New data reveal highly inequitable trends in access to insurance for women in emerging markets

Thursday, June 25, 2020

New data compiled by the Microinsurance Network (MiN) from 18 countries across Africa, Emerging Asia, and Latin America unearth the distressing degree to which women in developing markets are excluded from financial services, including insurance.

The variable data, gathered by students from the Katie School of Insurance and Risk Management at Illinois State University using the World Bank Global Findex, were presented at a series of ‘deep dive’ sessions at the recent June Member Meeting (JMM). The students looked at six countries in each of the aforementioned regions, gathering inconsistent rates among men and women with accounts at a financial institution and with mobile money accounts. They also compared gender discrepancies when it comes to taking out a loan from a financial institution.

Across all regions, women score worse than men in the three above indicators. On average, 40% of women have an account at a financial institution, against 50% of men. Nearly 13% of women have a mobile money account, while 17% of men own one. And, just 30% of women borrowed money in the previous year from a financial institution, compared to 35% of men.

Diving deeper into the regional data exposes some significant variations. In the six African countries surveyed (Burkina Faso, Egypt, Kenya, Senegal, South Africa, and Uganda), more men and women have bank and mobile money accounts than in either Asia or Latin America. Latin America (represented by Bolivia, Colombia, Mexico, Nicaragua, Paraguay, and Peru) scored lowest for both genders for both bank accounts and mobile money accounts. Emerging Asia (Bangladesh, Cambodia, India, Indonesia, Nepal, and Pakistan) has the highest rate of borrowing from a financial institution, 38% for women and 43% for men.

Country-level data also highlight some wide disparities. India heads the table for the highest rate of financial inclusion, with 77% of women and 83% of men having an account at a financial institution. Yet, along with Egypt, India has the lowest levels of mobile money accounts; just 1% of women and 3% of men. On the other hand, Kenya rates highest for mobile money accounts; 69% of women and 77% of men. This is likely a reflection of their access to banking services. In comparison, South Africa ranks very low on the use of mobile money, although it has high levels of mobile usage and penetration. As for borrowing from a financial institution, only two countries, Burkina Faso (15% to 10%) and Bolivia (46% to 43%), show women ahead of men, although not by a significant margin.

It is worth noting that the lack of reliable internet connectivity and extensive coverage are major factors in determining the size of bankable people in the developing and emerging markets. As for women, the equation is even more complex. In some examined countries, the presenters pointed out the fact that women often have access to mobile phones, of which the SIM cards are usually owned by the men in the family. In order for a woman to legally set up her own mobile money account, she needs to own the SIM card.  

Moreover, the need for building trust, especially among vulnerable groups such as women, was a common theme across all regions. “We need to get in the field and listen to those who buy our insurance policies. It’s important to maintain links with customers, build trustworthy relationships, work hand in hand with those on the ground, and always keep our beneficiaries in mind” said Vance Abissa, CEO of Inclusive Guarantee when observing the landscape in Burkina Faso.

Along the same lines and promoting the value of trustworthy relationships with women entrepreneurs in lower-income countries, the work done by Women’s World Banking (WWB) in Egypt was underlined by Nadia Boughaba, Head of Products and Data at AXA Emerging Customers. WWB help build trust and enrich the insurance culture in the low-income sector. “It’s really important not to underestimate the lack of trust; women need to know what they are covered for and trust they will get paid out” Boughaba emphasised.

Adding a layer to the challenge, the Global Findex does not include insurance data. Nevertheless, all the deep dive experts agreed insurance penetration levels tend to be very low across the countries showcased, averaging 3.3% in Africa, 1.5% in Emerging Asia, and 1.8% in Latin America. Cambodia showed the lowest insurance penetration rate. It is actually recorded at 0%, although the lack of reliable data makes it uncertain, said Patrick Mazière, CEO of Prévoir (Kampuchea) Micro Life Insurance. Evidently in all three regions, the data indicate women lag behind men when it comes to financial inclusion and access to financial services.

A gender perspective is an underlying and an inseparable part of the financial inclusion debate. MiN Board Member and Founder and Managing Director of Kashf Foundation in Pakistan, Roshaneh Zafar, stated “financial inclusion from a gender perspective is on the decline.” She pondered, “we are trying to work out why the numbers are going down; they have almost halved in recent years. Is it because of the types of offered products, or lack of education? What is holding women back in terms of access to finance?” For example, Public-Private Partnerships (PPPs) could play a major role in rolling out insurance products for women.

The significant gender disparity was also highlighted in other countries. Tara Chiu, Associate Director of the Feed the Future MRR Innovation Lab claimed, “Uganda has a culture of cooperatives, women’s groups and village groups, on which insurance sales could be effectively layered.” Chiu added that technical expertise is still evolving and that although this was a weakness it could also be seen as an opportunity. Mobile access, however, is compromised by rural and gender inclusion, she concluded.

Impacts of the Covid-19 pandemic on low-income entrepreneurs, and especially women, were not overlooked either. The Coronavirus crisis has hit women in India exceptionally hard, and NGOs are driving the response, said Annette Houtekamer, co-founder of IBISA and DHAN International Board member. She added, “the biggest issue is lack of income; most people have informal jobs and no social security. It would be very beneficial if there was any kind of income protection scheme for low-income people, but there is nothing. We’ve also seen a worrying increase in domestic violence during the lockdown.”

All speakers agreed that regardless of gender or region, there is an urgent need for insurers to understand low-income customers better and to take into account their particular needs, especially in the current context of Covid-19. “The pandemic has raised awareness about the need for insurance, and insurance companies are getting ready to engage people who need to leave the lockdown behind and go to work,” said Edwin Vargas, Executive Director of Fundación PROFIN in Bolivia. “Until now, there has been very little investment in raising awareness; most people still do not have an idea what insurance is and what it does.”