For the insurance industry, 2008 is more often reminiscent of the bailout of AIG than of new beginnings. However, 2008 also launched an unexpected wave of creative destruction. This essay series not only celebrates the 10-year work of the Center for Financial Inclusion, but also  several pioneers that strive to make insurance inclusive for all: the ILO’s Impact Insurance Facility, the Centre for Financial Regulation and Inclusion and the Microinsurance Network—all of which began a decade  ago.

As a more recent settler on the inclusive insurance planet – although almost three years have flown by – others may keep the flame, but I would like to offer a personal opinion on the past decade of innovation, and my perspectives into what more needs to happen to combine sustainable business and social impact for those who need insurance most.

Back in 2008, microfinance institutions predominantly distributed what was then called microinsurance. MFIs provided insurers with a readily available pool of clients for credit life insurance, which reimburses the outstanding loan amount in case of death or disability of the borrower.

This was the first era of inclusive insurance.

Ten Years Gone, Ten Years to Go: Taking Inclusive Insurance from Adolescence to Adulthood

Getting Inclusion Right

Crop Insurance

Health Insurance

Inclusive insurance

Insurance

Life Insurance

Blog Post

&gt; Posted by Camyla Fonseca, Knowledge Management Analyst, International Labour Organization

<img class="alignright wp-image-22456" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/11/thumb_f28dcce9156a4049b745e6fc36b2b8ba.jpg" width="330" height="220" />Remember when you were a kid, and your father lectured you about the value of money when you asked him to buy you the new videogame your friend just got for his birthday? You certainly don’t remember how much the videogame actually cost, but you can probably still hear your father’s voice saying money is hard to earn and shouldn’t be spent without caution. Your father may not know, but he used a teachable moment to transfer you some of his knowledge. These are instances when we are more likely to remember something because it was taught when we needed to use that information and hence were most likely to be engaged. A good teacher can leverage or perhaps even create teachable moments by adapting the lesson to the situation.

In the area of personal finance, teachable moments usually occur when someone is taking a financial decision or using a financial service. As a recent <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/723-innovations-in-financial-capability">report</a> published by the Center for Financial Inclusion notes, individuals are more likely to change their financial behavior or recall information if it is conveyed during these teachable moments. This insight has clear implications on the way financial education interventions are designed. Interactions that happen along precise moments in a financial service provider’s value chain may be more effective than traditional stand-alone classroom interventions. And, financial service providers, due to their repeated interactions with clients at crucial teachable moments, are in a unique position to contribute to financial capability efforts. Every customer touch point is a teachable moment.

The report also provides several examples of financial service providers leveraging such moments. In Zambia and in the Philippines, <a href="https://www.microfinanceopportunities.org/4-work-with-us/mfo-in-the-field/project-list/branchless-banking-2/">Microfinance Opportunities</a> has seen positive results from partnering with financial service providers to leverage contact points with clients for education. Activities include, for instance, equipping agents with flip books that contain simple scripts and pictures to help them provide accurate explanations to clients. <a href="https://www.cgap.org/sites/default/files/Working-Paper-Juntos-Finanzas-A-Case-Study-Oct-2015.pdf">Juntos</a>, a US-based SMS service, partners with banks to offer educational messages to low-income customers that are new to banking services. Initial messages are sent just after clients enrol to the service as if written by a friendly advisor, and as clients start to reply, the data is used to customize the SMS so that a useful and educational dialogue is created.

Insurance providers can adapt and apply such insights to the insurance domain. By embedding education components within their current operations, such as when conducting the <a href="http://www.impactinsurance.org/emerging-insights/ei123">sales</a> of an insurance product, replying to a complaint, paying claims, or sending a renewal reminder, they can help customers to think about their needs and adopt more effective risk management strategies. In the case of <a href="http://www.impactinsurance.org/publications/mp45">index insurance</a>, for example, the end of the season can be an appropriate opportunity to explain how pay-outs are calculated. Health insurers, on their side, can find creative ways of engaging with clients to transfer key messages when they are receiving health care.

An example of the potential of this approach is featured in a <a href="http://www.cgap.org/publications/responsible-bundling-microfinance-services">study</a> carried out in Colombia by the Microinsurance Center and EA Consultants on a crop insurance product bundled on a voluntary basis with credit by the microfinance institution Crezcamos. As part of the study, loan officers were trained and equipped with a standardized approach to selling this complex product which involved a short educational video, a worksheet, key talking points, and guided answers to common client questions.

Qualitative interviews suggest that the approach had positive results in helping farmers to understand crop insurance. Immediately after viewing the video and hearing the loan officer’s explanation of the product, they could explain the basic features of coverage, including the events covered and the damage their crop must suffer to be eligible for a claim. Furthermore, a 23 percent take up was achieved, which is a good result for voluntary crop insurance sales. This suggests that with appropriate and informative sales tools, even farmers with low levels of education and knowledge of insurance can understand the main features of a relatively complex product and decide whether or not it fits their needs.

When surveyed a few weeks after the sales, however, most farmers that took part in the study did not recall important features of the product, while some forgot having bought an insurance coverage in the first place. A slightly better recall rate was shown by clients who were offered insurance together with their loan, which may suggest that conducting sales at the time of loan application, when farmers are thinking broadly about their investments, may lead to greater understanding and retention. Still, even in this group of farmers overall recall levels were low. These results reinforce the idea that an on-going support beyond the sales moment is needed.

