“Yes…but.”
“The pandemic has been a catalyser,” Pierre Gramegna, Luxembourg’s Minister of Finance, told participants of the 2021 International Conference on Inclusive Insurance (ICII) during his opening keynote address. “As well as the bad, it underlined just how much we can work together to find solutions. If we work together, we can get results – together, we can make it!”
Minister Gramegna pointed to the billions of euros already committed to sustainable finance to help tackle the twin challenges of the pandemic and climate change, but warned that trillions more are needed. “We need to agree exactly what sustainable finance is. If we cannot measure it, we cannot be sure of achieving the Sustainable Development Goals.”
This year’s ICII – held online for the second successive year - has attracted more than 1300 registrations - a record, said conference co-host and Chair of the Steering Committee Dirk Reinhard, Vice Chairman of the Munich Re Foundation. This was the upside of a virtual gathering, he said – it enabled far more people to participate than would otherwise be the case. But for the world’s poor, the disruptions caused by COVID-19 have been far more serious. “The economy is expected to grow again but it will be an uneven growth,” he said. “Some economists predict 120 million new poor because of the pandemic – this is a major setback and a clear sign that we need to build more resilience. Sometimes I think the insurance industry hasn’t yet realised how important it is to prevent people falling back into poverty.”
The need for more urgent action to scale up inclusive insurance was underlined by Katharine Pulvermacher, Executive Director of the Microinsurance Network (MiN), co-host of the ICII. “There are still four to five billion people excluded from financial services, including insurance,” she said. “Have we made progress? The answer is a resounding ‘yes’ – but we do urgently need to accelerate efforts to tackle the three Cs – climate change, conflict and Covid.”
Session 1: Landscape of Microinsurance
The need for urgent progress was further highlighted by the findings of the 2021 Landscape of Microinsurance, launched and presented at the ICII by MiN Knowledge Manager Mark Robertson. “That so many people have access to inclusive insurance products is to be celebrated, but the high numbers of un- and underserved people is also a stark reminder that there is much work for us still to do as an industry,” he said.
In an encouraging sign, despite the pandemic, the sample for the Study was increased, with data received on 704 products from 30 countries. Headlines from the report show up to 377 million people had a microinsurance product, with a total of around 90 million policies, representing 6% to 14% of the target population. Health was by far the most popular product, demonstrating a heightened awareness of health risks during the worst of the Covid crisis, followed by personal accident, life and credit life. Some worrying trends were however identified, including the five-percentage point drop in women covered, and claims ratios down from 19% to 15%. Read the full report here.
The Landscape’s findings were analysed by a panel of experts comprising Milliman Chairman Ken Mungan; Laura Rosado, Head of Strategy and Performance Management at AXA Emerging Customers; and Jan Kellett, Special Advisor and Corporate Lead for Insurance and Risk Finance at the UN Development Programme.
Insurers, said Ken Mungan, need to move inclusive insurance up to the top of their priorities. “It’s just such an enormous market,” he said. “The developed world is saturated, the growth potential is in developing markets. There’s such a strong business case, I would encourage insurers to jump in!” However, he noted that while he was optimistic in the long term that inclusive insurance would reach scale, short-term challenges include lack of financial education, product innovation, distributor enthusiasm and proportionality from regulators.
For Laura Rosado, two challenges stood out: a lack of understanding of underserved communities and insurers’ concerns about the financial sustainability of mass-market, low-premium products. “Inclusive insurance is a numbers game,” she noted. “Claims ratios tend to be lower than in traditional markets, while tech-enabled efficiencies should lead to reduced costs. The elements are all there for greater engagement with inclusive insurance.” The uptick in health products during the pandemic was encouraging but there was a need to evolve health products beyond simple lump-sum payments and hospi-cash. “Value has to be improved. Telemedicine is just the tip of the iceberg.”
Although this year’s Landscape Study covers more insurers and countries than ever before, all speakers noted the challenge of poor data in some markets. “If you can’t measure something, how can you move forward?” asked Jan Kellett. “We really value this data, and what it tells us about how inclusive insurance is supporting the SDGs. It’s invaluable, and the industry should make more use of it.” He noted the particular difficulty of gathering gender-segregated data – either insurers don’t have it, or it’s hard to extract. “We have to do a better job of disaggregating data, because if we don’t, we are in danger of leaving at least 50% of the population behind.”
