African insurance market gets boost on back of two new partnerships
Efforts to deepen insurance penetration in Africa through market development initiatives will soon receive a boost, as ILO’s Impact Insurance Facility gets new partners.
In the month of October, The ILO’s Impact Insurance Facility signed partnerships with both the African Reinsurance Corporation (Africa Re) and Financial Sector Deepening Africa (FSDA) to support and enhance the development of micro insurance markets in Africa.
The partnership with Africa Re will develop the capacity of insurance providers to offer valuable insurance products to the financially excluded population, and will promote cross country collaboration and sharing of good practices among African countries. The partnership with FSDA supports insurers to provide scalable insurance solutions to low-income households and SMEs in Sub-Saharan Africa. Through the partnership, the Facility will work with five insurers and distributors to implement organisational change management and product innovation.
According to the facility, mobile insurance has been dominated by loyalty models, in which a mobile network operator (MNO) pays an insurance company to provide free insurance to its clients in order to increase client loyalty or airtime usage.
“Actuaries in Microinsurance” aims to help develop the actuarial capacity in the microsinsurance market, improve the relevance and sustainability of products, and ultimately assist individuals, families, and communities escape poverty. The book, authored by Jeff Blacker and Mary Yang, was recently released and can now be purchased online.
The ILO’s Impact Insurance Facility is thrilled to collaborate with Africa Re to extend better insurance coverage to more low-income households, small enterprises and smallholder farmers. We believe that Africa Re’s relationship with the insurance industry and governments across the continent will provide a strategic entry through which we can jointly promote the impact insurance agenda.
This partnership will develop the capacity of insurance providers to offer valuable insurance products to the financially excluded population, and will promote cross country collaboration and sharing of good practices among African countries. This partnership will also strengthen substantially Africa Re’s efforts in further developing African insurance markets.
Insurance is vital to social and economic development. It delivers tremendous impact for households, enterprises and countries: Insurance provides a critical safety net for households. Even partial insurance cover helps households avoid resorting to damaging coping strategies, like selling assets or taking children out of school; A strong and inclusive insurance market boosts the productivity of enterprises of all sizes by enabling entrepreneurs to pursue higher risk opportunities, and therefore makes a vital contribution to economic growth; Insurance is a powerful tool for governments to achieve public policy objectives. The insurance industry can be an indispensable ally in promoting access to vital services, including health care and agricultural services, and in making communities more resilient to climate change.
But in many developing countries, the insurance industry is not yet fulfilling its potential, with less than 2 percent penetration across the African continent.
ILO comes on insurance from both social protection and enterprise development angles. We, at the Impact Insurance Facility, enable the insurance industry, governments, and their partners to realise the potential of insurance for social and economic development. The Facility was launched in 2008 with generous support from the Bill& Melinda Gates Foundation, and has received subsequent funding from several donors, including the Z Zurich Foundation, Munich Re Foundation, the World Bank Group, USAID, AgenceFrancaise du Développement and AusAID.
The Facility brings to the table its six-year experience of managing insurance innovation with 60+ partners, connections to an extensive network, a qualified technical team, leadership in customer-centricity, and the largest one-stop shop for inclusive insurance know-how.
Since 2008 the Facility has pushed the innovation frontier in microinsurance through grants and technical support for product and process innovations. The Facility has established itself as a critical knowledge centre, extracting lessons from pioneers, facilitating learning, and sharing successes and challenges with all interested stakeholders. We have also worked to support various countries in developing inclusive insurance markets, including Ethiopia, Zambia, Kenya, Senegal and Tanzania, with several other countries in the pipeline. To do so, we leverage our current trove of lessons and tools, as well as good partnerships with local players, to build capacity of different stakeholders, facilitate knowledge exchanges and accelerate the evolution of insurance markets.
Modestus Anaesoronye