For more than 20 years, Fundación PROFIN has been promoting financial inclusion and economic development for low-income individuals and small businesses in Bolivia. The non-profit focuses on creative financial innovation to help improve productivity, income and employment opportunities. Edwin Vargas, Executive Director of PROFIN explains why inclusive insurance in a post-Covid world is more important than ever.
MiN: Why is inclusive insurance a priority for PROFIN?
Edwin Vargas: Insurance can be a mechanism to facilitate social mobility and move people out of poverty because it allows individuals and families to overcome unexpected shocks which impact their ability to generate income and wealth. Without insurance, progress out of poverty may be slowed or even halted. Access to insurance products and services can make the difference between achieving social mobility or remaining economically vulnerable. It is essential to focus on the requirements of our target populations - for example, we develop studies on protection needs for the design of new inclusive insurance for specific segments of the population.
MiN: How has the Covid-19 pandemic impacted your work?
EV: The informal sector in Bolivia represents 70 percent of the economically active population - most of them are self-employed entrepreneurs, some of whom go on to create a small business. The pandemic has badly hit this sector, and women in particular - there is a significant gender gap across the whole financial inclusion sector and we are working hard to reduce it as part of our current work plan.
For example, our Digitised Women Project provides financial access and business skills through virtual business and virtual financial education programmes for women to promote their products and services through digital media. We’ve also developed an app for women working as hairdressers, nurses, babysitters, chefs and builders so they can offer their services at home. Both projects include access to financial services and life insurance with cover for death from Covid-19. Currently we’re looking at business interruption insurance - there’s no previous experience of this in Bolivia, but it could clearly be useful.
MiN: How have you helped scale up inclusive insurance in Bolivia and Latin America?
EV: Fundación PROFIN sets the national benchmark for promoting and developing inclusive insurance. Since 2012 we have run the Inclusive Insurance Project, financed by Swiss Cooperation, and we’ve made significant progress in all three areas of intervention: market development by joining supply and demand; financial education with an emphasis on insurance; and commercial agricultural insurance.
MiN: What is the current inclusive insurance market in Bolivia like?
EV: The market is still developing and many challenges remain. It is influenced by two main factors: the willingness and interest of regulatory bodies to stimulate the development of products; and technology to facilitate access at a reasonable cost, even in rural areas. Technology is essential not only for selling products, but also for managing renewals and claims payments. InsurTechs can provide inclusive insurance solutions at mass scale, but despite growing interest, companies are not trying hard enough to develop emerging markets.
Inclusive insurance should be simple both from a legal and technical perspective. The policies and its conditions should be easy to understand, with simple cover and clearly defined insured amounts and benefits. Claims payments should be paid out with little to no delay and require a minimum of admin. Coordination among the key market players is essential to achieve this.
MiN: In your own words, what’s the importance in being involved in MiN’s country workshop initiative?
EV: Building the capacity of insurance professionals is essential in order to develop an active inclusive insurance market. We’ve already held training on InsurTech and insurance linked to credit, and we’ve also established an inclusive insurance committee where we can exchange experiences, discuss what does and doesn’t work and have a common voice to influence the regulator.
The MiN’s country workshops are an ideal complement to these activities - for example the most recent workshop - attended by the Bolivian Association of Insurers (ABA) and the Association of Insurance and Reinsurance Brokers (ABOCOCER) - benefited from feedback on the results of the 2020 Landscape of Microinsurance Study. Several insurers have already added value by providing data on their companies.
MiN: Why did PROFIN join the MiN?
EV: We see the MiN as the leading global platform for promoting the development of inclusive insurance worldwide. The Network has an extensive track record in convening a large and diverse number of members and stakeholders with the same objective - to democratise insurance. It is a privilege to be representing Bolivia in the Network.
We have benefited greatly from participating in all of MiN’s virtual activities during the pandemic, and having a dedicated regional initiative for Latin America and the Caribbean makes us feel included in the Network. Exchanging on regional experiences, the sharing of knowledge between organisations and conducting peer learning events are crucial in giving further impetus to insurance education and consumer protection initiatives.