4th Eastern and Southern Africa Regional Conference on Microinsurance concluded on 30 August 2017 in Kigali, Rwanda
According to the 2015 Microinsurance Landscape Study, Rwanda has the sixth highest microinsurance coverage ratio in the East African region. However, less than 2% of the over 12 million people living in the country are covered by microinsurance. Only about 9% of adults are using insurance. Overall, insurance penetration remains low in the region. How to accelerate the development of inclusive insurance markets in Southern and Eastern Africa was the overarching theme of the 4th Eastern and Southern Regional Conference on Microinsurance.
Insurance for development
According to Gaudens Kanamugire, Chair of the Association of Insurers in Rwanda (ASSAR), the microinsurance segment has been ignored for a long time. "The insurers of tomorrow will be able to understand the insurance needs of the informal sector, be capable of designing products that address the needs of the informal sector and will succeed in efficiently distributing products in the most cost-effective way" concluded Kanamugire. The informal market represents an important growth opportunity for the industry as the high-end market is highly competitive and undercutting prices challenges profitability. Furhtermore, insurance is key in supporting sustainable economic development and achieving the sustainable development goals established by the UN as of January 2016:
110 international and regional participants and experts exchanged experiences and discussed a number of key themes and topics on inclusive insurance business.
The top priorities in the region include health and agriculture
More than 70% of the population in Rwanda for example rely on agriculture as a source of income. The 2016 Microinsurance Landscape study conducted by Access to Finance Rwanda (AFR) shows that agriculture insurance covers around 100,000 rural households, and credit life covers just over 50,000 low-income borrowers only. According to market assessments, clients seem to have positive insurance experience despite the low insurance penetration. “On the radio, they tell us about global warming, so we decided to take out insurance for our crops”…“insurance payouts take about a week. To us that’s quick”, said farmers in Rwanda - according to findings presented by Jean Bosco Iyacu, Director of programs at AFR. However, the low scale has been a barrier to achieving business viability in agricultural schemes in Rwanda.
To overcome low availability, strong involvement from the government as well as appropriate or proportionate insurance regulation are required. For instance, a variety of entities that could distribute microinsurance do not have a license to do so. Flexible regulation that allows these entities to play a role would be an important step. Rwanda is in advanced stages of formulating specific microinsurance regulations and will soon be joining a number of countries creating an enabling regulatory environment to accelerate growth of the microinsurance sector.
Figure 1: Percentage of population covered by microinsurance in East Africa. Source: The World Map of Microinsurance, 2015
Combined efforts between governments, NGOs and insurers are necessary to move agriculture insurance programs beyond the pilot stages. Insurance is promoted disproportionately and tends to be forgotten as a key risk mitigation tool. Availability of data remains a key challenge. Educational campaigns as well as collecting and managing data could be important governmental roles in addition to setting up an enabling regulatory environment. This should be complemented with risk reduction and prevention, such as improved water management or health care campaigns. Linking agricultural insurance with e.g. loans for input products such as seeds has shown promising results.
Technology and mobile payments seem to be promising to reduce costs and improve customer service. Dutch PharmAccess in partnership with Safaricom and CarePay have developed a platform called M-tiba which connects payers of services, patients and health care providers. Using this platform, patients are able to pay their bills from their m-tiba wallet using mpesa. In Kenya, a large proportion of the population still pays for their health care out of their pockets, so the platform now even enables people to save for sickness using their m-tiba wallet.
In an interactive pre-conference training hosted by the ILO’s Impact Insurance Facility, participants learned how to provide insurance responsibly.
The way forward
“Rwanda is tired of low insurance penetration and it is high time inclusive insurance conversation involves proper numbers”, said representatives from the industry. Insurers together with the supervisory authorities supported by AFR will work on the following topics in the near future:
Closing of the 4th Eastern and Southern Regionial Conference on Microinsurance.
Left to right: Waringa Kibe, Country Director, Access to Finance, Rwanda; Dirk Reinhard, Vice Chairman, Munich Re Foundation, Germany; Gaudens Kanamugire, Chair, ASSAR, Rwanda and Lemmy Manje, Consultant, Zambia.
The 4th Eastern and Southern Regional Conference showed that industry, supervisors and donors are committed to the inclusive insurance agenda and ready to push through the necessary changes at each stage to build a sustainable, inclusive insurance market and enable millions of people working in the informal sector to manage their risks and improve their livelihoods. Munich Re Foundation will take up this role and continue to support the efforts in developing microinsurance markets. Together with its partners, it will organise the 14th International Microinsurance Conference taking place in Lusaka, Zambia in November 2018 to facilitate the exchange of knowledge and experience.