It is true that insurance providers will always have an interest in increasing sales, but by responsibly leveraging customer touch points as teachable moments they can benefit from stronger customer relationships, reduced misuse, and better financial habits that may increase customer loyalty in the long term. As the access to insurance products increase, providers can contribute to the financial capability agenda through the responsible provision of this financial service.

Image credit: Accion

Have you read?

<a href="https://cfi-blog.org/2016/04/12/a-change-in-behavior-innovations-in-financial-capability/">A Change in Behavior: Innovations in Financial Capability</a>

<a href="https://cfi-blog.org/2016/09/07/weather-indexed-insurance-why-isnt-it-working/">Weather-Indexed Insurance: Why Isn't It Working?</a>

<a href="https://cfi-blog.org/2013/12/05/a-smoother-road-to-building-quality-insurance-at-scale/">A Smoother Road to Building Quality Insurance at Scale</a>

Using “Teachable Moments” to Increase Understanding of Insurance

Financial Inclusion 2020

&gt; Posted by Sonja Kelly, Director, CFI

<a href="https://www.flickr.com/photos/worldbank/24881274083/in/album-72157601433335970/"><img class="alignright wp-image-21918" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/09/24881274083_746bef3806_z.jpg" width="330" height="195" /></a>Weather-indexed insurance is brilliant. It’s just not working.

It’s brilliant because it solves one of the basic challenges of insurance: moral hazard. Under the principle of moral hazard, having insurance tends to make an individual’s behavior riskier, increasing the likelihood that the product will be used. If I have fantastic health insurance, for example, I may be more likely to make riskier life decisions because I don’t feel the financial effects of the consequences of those decisions quite so acutely. If insurance is tied to the weather, however, nothing an individual does (unless you believe in the efficacy of a rain dance) will “trigger” the insurance.

Weather-indexed insurance is not a new phenomenon. Over the last decade we’ve heard exciting stories about weather-indexed crop microinsurance and the lifeline it offers to farmers given our world’s quickly-changing climate. Weather-indexed insurance was bundled with agricultural inputs like seeds or livestock, and the product was lauded as a way to increase the inclusion of poor people in insurance.

Amazing, right? So why, after a decade, aren’t customers buying? In India, for example, only <a href="http://www.economist.com/news/finance-and-economics/21592653-new-research-suggests-insurance-can-be-made-more-attractive-poor-farmers-hard">5 percent</a> of farmers have taken it up where available.

<ul>
 	<li>It’s complicated. Insurance is incredibly complex to explain to a consumer. There are no easy examples for consumers to reference in their mental maps of products. The concept has no analogues in the local culture.</li>
 	<li>It costs a lot. Low-value insurance is very expensive for companies to offer, and weather-indexed insurance is no exception. While the weather-based trigger makes it cheap to determine when claims are valid, the product requires a critical mass of people to break even, and it is costly to acquire all of those customers.</li>
 	<li>And it’s undervalued. At the same time, customers <a href="http://www.ilo.org/global/publications/world-of-work-magazine/articles/WCMS_081384/lang--en/index.htm">often under-value</a> insurance. In experiments looking at whether insurance products are priced appropriately vis-à-vis customer perception, there is skepticism regarding the price of premiums for an intangible product. A number of years ago, some researchers discovered that even when subsidized so that insurance would yield an expected return of 181 percent, <a href="http://www.hbs.edu/faculty/Publication%20Files/Dynamics%20of%20Demand_31bd8eb4-6cd2-4d72-8919-d83239aaf349.pdf">only half of households</a> offered the product decided to purchase it.</li>
 	<li>Making an insurance claim is annoying, and recourse mechanisms are not great . Weather-indexed insurance targets individuals living in remote areas who might lack experience with insurance claims or formal financial services. Moreover, available weather data has been a <a href="https://cfi-blog.org/2014/03/03/weather-index-insurance-to-benefit-from-new-nasa-satellite/">limiting factor</a> for the scope and accuracy of the services' automation. Recourse mechanisms are <a href="https://cfi-blog.org/2016/03/07/progress-and-evolving-risks-in-perus-advanced-consumer-protection-environment/">often a struggle</a> with financial services for the base of the pyramid, and there have been <a href="http://www.munichre-foundation.org/dms/MRS/Documents/Microinsurance/2012_IMC/2012IMC_Presentations-and-papers/S6-MIC2012-Presentation-Gibson/S6%20MIC2012%20Presentation%20Gibson.pdf">documented incidences</a> of similar issues in the weather-indexed insurance segment.</li>
 	<li>“Freemiums” can give insurance a bad rap. A “freemium” is an insurance product offered for free alongside another product that the customer is paying for. For example, <a href="http://www.creditcards.com/credit-card-news/best-card-rent-car-insurance-1273.php">rental car insurance</a> comes with a credit card. <a href="https://www.microfinancegateway.org/library/credit-life-insurance-indonesia">Credit life insurance</a> comes with a microloan. <a href="http://www.gsma.com/mobilefordevelopment/programme/mobile-money/tigo-bima-and-microensure-bring-a-freemium-model-to-mobile-insurance">Health insurance</a> comes with a mobile wallet. The problem is that customers <a href="http://www.dreamlopments.com/images/files/review_of_health_microinsurance.pdf">often don’t know</a> they have the product, which can reduce the offering’s credibility. The freemium approach has been met with <a href="http://www.cgap.org/blog/freemium-spawning-insurance-market-ghana">success in some cases</a>, but to achieve this, it’s essential that customers have a strong awareness and understanding of the product.</li>
 	<li>Governments aren’t really on board, even though the product would increase economic growth. Noteworthy exceptions to this are the governments of Canada, India, and the United States, which <a href="http://www.economist.com/news/finance-and-economics/21592653-new-research-suggests-insurance-can-be-made-more-attractive-poor-farmers-hard">subsidize premiums</a> by at least 50 percent. However, such involvement by many governments in Africa, for example, would likely not be affordable.</li>
</ul>
These results are not new. It’s just that the industry has not found compelling solutions to these problems.

