Banking and insurance - a partnership based on trust

An innovative health insurance product paying hospital cash of US$25 a night in return for a premium of just US$1.50 a month? It sounds too good to be true, but for thousands of Ugandan women it is a reality thanks to a partnership founded on trust between banking and insurance.

Bringing inclusive finance and inclusive insurance together to create greater impact for under-insured and uninsured people was the theme of the 47th midi de la microfinance in Luxembourg, co-organised by the MiN, along with ADA and Eighty participants gathered at the Bank of Luxembourg to hear Ann Nakawunde Mulindwa, Managing Director of the Finance Trust Bank in Uganda, and MiN member Gilles Renouil , Director of Microinsurance at Women's World Banking, discuss the challenges and rewards of putting a bank and an insurer together to scale up health insurance for women.

With MiN Board member Matthew Genazzini of ADA in the chair, the audience heard that insurance penetration in Uganda is a big challenge, at under three percent. “People think there are other ways to survive without insurance. It’s not an easy sell,” said Ann Nakawunde Mulindwa.

“When you are lending to women you have to understand their needs. Women have specific health needs. If women are healthy, they will be able to pay back their loans,” said Ann. “For most micro-enterprises, the business and the owner are inseparable. If the owner goes to hospital, the business suffers.”

For Gilles Renouil, it all came down to trust. “There are operational issues, but the main problem is trust. When a customer takes a loan from the bank, the bank trusts them to pay it back. Clients need to trust that their claim will be paid and paid quickly. Building trust is key.”

There also needs to be trust between the bank and the insurer. “It wasn’t easy to persuade an insurer to come on board, the premium was so small, they couldn’t see the profit,” says Ann. “Putting the bank side and the insurance side together is not easy, and we are still working on it.”

There is a symbiotic relationship between microfinance and microinsurance. “Insurance is about risk mitigation, and micro-loans are risky, so as a bank, we went looking for partners who could offload that risk - those are the insurance companies,” says Ann. “It is also really important for the bank and the insurer to work together to ensure a fast, smooth claims process.”

“We don’t do microinsurance because it’s not our core competency,” she says. “We need the insurers to come and say ‘Here we are!’ But I find the insurers are slow to capture the market. We need the insurance corporations and associations to come to us and say, ‘Let’s do this together - because when we do it together, it’s cheaper.”