties in this area: they generally have lower incomes and are more likely to have dependents on both sides of the border.
  • Policymakers should consider promoting the “home-based model” of insurance, where a policyholder may live abroad and his or her insurance extends across the border.
  • Making home-based insurance policies a reality in the United States would require legal and regulatory changes and the engagement of the state and federal officials.

The authors also suggest that promoting the widespread purchase of such flexible, transnational insurance policies may require marketing through non-traditional agents, something that remains difficult in the “highly regulated and protectionist” U.S. market.

Tags: poverty, Hispanic, Latino, race