It’s no wonder weather-indexed insurance for low-income populations continues to limp along, even though it is one of the financial sector’s greatest inventions (in this blogger’s opinion). The best way forward for weather-indexed insurance is either providing it for free (which is why Shawn Cole <a href="http://www.internationalinsurance.org/files/TC/PDF/Cole_AOP_3_June_2015.pdf">advocates so strongly</a> for public-private partnerships) or bundling both the price and the service with existing financial products. And ensuring that individuals sufficiently understand the products and their benefits, and that the products work well – i.e. making a claim or a complaint is as seamless as possible.

But I’d love to be proven wrong—do you know an example of a weather-indexed insurance that’s working?

Image credit: <a href="https://www.flickr.com/photos/worldbank/24881274083/in/album-72157601433335970/">World Bank</a>

Have you read?

<a href="https://cfi-blog.org/2015/12/09/where-the-best-place-is-to-be-an-insurance-providerand-other-insights-from-the-microscope/">Where the Best Place Is to Be an Insurance Provider... And Other Insights from the 'Microscope'</a>

<a href="https://cfi-blog.org/2016/01/06/credit-shield-insurance-piloting-microinsurance-products-in-bangladesh/">Credit Shield Insurance - Piloting Microinsurance Products in Bangladesh</a>

<a href="https://cfi-blog.org/2015/06/15/whats-insurance-got-to-do-with-it/">What's Insurance Got to Do With It?</a>

Weather-Indexed Insurance: Why Isn’t It Working?

<a href="https://www.gsma.com/mobilefordevelopment/resources/state-of-the-industry-2014/"><img class="alignright wp-image-17531" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/03/gsma.png" alt="" width="342" height="481" /></a>Coinciding with this week’s Mobile World Congress in Barcelona, GSMA’s Mobile Money for the Unbanked (MMU) program released its fourth annual ‘State of the Industry Report on Mobile Financial Services.’ CFI spoke with Jennifer Frydrych, Insights Coordinator for the MMU program and one of the authors on the report, about the project’s findings.

<h3>The mobile money industry has grown rapidly in recent years. Can you bring us up to date with some of the growth figures and dynamics?</h3>
In the past five years, mobile money services have spread across much of Africa, Asia, Latin America, and the Middle East. At the end of 2014, there were 255 live mobile money services across 89 markets, 36 more than in 2013. Mobile money is now available in 61 percent of developing markets globally. In terms of adoption and usage growth, 75 million additional mobile money accounts were opened globally in 2014, bringing the total number of registered accounts to 299 million. Importantly, account activity increased faster than account registration in 2014, and the total number of active mobile money accounts is now 103 million (up from 73 million in 2013). An increasing number of services are reaching scale: 21 services now have more than one million active accounts.
<h3>As of the last State of the Industry report, half of all live mobile money deployments were in sub-Saharan Africa. How has this distribution changed? What were some new or emerging markets of the past year?</h3>
There were 22 new services launches in 2014, of which half occurred in sub-Saharan Africa. The mobile money industry in sub-Saharan Africa continues to grow, and the region still accounts for just over half of all live services globally, and 60 percent of all active accounts. Much of this success can be attributed to East Africa; however we are now seeing exciting growth in mobile money uptake and active usage in West Africa.

In 2014 mobile money was rolled out for the first time in six new markets– Dominican Republic, Myanmar, Panama, Romania, Sudan, and Timor-Leste.
<h3>Historically, airtime top-ups have dominated the mobile money payments mix, followed distantly by domestic P2P transfers. Can you give us a snapshot of the current payment product space and a sense for how this is changing?</h3>
In the month of December 2014, mobile money users transacted a total of 717.2 million times, totaling a value of US$16.3 billion. Domestic P2P transfers and airtime top-ups continue to dominate the global product mix in terms of volume and value, but the fastest growth in 2014 occurred in bulk disbursements, and bill and merchant payments. This reflects an expanding ecosystem of institutional and business users of mobile money. Equally, there was a steep increase in the number of international remittance transactions in 2014, largely driven by the exciting new model of using mobile money as both the sending and receiving channel.
<h3>It’s still early days for mobile credit, savings, and insurance products. What were some of the success stories of 2014?</h3>
As of June 2014, 17 million mobile insurance policies had been issued, representing an annualised growth rate of 263 percent. Life insurance cover remains the most popular mobile insurance offering; however, we see growth in the number of health, accident, and agricultural insurance policies being issued. New commercial and partnership models have helped mobile insurance providers achieve scale. A number of MNOs have partnered with specialist solution providers to develop tailored insurance products for the low-income market segment. In addition, many providers have reassessed their commercial models, and have in many cases employed loyalty and “freemium” models to encourage customer uptake.

When it comes to mobile savings, one interesting innovation in 2014 was <a href="http://www.gsma.com/mobilefordevelopment/financial-inclusion-in-tanzania-tigo-rewards-its-mobile-money-customers">an initiative of Tigo Tanzania</a> which began to return interest generated on the trust account to its users. In September 2014 Tigo Tanzania disbursed US$8.7 million to 3.5 million users, followed by a second disbursement of US$1.8 million in November. Tigo plans to make payments to users quarterly.