The opening session ended with the results of a poll in which participants were asked to name the worries that kept them awake at night during the pandemic. Top of the list – not surprisingly – was family health and health in general, followed by job security, sustainability of income and climate change. Which goes to show that insurance professionals are no different from the clients they serve.
Download a copy of the 2021 Landscape of Microinsurance here.
Session 2: Turning failure into success
Failure and success go hand in hand, according to session host Bert Opdebeeck of Microinsurance Master – and failure should not be feared but seen as an opportunity to learn and improve.
In 2019, after considerable research and development, Radiant Yacu launched Turikumwe (“We are together”), an accidental death, permanent disability and hospital cash product aimed at motorcycle riders in the Rwandan capital Kigali. “The price was USD 1, which the riders paid through their cooperatives,” said CEO Ovia Tuhairwe. “In one quarter we had just 124 enrolments, which meant we took just USD 124. That was discouraging, but we didn’t give up and tried to find out why. The motorcycle drivers were paying the money to the cooperatives, but the cooperatives weren’t paying the money to the insurer.” As a result, the product was relaunched using a mobile phone app so riders could pay the premiums directly – and numbers grew.
Green Delta Insurance Company in Bangladesh have grown from just 250 farmers to 100,000 in just five years. Additional Managing Director and Company Secretary Moin Ahmed explained that success was mainly down to “seeing is believing” – in the first year, 200 out of 215 farmers were paid out. “People have a pre-conceived notion and we wanted to showcase paying claims,” he added. “That has helped us to showcase the numbers.” Even so, it was a slow burn. “It took us a year to design the product. Technical knowledge and capacity was a challenge. It was a new concept in 2016 and we didn’t have any knowledge whatsoever about it. We had to do a lot of dry runs, and there were no claims. We rolled out a product for cassava, but it’s very weather-resilient, so there were no claims and no scaling up. So, we learnt that we have to move into more ‘vulnerable’ products.”
The session’s third failure-to-success story came from Thilanka Kiriporuwa, Chief Corporate Services Officer at Softlogic Life in Sri Lanka. Having launched a mobile insurance product early in 2020, it soon became clear that a rethink would be needed. “We found out that the first product didn’t fit 100 percent with the target market. We then went back to our designing platforms, looking at what the customers were telling us. The lockdowns didn’t help with the distribution, so we had a problem there too. With the feedback coming in from the field we made a new product, and that’s what we are pushing now. Surprisingly, we will be breaking even this year.”
Geric Laude, Head of Non-Life Retail at Pioneer Insurance in the Philippines, identified three key takeaways from these examples. Firstly, that the launch version of any product is not final. Secondly, that a product is not only about benefits and premiums – an insurer has to think about the parts that influence customer experience. And finally, the value of partners in relation to scale. “It’s very good to hear stories of grit,” he said. “The biggest lesson is: never stop talking to your clients.”
Session 3: Designing programmes for enhancing inclusive insurance footprint
“On the one hand, governments and regulators are considered to be the velvet glove – but some people see them more as an iron fist which can limit both innovation and scale,” said session moderator Pranav Prashad, Senior Technical Officer at the ILO’s Insurance Impact Facility. “We need to focus on the interplay between governments and the insurance sector. Public-private partnerships (PPPs) can be an effective mechanism – but we have seen mixed results.”
This session sought to examine the role of governments – both at national and state level – in developing and scaling inclusive insurance solutions. Paul Omara, a Member of Parliament in Uganda, said that although the government had always supported the link between inclusive insurance and development, it should do more to increase outreach. He put forward a series of ten recommendations for strengthening the government’s role in the sector, including regulating and promoting gender-diverse products, implementing financial literacy programmes and subsidising inclusive insurance premiums.
Cynthia Ayero, an Inspection Officer with the Ugandan Insurance Regulatory Authority, outlined some of the measures already taken to make life easier for companies wishing to enter the country’s inclusive insurance market, including reduced entry requirements “to provide a softer landing” for companies who want to operate as pure microinsurance providers. As a result, the Ugandan inclusive insurance market hit UGX 1 trillion (approx. USD 280 million) in 2020 for the first time, despite – or perhaps because of – the Covid crisis.
