Making Nigeria’s micro insurance initiative an adaptation mechanism for the underprivileged
As the nation’s insurance industry firms up arrangements and licensing protocols to kick start micro insurance in Africa’s largest populated country, experience across other markets are providing the needed guidance for easy take off.
According to experts, micro insurance will pave the way that will not only bring the poor out of poverty, but also sustains them above the poverty line and support market growth.
They also believe that to meet the needs of the customers and drive the business profitably remains the greatest challenge faced by those in the development and financial inclusion community.
Feelers from the market show that, a number of conventional insurers are looking at how to come into the main stream micro insurance business in line with the National Insurance Commission’s policy guidelines.
According to sources while about five new firms have put in preliminary application for licensing, not up to three conventional players have resolved to get new license.
During a workshop Increasing Access to Inclusive Insurance, co-organised by the MiN and the Pakistan Microfinance Network (PMN) last week, Michael J. McCord, Managing Director of the MicroInsurance Centre at Milliman, emphasised how the use of insurance could bring about change to the underserved, and the need to create products that help protect their interests.
Understanding the client and their needs is crucial, and a lack of this often leads to misconceptions in product design, which is ultimately detrimental to both the client and provider. That is why microfinance providers have been identified as a stakeholder well-placed to develop suitable and affordable products for clients and insurance companies, using their proximity with and knowledge of the target client to ensure tailored and effective products.
Katharine Pulvermacher, executive director of the MiN, gave an overview of the role of the microinsurance industry globally and within the Pakistani context, emphasising how inclusive insurance provides crucial underpinning for sustainable development.
It is designed to meet the needs of emerging consumers and plays a critical role in preventing households from falling back into poverty after a financial shock. It is therefore an important enabler in the economic and social development of a country and in the achievement of the United Nations’ Sustainable Development Goals (SDGs).
As a risk mitigation strategy microinsurance is a tool that can considerably reduce losses for low-income people and provide solutions that are accessible, affordable and sustainable. She further highlighted how the growth of the inclusive insurance sector needs to be supported through the development industry infrastructure including data collection and research.
The panelists highlighted the importance of client awareness and designing simple products that generate value.
Roshaneh Zafar, founder and managing director of Kash Foundation, explained the rationale for introducing micro-health insurance products. Kashf Foundation, Pakistan’s largest microinsurance program, with over 1.5 million low-income individual policy holders, contributes to 29 percent of the total microinsurance market in Pakistan.
Roshaneh accentuated the need for client awareness and education and shared the tripartite view of the benefits drawn from the provision of microinsurance to the clients, microfinance providers and insurers. She highlighted how the three need to work together in order to develop successful products that create value.
Rehan Butt, group business director of MicroEnsure briefed the guests on the global success of MicroEnsure achieved by designing of simple, value driven but robust products and distribution channels to deliver insurance products along with value added benefits that also generate client awareness.
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