2014 also saw a 50 percent increase in the number of mobile credit services. This was fueled in part by new partnerships between MNOs and banks to provide mass-market short-term loans, and by microfinance institutions and start-ups targeting specific segments of the underserved. New credit scoring models using MNO data are also starting to result in lower numbers of non-performing loans compared to traditional lending.
<h3>A mobile money service’s success is contingent upon a plethora of factors, including agents, merchants, competition, interoperability, regulation, and client awareness. What are the main hurdles we’re witnessing today?</h3>
Lack of investment in operations is one factor preventing the development and expansion of mobile money services. A recent MMU paper on mobile money profitability revealed the extent to which providers must invest heavily in operational and commercial infrastructure at the start of the life of the service in order to ensure operational excellence in areas such as customer awareness and distribution to begin the journey towards profitability.

Industry learning gaps still exist around how to reach and serve harder-to-reach customers, including rural communities and female clients.

In a number of markets regulatory hurdles still exist, which can slow the development of the mobile money industry and the benefits it can bring for financial inclusion. Today, regulation is enabling in 47 out of 89 markets where mobile money is available, according to the new report.
<h3>What were the data sources used for this year’s State of the Industry report, and is it a challenge getting ample quality data to assess the industry to the extent desired?</h3>
The report is based on data from GSMA Mobile Money Intelligence on planned and live mobile financial services. The data includes qualitative insights on these services, as well as quantitative information on numbers of users, distribution points, transaction volumes and values, and revenues. This data is updated regularly, primarily using the results from MMU’s annual Global Adoption Survey of Mobile Financial Services, which captured data from 127 respondents from 69 countries in 2014. In addition, for core metrics, MMU uses data modelling to estimate and forecast figures, making information available for the entire industry, rather than only for survey participants. The estimates help to provide a true representation of the scale of the industry both globally and at the market level. This data provides key industry stakeholders–such as regulators, senior executives in telecoms and banking sectors, and international development agencies–with an authoritative overview of the industry and its impact on the financial lives of unbanked and underbanked users.
<h3>Last year’s reports paid special attention to women and mobile money, and mobile money in rural areas. Over the past year, what progress was made in these priority areas?</h3>
Where data is available, it showed that penetration of mobile money services amongst women and within rural areas has increased. Much of this growth may be organic and due to the overall growth of the mobile money registered base, but MNOs that want to drive adoption in the mass market need to adapt their strategies and tactics specifically to tap into underserved segments. Regardless of the level of maturity of their service, there are fundamental indicators mobile money providers can use to improve the visibility of underserved segments, including the collection of demographic data to identify and track usage amongst women and rural customers.
<h3>What’s next from GSMA that we can look forward to?</h3>
Coming up the MMU team will publish a number of publications including:
<ul>
 	<li>Case study on cross-border international remittances: insights into commercial implementation and user adoption from two early examples in West Africa.</li>
 	<li>Case study on enabling mobile money policies in Paraguay: this publication will showcase the journey Paraguay has taken towards digital financial inclusion, in particular through the creation of a regulatory framework that enables the mobile money market to increase its outreach and efficiency.</li>
</ul>
The full ‘State of the Industry Report on Mobile Financial Services’  is now available for <a href="http://www.gsma.com/mobilefordevelopment/programmes/mobile-money-for-the-unbanked/insights/industry-reports">download here</a>. Over the next few weeks, some of the main findings from the report will be discussed <a href="http://www.gsma.com/mobilefordevelopment/programmes/mobile-money-for-the-unbanked/mmu-blog">on the MMU blog</a>. Stay tuned!

Have you read?

<a href="http://cfi-blog.org/2014/07/28/mobile-money-sprinters-adapt-to-local-conditions-in-pakistan-somaliland-and-zimbabwe/" target="_blank" rel="noopener">'Mobile Money Sprinters' Adapt to Local Conditions in Pakistan, Somaliland, and Zimbabwe</a>

<a href="http://cfi-blog.org/2014/01/31/mobile-money-in-afghanistan-an-uphill-battle/" target="_blank" rel="noopener">Mobile Money in Afghanistan: An Uphill Battle</a>

<a href="http://cfi-blog.org/2014/04/18/unexpected-benefits-of-mobile-money/" target="_blank" rel="noopener">Beyond On-Ramps and Uptake: Exploring Surprising Benefits of Mobile Money</a>

The State of Mobile Financial Services: An Interview with GSMA’s Jennifer Frydrych

Myanmar

Panama

Romania

Sudan

Timor-Leste

Agent Banking

Credit

Delivery Channels

Digital Credit

Digital Financial Services

Mobile Banking

Payments

Policy, Regulation and Government Initiatives

&gt; Posted by Jeffrey Riecke, Communications Associate, CFI

On Thursday NASA and the Japan Aerospace Exploration Agency <a href="http://www.washingtonpost.com/blogs/capital-weather-gang/wp/2014/02/27/nasa-launching-game-changing-satellite-for-global-precipitation-monitoring/?wpisrc=nl_buzz">launched a new weather and climate satellite</a> that generates a near-global view of precipitation, closing previous large observation gaps. This development has the potential to inform an array of important weather-related activities, including weather index insurance.

