Life throws unexpected changes our way. For most low-income individuals and households, those changes can be extremely costly, especially for those that are uninsured. Low-income households typically lack social safety nets, so when an unexpected event or expense arises, the financial impacts are very challenging to navigate. Insurance helps alleviate the cost of serious life events, like illness, job loss, or the death of a loved one, but for many in this group, these policies seem unattainable and only for the elite.
Accion partner Socremo has low-income people and entrepreneurs in Mozambique for more than two decades. A leading microfinance bank based in Maputo, Socremo identified funeral coverage as one of the most important needs of its customers. Socremo took the opportunity to leverage this insight into creating a product that would help their customers relieve one of their biggest burdens — bearing significant funeral costs for their loved ones. In Mozambique, funerals are a major event with great cultural significance that carry many additional costs beyond the money spent on burials. Bereaved families bear the costs of organizing and hosting relatives and community members, sometimes depleting family savings or forcing them to draw down on money from their small businesses to cover costs.
With support from the Swiss Capacity Building Facility, we worked with Socremo to refresh its savings product, Vitamina, and bundle it with a funeral insurance benefit. Building on the success of an existing credit life insurance product, Socremo worked to provide funeral benefits to existing loan customers and, with time, extended this benefit to its savings account holders. A key feature of the revamped savings product is a “balance multiplier,” which pays out double the savings account balance in the event of death of the customer.
The team used human-centered design to test and iterate the product, refine processes, uncover new channels, and incorporate customer feedback at every stage to refine the final product. We documented the experience and learnings in our latest report, “Unlocking the benefits of embedded insurance for micro and small businesses: Insights from Mozambique.”
Launching the new and improved Vitamina savings product and attracting more customers was not without challenges. However, the eventual increase in customers using the product and its new funeral insurance benefit is clear proof that financial service providers have an important role to play in supporting customers throughout the product adoption journey: by investing in the right infrastructure, researching customer needs, and leveraging partnerships.
Socremo customers are already realizing the positive impact this product has on their livelihoods. Elisa Cecilia Paruque Lowe, a widow, saw the value of insurance during a time of distress. Elisa recounted, “The amount I received really helped as I did not get family support and resorted to taking money from my business. With this insurance money, the negative impact on my business was reduced.”
Read Accion’s full report on the benefits of embedded insurance and bundling products to achieve scale.
This report was developed with support from the Swiss Capacity Building Facility.