At best, only one in four people have access to insurance; that’s three-quarters of the world’s population left potentially unprotected against daily risk and natural disasters. But there is hope to change this and close the protection gap.
As highlighted in last month’s newsletter article (the first of our 20th Anniversary celebration features), the goal of closing the people protection gap is the mission of MiN, and over the last few decades, we have played a key role in closing this gap – an achievement delivered partly in thanks to our Landscape of Microinsurance Studies.
The Landscape of Microinsurance Series is considered a unique benchmark for tracking insurance uptake in emerging countries. To date, the studies have proved influential, highlighting barriers, regulations, trends and opportunities in emerging markets – vital information which helps drive the development of suitable microinsurance products.
And it is by offering valuable and actionable market intelligence that makes these reports such a success. Such information simply cannot be found anywhere else, and as more insurers see the power of the reports and share their data too, the credibility of the reports can only grow.
This is something member Erik Jarrin Peters, Head of Latin America Life Practice at Barents Re, Cayman Islands, commented on when discussing how – by sharing common goals and interests – members can “bring their own perspective from their positions on the inclusive insurance value chain. There is value in sharing experience and working together on different projects, creating partnerships and generating value together for clients,” he said.
Inspiring a revolution
Published annually since 2010, the Landscape of Microinsurance series covers multiple markets in Africa, Latin America, the Caribbean, Asia, Oceania, and Sri Lanka, while more recent editions provide an in-depth analysis of specific regions. An additional project exploring insights on mobile operators as a distribution channel for microinsurance in Asia was also published in 2016.
With insurance activities on the rise in developing countries and growing interest from a broader range of stakeholders, providing an overview of the industry and dynamics of any given region is crucial in helping drive growth. The 2010 publication, which focused on Africa, took this direction, with surveys by representees and insurers in the region revealing inside information on the market, from insurance knowledge, pay, technology, costs and personnel limitations.
This input proved valuable during the 2012 study, where comparisons could then be made on the uptake of microinsurance – the result of which indicated tremendous growth. Nevertheless, the study recognised that product innovation was needed to meet demands. Revolutionary ideas, such as embedding products into savings accounts and using mobile network operators as distribution partners, were identified as routes to drive up insured numbers. This product evolution meant that by 2015, microinsurance was becoming more beneficial in the region, mirroring that of Latin American markets – information that was accessible thanks to reports carried out in this region as well.
Just like the African reports, the Latin American and Caribbean (LAC) studies were instrumental in revealing the nature of the market. From the first publication in 2011, data revealed that demand in the region was high; however, growth was hindered by a lack of distribution channels as well as regulatory and policy constraints.
Despite the barriers, the 2014 LAC report revealed progress towards growth. Opportunities in new technology and distribution approaches were being shared and by 2017, the potential scale and importance of microinsurance in LAC was picked up by governments, many of which started improving their regulatory frameworks to help the sector grow.
Balancing the scales
Trends vary from one region to another. The 2013 report on Asia and Oceania, for example, indicated that 40% of the countries in the region had no active insurance sector, despite having coverage of 170.4 million. Various regional differences also meant many areas were already delivering customer-centric product designs, or using low-cost distribution mechanisms, which meant that insurers needed to approach these markets accordingly – something only data from the report could identify.
The studies recognised that a lack of customer knowledge was also a setback, particularly in areas where microinsurance services were in their infancy – a point raised in the 2016 report on Sri Lanka. This data proved vital in identifying flaws that could inhibit growth – from unsupportive regulations and skills deficits – but what made this study important was that it identified solutions, including that of using mobile phones for enrolments, sales, premium collection, claims processing and payments.
From identifying the potential scale of emerging technology, such as digital platforms and smartphones, the studies were proving to be invaluable. They were also identifying shifts in customer behaviour, and, most importantly, were detecting which products were successful, and which ones were struggling to reach scale.
Taking the methodology in-house
In 2018, the study was taken in-house. Expert members of the MiN continued to provide inputs into the methodology, which was piloted in Africa. By 2020, after 10 Landscape publications to date, the world was in the grips of the Covid-19 pandemic. Now more than ever, improving the resilience of those most vulnerable was paramount; and the Landscape Series was going to be integral to delivering this goal.
The 2020 report fully implemented the new methodology, focusing on selected countries across three regions, with the aim of adding more countries over time, and repeating the survey every year to engage with respondents more frequently. Data included information on microinsurance products and market context, information of which is also available separately as country reports – now published monthly by the MiN and which provide deep dives into specific country markets to supplement the annual reports.
Nearly 200 insurance providers in 27 countries supplied data from the African, Asian and LAC regions. Understandably, the pandemic hindered some data gathering as insurers adjusted to working under the first lockdowns.
One trend that was quickly made apparent from the 2020 data was that the appeal of health insurance was at a high; and yet coverage was still low. With the significance of worldwide resilience having been made even more apparent since the start of the pandemic, the industry found itself in a position where it was best placed to protect those most vulnerable to daily and catastrophic risks. As the data showed, the scope to expand was tremendous, with an estimated USD 20.5 billion of untapped potential.
The 2021 report revealed that with the right tools and insight to hand, developments in microinsurance products have been made; however, to continue driving uptake, improving customer value and product relevance is a must.
Such findings and best practice examples have been shared recently at both the International Conference on Inclusive Insurance 2020, and the 2021 conference. During both events, trends such as the continued rise of low-cost health products, shifting perspectives on climate risks, and the importance of government support, were main discussion points, with data from the Landscape Series discussed to help find and manage solutions, from reviewing claims ratios, right through to delivering hybrid insurance models.
Knowledge is power
Over the years, interest in the reports has unsurprisingly increased, and with more independent data being made available by insurers, the reports have become a benchmark for tracking the development of the inclusive insurance market.
Since 2020, the Microinsurance Landscape study has also collected data on women’s access to insurance and how to reach more female clients, essential information which will help reach an even greater number of those most vulnerable and in need.
Without doubt, the reports not only help inform policy and business decisions, they help determine product design and provide market entry for the private sector too. However, these findings couldn’t be achieved without input from the regional teams, who coordinate collaborators around the world to deliver the right data at the right time. Without these teams, plus funding and on-going support from members, donors, and the wider financial sector, the reports simply couldn’t be created – and without the reports, gaining insights into regions would be impossible.
As MIN member Shahzad Iqbal, Chief Financial Officer at Kashf Foundation, Pakistan said, having access to the reports means “we can learn from other members in other countries about what they are piloting, what has worked and what hasn’t. It would be impossible to get all that information and experience if you weren’t part of the Network.”
Driving the market forward
Despite the challenges brought on by the pandemic, our market development work continues, spurred on thanks to the ongoing involvement of insurers around the world.
And this is why our work and the input from others is so important; the microinsurance industry is still in its evolutionary stages, and until it matures these reports will continue to be critical tools for helping insurers navigate the markets. As member Farzanah Chowdhury, Managing Director and CEO at Green Delta Insurance, Bangladesh, highlights, “awareness of insurance and financial education has to be improved, and the Network is a powerful tool to work towards that. It’s very important to contribute what we know so we can all become influencers.”
Because this is essentially what the Landscape Series – and being a part of the Microinsurance Network – is all about; it is about encouraging progression in an effort to ensure the widespread delivery and uptake of microinsurance solutions to those who need it most. It is about closing the protection gap once and for all.
All Landscape of Microinsurance studies are available for download in English for free. The 2020 and 2021 versions are available for download in English, Spanish, French and Arabic.
If you would like to be included in the next Landscape Series report, please contact us at info@microinsurancenetwork.org.