This paper was commissioned by the “Good and Bad Practices in Microinsurance” project.  Managed by the ILO’s Social Finance Programme for the CGAP Working Group on Microinsurance, this project is jointly funded by SIDA, DFID, GTZ and the ILO.  The major outputs of this project are:

• A series of case studies to identify good and bad practices in microinsurance
  
• A synthesis document of good and bad practices in microinsurance for practitioners based on an analysis of the case studies. The major lessons from the case studies will also be published in a series of two-page briefing notes for easy access by practitioners.
  
• Donor guidelines for funding microinsurance.

At the end of the 1980s and in the early 1990s, Peru suffered a severe economic crisis that led to the implementation of structural adjustments measures to achieve macroeconomic stability.  These policies resulted in a revitalisation of the financial system, including the emergence of new types of financial institutions. In this context, low-income persons, who previously had
not had access to credit, found funding alternatives in line with their circumstances, which enhanced their income and improved their living conditions.

However, the development achieved in microcredit did not result in the poor’s corresponding access to insurance. The new insurance law issued in 1993 did not promote insurance products for the low-income market—in fact, quite the opposite. Higher capital requirements caused some insurance companies to merge, while others left the market altogether.

This case study relates the experiences of one insurer, SEGUROSCOOP, that was hurt not only by the regulatory changes, but also experienced a decline in its core market, Peruvian cooperatives, which had not weathered the storm of hyperinflation and macroeconomic instability very effectively. From October 1994 SEGUROSCOOP had to cease operating as an insurance company for the cooperative sector and became a company offering protection services, as Serviperú is today.

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