By invitation: Matthew Genazzini recalls the evolution of inclusive insurance and why Luxembourg’s support matters
As part of our ongoing interview series with inclusive insurance leaders, we spoke to Matthew Genazzini, the new Executive Director of the Microinsurance Network in early October. Unlike previous interviews, this took place in person just a few days after Matthew started his new role. While the interview spanned several topics, this blog focuses on two pressing questions: how the sector has changed and what role Luxembourg has played in promoting inclusive insurance.
You’ve been involved in inclusive insurance for at least 15 years. How has microinsurance innovation changed in that time?
Inclusive insurance innovation ultimately comes down to product types and distribution channels. Since the MiN’s launch, we have seen several points during which there was a “buzz” about new opportunities in inclusive insurance. Each buzz led to some type of industry development, but not without challenges emerging.
When I first got involved in microinsurance in 2009 there was a lot of excitement about credit-life insurance and the possible scale that the industry felt could come out of this. ADA, where I previously worked, was supporting a programme with CIF – a federation of 6 co-operatives operting in five West African countries. Around 400,000 people were covered through a credit-life product.
At the time, there was a lot of optimism about working with microfinance institutions (MFIs): the industry needed to add more products to reach scale and offer value to customers. In hindsight, this was a little premature. The thinking was that seeing as MFIs tend to be close to their target audience, creating a high degree of trust, this should allow the former to easily distribute inclusive insurance. However, it was not straightforward to go beyond credit-life products.
The next buzz came about when the adoption of mobile technology started to rapidly grow. It felt like everyone was using a mobile phone. The feeling was that inclusive insurance could be sold through mobile, by bundling with airtime top-ups or by allowing customers to pay using their airtime balances. There was a sense of “this should work – it shouldn’t be too difficult either”. Amid the promise offered by mobile technology, the main challenges centred on the value that customers would receive and whether people would use the product they had signed up for.
Mobile-enabled microinsurance grew significantly, but over time, several issues arose, and the excitement died down. These innovative products took a tumble, and, as an industry, we started talking less about it. Mobile network operators lost interest in inclusive insurance and ultimately became less engaged in wanting to offer insurance to their customers. From an industry perspective, achieving stickiness through mobile was not as easy as assumed.
There was also a buzz about insuring smallholder farmers. The same optimism emerged this time too: index insurance first appears to be simple and the product should scale. Technology had become accessible and more affordable, which enabled index insurance schemes to be designed and launched in new regions. Much progress has been made: index insurance has experienced numerous successes and failures. Despite this, the sector has learned from every pilot that hasn’t become a programme – index insurance has a role to play in improving climate resilience.
Overall, as an industry, we are in a better place now than we were 15 years ago. There is much more to come. It’s anyone’s guess what the next buzz might be!
The Government of Luxembourg has been committed to promoting inclusive and innovative finance for around 30 years. How important has Luxembourg’s support been in promoting innovation in the inclusive insurance sector?
Inclusive finance has been at the forefront of the Government of Luxembourg’s (GoL) development objectives – this is impressive as Luxembourg’s support has been second-to-none and integral for so many organisations. The GoL has been the Microinsurance Network’s most important partner since it became an indepent entity, and even before that. We have benefitted from the support provided in several ways: we have been able to develop and promote innovations, tap into networks for global actors and – importantly – create communities of stakeholders.
While this has benefitted many organisations in the sector, not all donors see value in creating global platforms for knowledge exchange. This is where Luxembourg’s support has been integral: the MiN serves as a platform for much more than the photos of a product launch. It’s easy to overlook the importance of such fora, but knowledge exchange is an important ingredient to developing the inclusive insurance sector. Even though we are not in the thick of the “action”, our members are, and through them, we create value for the industry.
Being in Luxembourg, we benefit from the close proximity to other entities that support innovation and regulatory improvements. Around half of all impact investment funds in inclusive finance are domiciled in Luxembourg. Being part of this community, which the Government of Luxembourg has helped create, means that the MiN is part of a holistic approach to supporting inclusive finance. Having different experts work closely or with the ability to collaborate with others is key to developing the inclusive finance sector.
The question often asked is: “Why does Luxembourg support this sector?” The country’s financial sector has been highly successful, which makes inclusive finance a natural, parallel target for development. Part of the rationale is how Luxembourg’s financial sector expertise can be used for the Global South. This strategy is not a coincidence – Luxembourg is a small country, and promoting the growth of inclusive finance has put it on the map. Platforms such as the MiN can bring people to Luxembourg to share and learn from each other. Importantly, this also puts the country at the forefront of a global conversation.