The satellite, known as the Global Precipitation Measurement (GPM) satellite, uses a radiometer and dual-frequency radar to measure the presence and even the intensity of rain, snow, and ice, to a time window of three hours, across a geographic range of 65 degrees north to 65 degrees south latitude. Data generated by the satellite will be publicly available to anyone around the world.

[caption id="attachment_14147" align="aligncenter" width="587"]<a href="http://www.nasa.gov/press/2014/february/nasa-and-jaxa-launch-new-satellite-to-measure-global-rain-and-snow/#.UxSe_fldWSo" target="_blank"><img class=" wp-image-14147 " style="border:0;margin-top:8px;margin-bottom:8px" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/03/14-055-gpm1_0.jpg?w=490" width="587" /></a> A Japanese H-IIA rocket launching the GPM satellite from the Tanegashima Space Center in Tanegashima, Japan.[/caption]
NASA’s predecessor satellite was only able to detect rain, and not to varying intensities. It also covered a more limited geographic area of 35 degrees north to 35 degrees south. The new NASA satellite could prove an invaluable resource for weather-related initiatives like disaster response and relief.
Weather index insurance is well-positioned to benefit from the newly detailed precipitation data. Weather index insurance offers a payout to farmers in the event of extreme weather, such as drought or a hurricane. The financial support helps farmers sustain their families while their source of livelihood, their land, recovers. This safeguard also makes it less risky to take out loans to invest in the productivity of land. The payout is triggered by weather index readings that register as extreme weather. This mechanism yields low transaction costs – a necessity as it rarely is practical for insurance agents to travel to smallholder farmers and verify the weather and land conditions.
Available weather data has been a limiting factor for the scope and accuracy of weather index insurance. A few years ago, those with index insurance hit by Hurricane Sandy in the Caribbean were not able to receive payouts because the limited range of the NASA satellites in operation did not cover the impact zone. As the new satellite expands the data’s geographic reach, weather index insurance is also positioned to expand. With the new satellite, weather index insurance could expand beyond rain, too. Hail storms, for example, are currently a significant risk in countries like Malawi and Zambia, but the data has been lacking to support weather index insurance with hail coverage.

When we heard about this exciting development, we reached out to Véronique Faber, Executive Director of the Microinsurance Network, to see what she thought. "This data will be a game-changer, especially as NASA plans to give access to everyone in the world," she said, adding, "Stakeholders involved in weather index insurance for small farm holders will watch this space closely!"

Along with these potential advantages, it’s important to consider a few factors that might constrain the satellite’s ability to support weather index insurance. Typically, insurance product pricing and design is calibrated using historical data on claims and damage. This will be lacking at first when the new satellite data comes on stream, and could limit its rapid use. There is also the potential for the satellite’s new techniques to not be as accurate as hoped across all regions. It’s still not uncommon for particular satellites to be more or less accurate for particular geographies. For instance, the previous NASA satellite was more accurate in the Caribbean and East Asia than it was in Africa.

*Some of this post's content was generously provided by <a href="http://www.microensure.com/" target="_blank">MicroEnsure</a>.

Image credit: <a href="http://www.nasa.gov/press/2014/february/nasa-and-jaxa-launch-new-satellite-to-measure-global-rain-and-snow/#.UxSfnPldWSp" target="_blank">NASA/Bill Ingalls</a>

Have you read?

<a href="http://cfi-blog.org/2013/12/06/microinsurance-gets-three-wishes/" target="_blank">Microinsurance Gets Three Wishes</a>

<a href="http://cfi-blog.org/2014/02/25/mobile-microinsurance-products-and-financial-capability/" target="_blank">Mobile Microinsurance Products and Financial Capability</a>

<a href="http://cfi-blog.org/2013/04/16/silos-no-more-financial-inclusion-for-the-whole-value-chain/" target="_blank">Silos No More: Financial Inclusion for the Whole Value Chain</a>

Weather Index Insurance to Benefit from New NASA Satellite

Alternative Data

Smallholder Farmers

Amee Parbhoo

Justin Matheson-Turner

Megan Peterson

Michael Schlein

Vikas Raj

Kenya

Sub-Saharan Africa

Zambia

Agricultural and Rural Finance

Financial Inclusion Strategy

Fintechs

Impact Investing

Insurtech

MSME/SME Finance

Resilience

Trends

Women

Article

Podcast

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

“Change is the only permanent thing. We see a lot happening, like climate change, and for us to solve the issues of the smallholder farmers — we can’t use the normal way to solve issues,” says Jacobeth Barno, who works for Accion Venture Lab portfolio company Pula. In Kenya, where Jacobeth works, the past decade of change has led to a booming digital economy with <a href="https://globalfindex.worldbank.org/">91 percent of the population</a> using mobile money. 

But smallholder farmers haven’t always gotten to enjoy the fruits of the digital revolution, particularly when it comes to insurance. “Insurance has not been available to them,” says Jacobeth. “The reason is not that insurance companies don’t like them, but because the approach does not suit the smallholder farmers — it’s too expensive for them. I realized there is an opportunity to be able to reach these people with innovations to help improve their years and change their lives.”

Fintech innovation is crucial for Pula as it seeks to serve rural communities. “Technology has helped us reach most people. Through technology, we have been able to advise farmers on methods to use that can improve production and their farming. We use our phones for farmers to pay with and to do research,” says Pula employee Cleopas Busienei. 

