MUSCCO: Malawi Union of Savings and Credit Cooperatives (CGAP Working Group on Microinsurance Good and Bad Practices Case Study No. 8)

Publication Date: Mar 2005
Published by: CGAP Working Group on Microinsurance
Document Type: Case Study (PDF)

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Malawi Union of Savings and Credit Cooperatives: Growth and lessons learned

This paper details the growth of Malawi Union of Savings and Credit Cooperatives (MUSCO) and lists the lessons learnt from its experience. The paper states that:

• MUSCO was founded to channel support to the Savings and Credit Cooperatives (SACCOs) of Malawi that offered savings services to people who were not serviced by commercial banks.

The paper presents the lessons learned as follows:

• Organizational Structures:
  • For micro insurance to be viable in Africa it has to be integrated with other operations such as savings and credit;
  • Distribution of the insurance service will have to be done through an existing organization, which already handles transactions with the working poor;
  • Claims verification is done at the SACCO level to reduce the cost of claims underwriting;
  • Viable microfinance would involve decentralization of claim preparation and verification to local organizations.
• Product Design:
  • Mandatory insurance policies minimize administrative and processing costs;
  • MUSCO has a simple life savings scheme, which is cost effective;
  • Simple terms make it easier for clients to understand them.
• Actuarial Reviews:
  • Actuarial reviews should be carried out regularly;
  • Social changes that affect insurance need to be carefully observed;
  • Actuarial reviews should specify how reserve funds should be amassed.

Other lessons are that:

• Micro insurance services should be applicable to local conditions;
• Activities in the area of nutrition and health should be undertaken by the insurer, in order to increase life expectancy and decrease the number of claims.