From Colombia, participants heard about a PPP collaboration between Fasecolda – the national insurance association – and Banca de las Oportunidades, a government-run inclusive finance initiative. The collaboration, said the bank’s Programme Officer Michael Bryan Newball, has resulted, among other things, in a roadmap to modernise insurance regulation, aimed at developing an efficient and sustainable market, build industry capacity, create greater consumer protection and incubate innovative projects. One concrete outcome, reported Nataly Galán Pérez, Leader of Financial Inclusion and Innovation at Fasecolda, was the development of ten innovative microinsurance products.
Turning to India, Priya Kumar, Business Head of Emerging Markets, Rural & Agri at SBI General Insurance shared the success story of the national crop insurance scheme, which is 90% funded by the government. “Crop insurance has been around for 50 years in India,” she noted, “but it’s only since private actors came into the space in the last twenty years that we’ve seen all-risk products, greater capacity and support functions on the ground, better dissemination of information and innovations such as a unified digital platform.” Malay Kumar Poddar, Chairman-cum-Managing Director of the Agriculture Insurance Co., which is tasked with implementing the government national crop insurance programme, pointed to the importance of IEC in engaging farmers – the government spends USD 200,000 a year on IEC programmes. “That’s really important when the scheme is voluntary.” He also highlighted the involvement of governments in usage of technology, especially for data availability and loss assessments, while encouraging related innovations.
Session 4: Making insurance work for women
The final session of the ICII’s opening day asked how insurers can address the global women’s protection gap and the roles they have in mitigating the negative impacts of COVID-19 on women.
“In rich countries women lost out during the pandemic,” observed co-facilitator of the session Katharine Pulvermacher. “In developing countries, they are even worse off. Women have been disproportionately hit by job losses, reduced access to social security and diminished healthcare. They were also in the front line as health and care providers.”
Against this background, Sarah Ebrahimi, Women’s Insurance Program Officer at the IFC, outlined some key findings on women and insurance taken from the ‘She For Shield’ initiative. For a start, she said, insurers are missing out on a USD 1.7 trillion market opportunity by 2030. “Women need risk protection more than ever. There are an ever-growing number of women entrepreneurs. Women have a knack for forming long-term relationships and are increasingly heading households and making the financial decisions. Women don’t just buy insurance for themselves, they act as a conduit for purchasing insurance for other family members. They are less likely to make fraudulent claims, they’re more loyal and are great brand ambassadors. Are women valuable clients? Do we want them in our portfolio? Yes, we certainly do!”
AXA is one global insurer which has seen the potential in women-centric insurance – and is making a success of it. “We have tried to become partners to those women, so we become their insurer of choice,” said Oyinkansola Adewunmi, Lead, Distribution Support for AXA Mansard in Nigeria. “We want to enable women to grow, add value to their lives, help them mitigate risk at every step along the way. The results show we are really impacting our portfolio, we are selling to more women and our portfolio is growing.”
“Our research shows women are more and more the financial decision makers, not just for insurance but in other areas as well,” said AXA’s Global Head of ESG Business Development and Outreach Liza Garay-de Vaubernier. “By 2028 they will control up to 75% of discretionary financial decisions. Contrary to popular myth, women are not more risk-averse, they are more risk-aware. That makes them more rational when it comes to buying risk protection.”
Gilles Renouil, Global Head of Insurance Solutions at Women’s World Banking, added that men have an important role to play in levelling up the insurance protection gap for women. “The problem is not going to be solved if men sit and do nothing. We will only solve these challenges together.” The biggest gap, he noted was in health protection – higher even than for climate change and natural disasters. “It is clear that a gender-neutral approach is always going to be biased towards men. We must act quickly to include women in technology and digitalisation, and products must be designed to address women’s specific pain points.”
Summing up, Katharine Pulvermacher again identified the lack of gender-segregated data as an obstacle to scaling up women’s microinsurance. “I’ve been buying insurance for 35 years,” she said. “Every single form I’ve ever filled out has asked if I am male or female, and it asks whether the beneficiaries are male or female, so I don’t understand what insurers are doing with that information, if they are not using it to understand their client base?”
For full details of all ICII sessions, visit the conference website.