Op­pOR­Tu­Ni­TiES RifE fOR mi­CROiN­SuR­aNCE in AfricA


Mar­ket over­view

Health in­sur­ance

Con­sumer ed­u­ca­tion

Can­di­date at­tor­ney, Siba Jonas, and as­so­ciate, Lau­ren Kent, from Nor­ton Rose South Africa, pro­vide us with mi­croin­sur­ance lessons from Africa. 7KH $IULFDQ PLFURLQVuUDQFH PDUNHW LV largely un­tapped. The In­ter­na­tional Labour Or­gan­i­sa­tion (ILO) re­ports that 14.7 mil­lion lives were mi­croin­sured, out of a po­ten­tial 700 mil­lion, rep­re­sent­ing 2.6 per cent of the tar­get pop­u­la­tion.

7KH FRPELQHG DQQuDO LQFRPH RI ORZin­come African house­holds is around $500 bil­lion, ac­cord­ing to the World Bank, mean­ing there is sig­nif­i­cant po­ten­tial for growth. $ VuFFHVVIuO PLFURLQVuUDQFH UHJLPH re­quires clear com­mu­ni­ca­tion. The ILO found that the mi­croin­sured of­ten claim their pre­mi­ums if the prod­uct was not needed, sig­ni­fy­ing a fun­da­men­tal lack of un­der­stand­ing of the prod­uct.

Mil­lions of Africans find them­selves trapped in dire cir­cum­stances due to short- term strate­gies used to eke out an ex­is­tence. Mi­croin­sur­ance is set to ef­fect real change on the con­ti­nent. Through know­ing the mar­ket, de­vel­op­ing in­no­va­tive prod­ucts and ed­u­cat­ing con­sumers, in­sur­ers can cap­i­talise on

the op­por­tu­ni­ties pre­sented in the African mar­ket.

,Q GKDQD, DQ DZDUHQHVV FDPSDLJQ EDFNHG by govern­ment and pri­vate in­sti­tu­tions has been rolled out, to­gether with var­i­ous in­dus­try work­shops and train­ing pro­grammes. A pol­icy pa­per is be­ing de­vel­oped as a re­sult.

,Q (JySW, 8JDQGD DQG :HVW $IULFD, QDWLRQDO and re­gional work­shops have been held as an in­tro­duc­tory step.

,Q (WKLRSLD DQG ZDPELD, JRYHUQPHQWV DUH de­vel­op­ing mi­croin­sur­ance strate­gies to en­cour­age wider de­lib­er­a­tion and ca­pac­i­ty­build­ing ini­tia­tives.

Pre­mium col­lec­tion and pay­ment

,Q BuUNLQD )DVR, DJHQWV ZKR FROOHFW pre­mi­ums are re­cruited and trained from the lo­cal com­mu­nity, lend­ing cred­i­bil­ity and trust. While this is costly and time­con­sum­ing, with po­ten­tial for fraud, is­su­ing the in­sureds with smart cards and agents with hand­held com­put­ers at the col­lec­tion points is help­ing mit­i­gate th­ese risks.

8VLQJ H[LVWLQJ UHWDLOHUV’ LQIUDVWUuFWuUH DQG cus­tomer loy­alty to dis­trib­ute prod­ucts and col­lect pre­mi­ums is suc­cess­ful in South Africa. In Kenya, mo­bile tech­nol­ogy is used to pay for any­thing from taxi to in­sur­ance pre­mi­ums, which is de­ducted from avail­able air­time.

7R RYHUFRPH FKDOOHQJHV RI DIIRUGDELOLWy, in­sur­ance mis­trust, poor de­liv­ery in­fra­struc­ture and in­suf­fi­cient reg­u­la­tions, one in­surer in­tro­duced a com­pre­hen­sive prod­uct for low-in­come Kenyan fam­i­lies. In con­junc­tion with the National Health In­sur­ance Fund, the fam­ily in­sur­ance prod­uct pro­vided cover to a pol­i­cy­holder, spouse and all de­pen­dants for hos­pi­tal ex­penses, loss of in­come, dis­abil­ity ben­e­fits, ac­ci­den­tal death and fu­neral ex­penses for an an­nual pre­mium of $50.


/DFN RI uQGHUVWDQGLQJ DQG WUuVW LQ mi­croin­sur­ers and their prod­ucts.

/DFN RI ILQDQFLDO PHDQV WR SDy SUHPLuPV reg­u­larly, on time, or at all.

DLIILFuOWLHV ZLWK WHFKQRORJLFDO LQIUDVWUuFWuUH, which hin­der in­sur­ers in their de­vel­op­ment and rolling out of prod­ucts.

/DFN RI VuLWDEOy TuDOLILHG VWDII WR GHYHORS and mar­ket prod­ucts and ad­min­is­ter pro­cesses.

5HOLJLRuV DQG FuOWuUDO FRQVLGHUDWLRQV may limit the de­mand for tra­di­tional in­sur­ance prod­ucts, par­tic­u­larly in North Africa, where Is­lam, the pre­dom­i­nant re­li­gion, con­sid­ers com­mer­cial in­sur­ance ob­jec­tion­able.


7KH GHVSHUDWH QHHG IRU FRQVuPHU ed­u­ca­tion to im­part ba­sic read­ing and math­e­mat­i­cal skills, as well as an un­der­stand­ing of mi­croin­sur­ance.

While op­por­tu­ni­ties abound, in­sur­ers should study their cho­sen African mar­ket(s) care­fully be­fore com­mit­ting to sig­nif­i­cant in­vest­ment.

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