But technology is only part of the story for Pula’s business model. Team members regularly visit communities to talk and share advice with smallholder farmers. Data-driven insights inform farmers about when and how to plant their crops to produce higher yields. Jacobeth sums up the company’s vision with, “I see a great future for Pula because we put out clients first and deliver on what we promise. We always come up with solutions. I want to see Pula help those who are in a struggle to scale up due to low-income, and I want us to help them.” 

With 1.5 billion smallholder farmers worldwide, who are largely uninsured, Pula has a massive opportunity to help people.  With its formula of mixing cutting-edge insurtech products with a personal connection with clients, Pula is making strides in empowering a vital, yet underserved, segment of the population with knowledge and confidence.

Driving resilience for farmers through tech and human interaction

The real impact of financial inclusion

When asked how he feels about farming, Festus replies, “I enjoy it so much — I love it.” Farming allows Festus to be his own boss and is more stable than other forms of work. With his harvests, Festus puts food on the table, pays his children’s school fees, and incrementally improves his family’s standard of living. But, as all farmers know, a bountiful harvest is never a given. “When drought came, I would lack food and wait for the rain, farm again, and wait to get food.” Trapped in this cycle, and with no recourse from a failed harvest, Festus could never plan for the future.

Until recently, smallholder farmers have not had access to farming technologies that mitigate the risk of drought, pests, and floods. These farmers are at a higher risk of a bad harvest which can have wide-ranging consequences for their finances. When Festus learned about Accion Venture Lab portfolio company <a href="https://www.pula-advisors.com/">Pula</a>, he saw an opportunity to boost his resilience and security. Pula offers more than crop insurance. Farmers like Festus benefit from interactive training on farming methods and tech-enabled insights accessible through farmers’ mobile phones. 

<img class="size-large wp-image-18867 aligncenter" src="https://content.accion.org/wp-content/uploads/2019/06/Kitui_0012-1024x684.jpg" alt="Festus harvesting his crops" width="1024" height="684" />Festus has seen the benefits of working with Pula and regularly encourages other farmers to join. “I hope that Pula continues in the future and that we can continue to improve our future through its benefits,” he says. Knowing that his crop insurance provides protection from a bad harvest, Festus can take care of his family and his hopes and plans for the future can stretch beyond the next harvest.

Insurance emboldens Festus to be his own boss

Pula

Impact Investor

Institutional Funder

Social Good

Accion Venture Lab

Anastasia Ngala has to make sure her crops can thrive with only two rains per year. “We have long rain and short rain. We plant for the short rains this November. I am happy when it rains because I sell my farm products and earn my income.” Missing one of these rains can mean ruin for Anastasia’s harvest and financial hardship for her family of nine. But farming is Anastasia’s way of life and her only source of income. When she learned about Accion Venture Lab portfolio company <a href="https://www.pula-advisors.com/">Pula</a>, she recognized the opportunity to further develop her agricultural skills while insulating herself from bad harvests.  

[caption id="attachment_18776" align="alignleft" width="500"]<img class=" wp-image-18776" src="https://content.accion.org/wp-content/uploads/2019/06/Kitui_0051-1024x684.jpg" alt="Pula employee Jacobeth Barno" width="500" height="334" /> Pula employee Jacobeth Barno[/caption]

Pula, a cutting-edge insurtech startup, focuses on providing crop insurance to traditionally underserved smallholder farmers. “It’s important to solve that sector because as soon as we support the smallholder farmer, we will directly be changing a lot of things in the dynamics of the economy,” says Pula employee Jacobeth Barno. As a Pula customer, Anastasia can access data-driven farming insights that boost her crop yields while also having the peace of mind that she will be compensated if the harvest fails. “When I planted without Pula, I took a risk that it was okay if I harvested or lacked yields. I was 50-50. But now, I am 99 percent assured by Pula,” she says.

The benefits of Anastasia’s relationship with Pula have been tangible. With the confidence of her Pula coverage, she has grown her farm from three to five acres and has encouraged her children to work with Pula. Anastasia has also become a vocal Pula advocate outside of her home. She urges her friends and neighbors to look into the benefits, “Some of my neighbors want to join the insurance because they have known about compensation and also want to get compensated.” Now, Anastasia has confidence that she can provide for her family and grow her farming capabilities to new levels.

&nbsp;

<img class="size-large wp-image-18779 alignnone" src="https://content.accion.org/wp-content/uploads/2019/06/Kitui_0037-1024x684.jpg" alt="Pula client Anastasia" width="1024" height="684" />

After seeing the benefits of crop insurance, Anastasia’s an advocate

Entrepreneur

According to <a href="https://techcrunch.com/2018/11/04/female-founders-have-brought-in-just-2-2-of-us-vc-this-year-yes-again/">TechCrunch</a>, fewer than 1 in 10 people making investment decisions at venture capital firms are women, and three-quarters of these firms have zero female investors. Furthermore, there were only 24 companies with female chief executives <a href="https://www.nytimes.com/2018/05/23/upshot/why-the-number-of-female-chief-executives-is-falling.html">among the Fortune 500 in 2018</a>. There’s a long way to go before we reach gender parity in most industries and societies throughout the world, but it’s crucial that we continue to champion women because, as the slogan for International Women’s Day 2019 points out, balance is better.

Having diverse leadership helps companies increase their understanding of their customers, so they can perform better financially. For businesses focused on social good, this can also translate to making a greater impact. When it comes to financial inclusion, we need women in power as we work to overcome the <a href="https://globalfindex.worldbank.org/">persistent gender gap</a> in access to financial services and ensure that all women have useful financial tools that can help them gain independence and seize more opportunities.

