It is in the world’s best interests to make insurance inclusive. From the implications of war and the fallout from the pandemic, to the ongoing devastation caused by extreme weather events, current times only serve to emphasise the importance of financial security, and how without it whole populations, especially the vulnerable, can suffer.
Unfortunately, many low-income groups vulnerable to such scenarios are either unaware or unsure about how they can access financial services such as insurance; and even when they do, policies are often unaffordable. As instigators of risk management, the insurance industry simply cannot stand by and let this continue. As Sharon Donaldson, President of the Insurance Association of Jamaica (IAJ) pointed out during the 2022 International Conference on Inclusive Insurance (ICII), the sector has a critical role to play when it comes to both educating and delivering innovative insurance and financial products that are aimed solely for those most vulnerable.
Hosted by the IAJ and the Munich Re Foundation, in cooperation with the Microinsurance Network (MiN), presentations throughout the ICII all naturally shared a common goal: to make insurance inclusive. But how exactly can insurers deliver this? And what does it take to ensure products and services are both tailored and accessible? The answer boils down to three key elements: people, partnerships and policy.
Teamwork makes the dream work
In today’s climate, where risks and perils are evolving on a daily basis, collaborations such as those seen through public-private partnerships (PPP), are proving key to delivering affordable, accessible and suitable insurance products for all – especially for climate-vulnerable communities and those on low incomes.
In Zambia, for example, collaborations between governmental departments, financial institutions and service providers are changing the lives of smallholder farmers throughout the region. Several of these success stories were shared during the ICII, the most notable of which were instigated through partnerships between the Ministry of Agriculture, the International Finance Corporation (IFC), the Global Index Insurance Facility (GIIF), and the Zambian Financial Sector Deepening (FSDZ). Working with organisations such as GIZ has further helped insurers upscale their products for smallholder farmers.
Partnerships with aggregators are also proving fruitful in the region, particularly for product distribution and training. The success story of Zambia’s Mayfair Insurance Company’s Weather Index Insurance products is one such example. After partnering with Musika, IFC and the FSDZ, Mayfair Insurance’s product became accessible with 8,900 farmers targeted. This reach was bolstered even further following Mayfair Insurance’s successful tender for a government weather index insurance programme, which resulted in them reaching more than 1 million small-scale farmers in the region.
And this isn’t the only success story in Zambia where collaboration is helping drive the inclusive insurance agenda. The Pensions and Insurance Authority (PIA) is currently driving underwriting initiatives for index insurance products to help scale agriculture insurance. To date, partnerships between market facilitators including GIZ, FSDZ, IFC and Musika, plus a number of regulatory and policy changes, has seen nearly 1 million people gain access to insurance; a fivefold increase since 2013.
Successful partnerships between governments, regulators and insurers are also taking place across the waters in the Caribbean, where a microinsurance legislation bill is to be tabled in Jamaica in 2023. And this isn’t the only bill set to make ground-breaking changes. Although still under review, the proposed Insurance and Pensions Bill for the Eastern Caribbean Currency Union (ECCU) is aiming to establish a singular insurance and pension market across the eight ECCU member territories. As an area prone to natural disasters, such regulatory harmonisation will prove beneficial for these small vulnerable economies.
This goal for harmony is happening on a global scale as well, as has been seen with the establishment of the Global Shield, which was officially launched during COP27. By strengthening and cementing relationships, the Global Shield plans to increase financial climate protection and build resilience for the V20 and other high, climate-vulnerable areas.
“No woman, no cry”
Such financial products and programmes, however, are only valuable if everyone has access to them; and this is where the people element of delivering inclusive insurance comes into play. Unfortunately most insurance products – even those under the umbrella of microinsurance – are not always geared towards serving women. As Katharine Pulvermacher, Executive Director of the MiN highlighted during the ICII, despite making most family-oriented financial decisions, women are often excluded from financial services, especially insurance. Known as the gender protection gap, this issue is essentially leaving half the world’s population uninsured and vulnerable to financial shocks.
The reasons behind this gender protection gap are due to a combination of factors, including low financial literacy and product knowledge, lack of access to mobile internet services, and a lack of gender disaggregated data. Such barriers have hindered product development in this field; however, the tide is starting to turn, and insurers are finally starting to take note of the economic opportunity that the female market share presents.
Several examples of this development were shared during the ICII. These included Fearless, South Africa’s first – and only – car insurance product for women. Offering a digital claims process, journey monitoring, 24/7 accident and roadside assistance, and even a ‘Take Me Home’ service, it is clear that Fearless both recognises and caters for women’s needs.
ParaLife is another prime example. Taking into account the multiple roles and responsibilities that women face, ParaLife’s insurance solutions are directly aimed at women customers, helping provide financial support in times of need without impacting their family income or their children’s education.
Of course, such product development wouldn’t be possible without significant research and a greater understanding of the challenges faced by women when seeking insurance. For SOCODEVI, uncovering the challenges faced by women when seeking agricultural insurance is its main focus. Through surveys and questionnaires, SOCODEVI has been able to gain valuable insight and knowledge into the needs of women, helping it deliver opportunities for inclusive, sustainable socio-economic development, which in turn is helping to improve the lives of those in developing countries.
Putting the ‘people’ back in policies
Of course, the key to delivering inclusive insurance means insurers need to address the needs of all underrepresented segments of society. One such segment, which has been under the spotlight, especially with the kick-off of the FIFA World Cup in Qatar earlier this week: migrant workers. With 281 million economically-active migrants in the world, this isn’t exactly a small undertaking.
One of the ways insurers can reach this often underserved group is through remittance providers. Heavily dependent on money-transfer services to send wages back home, migrant workers and their families are often vulnerable to financial shocks – a point we explored in detail in September’s edition of the Network Exchange.
In 2020 alone, remittances were said to be more than USD 702 billion, and yet migrant workers remain underserved when it comes to financial aid. With little to no social protection, this sector is at risk from irregular and low pay checks, and inflexible withdrawal terms. As Rupal Kulkarni of Shram Sarathi highlighted during the ICII, such factors often “perpetuate and feed unmanageable debt”; and of course, it isn’t just the workers who are impacted – with no remittance income, their families back home suffer as well.
Helping to improve the financial resilience and economic inclusion of migrant women, men and their families, is now, thankfully, becoming the goal of multiple organisations – in particular the UNCDF. Working directly with both public and private sectors, the UNCDF is helping provide technical assistance, market research, and even capital investments geared towards this sector of society.
And this isn’t the only organisation advocating for change. FinTech company Rewire is also on a mission to empower migrant workers. Its innovative digital platform not only aims to deliver migrants a secure way to send money home, but it also provides them with personal accident cover (delivered by AIG) whenever they use the service. The more money they send home at any one time, the better insurance coverage they can access.
The reasons behind all these initiatives, projects and calls for actions aren’t just for generating local impact; the reverberations are global. As Jamaica Finance and Public Service Minister Dr. the Hon Nigel Clarke recently commented, access to finance is a critical pillar of sustained economic growth. And surely this is the ultimate goal of the financial sector as a whole, to have a sustainable and therefore prosperous global economy.
Unfortunately, without inclusive insurance this goal simply becomes unrealistic. Without a financial safety net communities will remain vulnerable, unable to rebuild their lives or livelihoods efficiently and effectively after an economic shock. Put simply, if insurance isn’t inclusive, then one way or another, the whole of society will suffer, and this is a risk we just cannot be willing to take.