6th Consultative Forum: Regulators and industry convey microinsurance experiences in Africa

Thursday, June 2, 2016
Around 70 participants gathered from many African countries to attend the first day of the 6th Consultative Forum on “Innovative products for the emerging consumer”, in Marrakesh on 11 May 2016, co-organised by the Microinsurance Network, the International Association for Insurance Supervisors (IAIS), Access to Insurance Initiative (A2ii) and the African Insurance Organisation (AIO).
The Forum started with an introduction by Bachir Baddou, newly appointed president of AIO and director general of the Compagnie d'Assurance Transport in Morocco. Later on, Conor Donaldson from IAIS, explained in his presentation, that in order to ensure client value, product innovation should be in line with the role of supervisors, promoting effective supervision, contributing to stable insurance markets and financial stability. 
The afternoon was filled with new insights on innovative products and the situation of microinsurance in Africa and the MENA Region. Jenny Nasr, Development Coordinator of the Microinsurance Network presented the findings of the Landscape of Microinsurance in Africa, based on the study conducted by the MicroInsurance Centre and co-funded by Munich Re Foundation and Making Finance Work for Africa (full report in print). She exposed the type of products marketed, their evolution since 2011, as more bundled products entered the market and almost 40% of programmes launched containing a health coverage of some kind. This explosion in health covers is primarily due to four new programmes entering the market and offering hospital cash or hospitalisation covers via Mobile Network Operators, reaching 1 million clients altogether in Africa. Most of these new products were launched in Ghana, Kenya, Zambia, and Nigeria. 
As for the MENA Region, there are no accurate figures (based on sound assessment methods) on the spread of microinsurance and many studies stress that only very few microinsurance schemes exist in the Region. However, some exist in Jordan, where a health provider is offering insurance against the treatment of cancer and 2 MFIs are offering health insurance in cooperation with commercial insurance companies. A study conducted by the ILO’s Impact Insurance Facility and the UN Economic and Social Commission for  Asia (ESCWA)  also showed that some MFIs in the Region are offering credit-life and work disability insurance whilst cooperatives in Jordan, Lebanon and Palestine are running very rudimentary mutual funeral, health transportation and life insurance coverages. Microtakful, more in harmony with Islam than conventional insurance, was also mentioned, where policy-holders insure each other, share all gains and losses and own the insurance reserves.
Douglas Lacey, partner at LeapFrog Investments, presented some of the innovative microinsurance products such as Dial a Doctor in Ghana, offered by BIMA, which allows medical advice to be distributed via the mobile phone to consumers. Another hospital support plan implemented by BIMA, facilitated by the regulators, in partnership with Tigo Ghana, offers hospitalisation insurance to customers for up to 30 nights in hospital. “Mobile penetration which covers 67% of Africa is a tool to reach microinsurance consumers more cost-effectively”, declared Lacey. Other programmes in Kenya, include index-based weather insurance offered by APA Insurance, and microhealth insurance targeting 5 million people offered by CIC Group. LeapFrog Investments is targeting the 2 billion emerging consumers in Africa, South Asia and Southeast Asia, by enabling tools to support their rise into the middle class.
Stephen Cartwright, Financial Director of MicroEnsure presented the microinsurance intermediary’s experience in enhancing client value, namely by assessing client needs and claims processes, establishing proactive engagement with the consumer through regular calls, ensuring that the enrolment process is educating the consumer, and using different methods to add value such as the dial in doctor or sms doctor schemes already established in the context of health insurance. Furthermore, he explained that leveraging distribution channels available to deliver microinsurance would be one way to add client value, e.g pharmaceuticals to offer health MI and retails and rural banks to offer other MI products. “For a health microinsurance product to take off through mobile money there is always a lag period and low claims ratio due to lack of market education. With time, the claims ratio will increase due to success stories and advertising of the products”, Cartwright added. 
Lydia Bawa, Ghana’s Insurance Commissioner, explained that in her experience, two strategies are needed to improve client value: Providing frequent surveys to monitor product development, and selling microinsurance products through rural banks instead of commercial banks to reach the low income populations in remote areas.
On the subject of consumer education, Renata De Leers, Executive Director, Actuaries Without Borders explained that building awareness in Ghana is an ongoing process and that many campaigns have already taken place, including road shows, talk shows, and ABC guides supported by GIZ. “It does not happen overnight and one should think in the long term and find a sponsor to support consumer education because it is costly”, she highlighted.
The question that arose: Why is insurance penetration still low if insurance companies were present in the market for decades? The missing pieces according to MicroEnsure are simple products, educating the consumers and engaging with regulators to build client value. Adding value to the client means supporting a human-centred product design in the long run.
Lemmy Manje, Independent Development Consultant summarised the discussions of the first day by listing the importance of enhancing client value, mainly by assessing client needs, simplifying and responding to client claims processes, addressing consumer awareness, collaborating with other regulators and increasing the frequency of data collection, both qualitatively and quantitatively.