As we strive to close this gap and build an inclusive financial system, we’re proud to have a diverse team leading the charge. Three in five people who work at Accion are women, and at Accion Venture Lab, more than half of all full-time staff are women.

We’re highlighting some of these leaders who are working to build a more inclusive world in our <a href="https://www.accion.org/series/women-of-accion">annual International Women’s Day blog series on the women of Accion and our partners</a>. Check out <a href="https://www.accion.org/these-women-leaders-show-that-balance-is-better-part-two/">this additional article</a> to learn about more inspiring women.

Here are a few of the leaders we’re proud to work with:

These women leaders show that balance is better, part one

Women building a better future

For people who struggle to get by, a financial shock is devastating. Without resources to recover, low-income consumers in emerging markets can have the course of their lives altered by one unfortunate event. Insurance can make a drastic difference for these populations. But serving these customers poses significant challenges for insurance companies — from cost-effectively reaching and educating consumers to accurately assessing and pricing risks to efficiently managing claims. <a href="https://www.accion.org/how-can-we-bring-insurance-to-those-who-need-it-most">Startups can play a critical role in solving those challenges</a> with products intended to address specific risks for underserved communities, new distribution channels to reach these populations, and new streams of data to more effectively assess and price risk.

Accion Venture Lab has been excited to make its first three investments in the insurtech space this year with investments in <a href="https://www.pula-advisors.com/">Pula Advisors</a>, operating across Africa, <a href="https://lumkani.com/">Lumkani</a> in South Africa, and <a href="https://toffeeinsurance.com/">Toffee Insurance</a> in India. These startups are doing exciting things across geographies and products — covering personal accident, health, property, life, and agriculture insurance.

Based on our recent investments and our ongoing exploration of new insurtech businesses around the world, we have identified four areas of inclusive insurance innovation that we’re particularly excited about.
<ol>
 	<li>A tangible “hook” to attract customers: For the vast majority of low-income customers, insurance remains an intangible product with intangible benefits. Unlike credit, insurers ask customers to pay upfront for a product only to see the benefits days, months or years later — if ever. We’re seeing insurtech models now that, rather than relying on this traditional approach, are offering a solid hook to attract customers and provide immediate benefits in addition to the longer-term value of insurance. For example, <a href="https://www.accion.org/insurtech-fire-protection-south-africa">Lumkani provides South Africans living in informal settlements</a> with a unique bundle: insurance that protects against loss of life, shelter, and assets in the case of a fire, and an Internet of Things (IoT) heat detector that detects fires in and around homes. In addition to providing early warning, the heat detector, often proudly displayed in a home, reminds customers every day that their purchases are keeping their families safe and protected.</li>
 	<li>Distribution models that build trust and that scale: In addition to defining a strong hook or value proposition to customers, traditional insurance models often struggle with reaching customers, educating them about the product’s benefits, and providing confidence in the overall experience. Selling insurance door-to-door is too costly for many microinsurance policies. We have seen insurtech businesses leverage existing distribution channels to piggyback on the trust of existing customer relationships. For example, Toffee in India works with retail channel partners to sell products that have a natural overlap with their insurance policies, such as commuters insurance paired with bicycle retailers. By ensuring sales channels are part of their target customers’ everyday lives, such as pharmacies where they plan to sell insurance, Toffee makes its offering accessible to a relevant customer base.</li>
 	<li>Unique and compelling product design features: Another challenge traditional insurers face is designing relevant products for the underserved. Insurance products created for middle- or higher-income customers are not always relevant for the realities of a low-income customer who faces different circumstances and different risks from day to day. Insurtech companies can successfully understand what their customers need and reimagine how the product could be made relevant to their lives. For example, <a href="https://www.accion.org/changing-climate-technology-provides-agricultural-insurance-farmers">Pula uses cutting-edge technology</a> coupled with partnerships with seed, fertilizer, and credit providers to make agricultural insurance feasible for rural farmers. Customers read about Pula’s coverage on a sticker on the bag of seed or fertilizer they’re purchasing, and then they register their unique policy via their mobile phone. Pula has designed their free coverage in a way that’s relevant for farmers. Using satellite data, Pula can provide farmers with a new bag of seed while they are still in the planting season. Doing so gives farmers another chance at a harvest.</li>
 	<li>Backend claims automation: Ultimately, the most important part of insurance is getting a claim paid. Claim processes in emerging markets are notoriously slow and unreliable. Often customers are unaware of how to process a claim, or insurers require onerous paperwork to submit one. Once received, it can take time — something many customers don’t have. Insurtech companies are leveraging technology to automate much of the claims process, relying on agents at the relevant points in the claims journey. For example, Toffee is developing a fully digital claims experience where customers can submit and track claims on their smartphone app. Pula relies on satellite and yield data to automate claims decisions, proactively letting customers know once they qualify for a payout. Lumkani’s heat detector informs the company of a possible fire and sends one of its agents within a day to investigate and support a customer through the claim.</li>
</ol>
We’re seeing incredible innovations in insurance, similar to what we saw in the lending space just a few years ago. From acquisition to underwriting to customer engagement, insurtech companies have a real opportunity to increase access and improve the quality of this critical financial service.

Four innovations making insurtech more inclusive

Lumkani

Toffee Insurance

The world’s poor live only one illness, drought, or flood away from disaster. The world’s most vulnerable people don’t have the basic financial tools needed to protect their families, homes, and livelihoods.

Both the need and the opportunity is enormous. The Center for Financial Inclusion at Accion (CFI) and the Institute of International Finance found that the estimated addressable market of uninsured people is <a href="https://www.linkedin.com/pulse/new-strategies-technologies-making-insurance-more-michael-schlein/?published=t">3.8 billion</a>.

Why are so many people left unprotected? It’s largely due to the high costs of designing, delivering, and administering insurance products. Creating these products and services for low-income customers can be lengthy, difficult, and expensive.

This is something we can, should, and must fix. And it’s why Accion is so committed to creating inclusive insurance that protects the world’s underserved people and businesses.

One of the ways that we’re helping extend coverage to more people is by <a href="https://www.accion.org/four-innovations-making-insurtech-more-inclusive/">investing in and supporting innovative insurance startups</a>. New technologies can fundamentally change the costs of providing policies to the underserved: <a href="https://www.mckinsey.com/industries/financial-services/our-insights/time-for-insurance-companies-to-face-digital-reality">McKinsey &amp; Company</a> estimates that automation can cut the costs of managing a claim by 30 percent.

At Accion, we provide new insurtech companies with the capital and support they need to expand: these resources help them integrate new technology far faster than legacy financial service providers. <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab">Accion Venture Lab</a> made its first three insurtech investments this year. These three startups are using new technology to make insurance more inclusive:
<ul>
 	<li><a href="https://www.accion.org/insurtech-fire-protection-south-africa">Lumkani</a> uses an internet-connected heat detector to give South Africans living in informal settlements insurance that protects against loss of life, shelter, and assets in the case of a fire.</li>
 	<li><a href="https://www.accion.org/changing-climate-technology-provides-agricultural-insurance-farmers">Pula</a> bundles insurance with seed, fertilizer, and credit, using satellite data to see how a client’s farm is doing and providing them with agricultural advice via text messages.</li>
 	<li><a href="https://www.accion.org/toffee-insurance-closes-1-5-million-in-seed-funding">Toffee</a> works with retailers to sell insurance policies that cover relevant products — for instance, selling personal accident and bicycle damage insurance in addition to the bicycle itself.</li>
</ul>
In time, startups like these can scale to serve more people and businesses. Take AllLife, the first company in the world to provide insurance for people diagnosed with HIV/AIDS. It uses a proprietary, tech-driven model for continual operating and patient care that’s helped cut premiums by 40 percent if clients follow their treatment regimes. AllLife was launched in South Africa and has licensed its technology to <a href="https://www.accion.org/insurtech-leader-alllife-raises-funds-to-expand-coverage-to-people-living-with-diabetes-and-hiv">Royal London</a>, the U.K.’s largest mutual life, pensions, and investments company. By reducing back-office costs, AllLife’s underwriting innovations can change how insurance policies are created and administered, ultimately protecting more people.

And it’s not just fintech companies that are working to make insurance more inclusive. We’re working with several joint mobile network operator/insurance partnerships in In Sierra Leone, Tanzania, and Zambia, advising several organizations on how to better leverage data to design better mass market, micro-health, medical, personal, and business insurance.

Microfinance institutions are also working to protect their clients: we’re working with MFIs in Colombia, India, Mexico, Tanzania, Uganda, and elsewhere to design health, motor vehicle, fire, livestock, and funeral insurance.

In addition, we’re working to define some best practices about creating inclusive insurance. CFI continues to publish important <a href="https://www.centerforfinancialinclusion.org/the-radical-reinvention-of-inclusive-insurance">research on inclusive insurance</a>: providers need to find an appropriate balance of “tech and touch” to enroll customers, resolve issues, and make payments. Moreover, the products they design must be simple: customers love something they understand, and the easier it is to administer a product, the lower the costs are for the insurer. CFI has also identified the <a href="https://www.centerforfinancialinclusion.org/ten-years-gone-ten-years-to-go-taking-inclusive-insurance-from-adolescence-to-adulthood">bottlenecks that limit the spread of inclusive insurance</a>: regulators need to approve new products much quicker than they are and allow for a completely paperless process.

We’ll continue watching, supporting, and investing in insurtech to protect more underserved families and businesses.

How can we bring insurance to those who need it most?

AllLife

“I have never been so proud because, that season, insurance made that harvest possible,” recalls Rose Goslinga, CEO and co-founder of Pula. She saw how insurance enabled 10,000 farmers in East Africa to reap a harvest against all odds in 2009. Rains fell early that year — well before farmers were ready — and the seeds they had already planted didn’t germinate. In most places across Africa and around the world, those farmers would have been out of luck. However, because their seeds were covered by insurance, the farmers were able to pick up new bags and enjoy a successful harvest in the latter part of the season. On <a href="https://soundcloud.com/accioninternational/pula-and-protecting-smallholder-farmers-through-insurance">our latest episode of VentureKast</a>, the podcast about the most innovative and impactful financial inclusion startups in the world, I sat down with Rose to discuss <a class="markup--anchor markup--p-anchor" href="https://medium.com/accion/in-a-changing-climate-technology-provides-a-lifeline-for-farmers-c2eb5133d79f" target="_blank" rel="noopener noreferrer">Pula, Accion’s first ever investment in insurance</a> for farmers.
Pula develops insurance products and distributes them to farmers, while simultaneously offering farm advisory services so that, in Rose’s words, their customers “can be the best farmers they can be.” Pula bundles their insurance products with farm inputs, such as fertilizer, seeds, or credit. This substantially lowers risk for farmers who want to be able to invest in more expensive, higher-yielding seeds and fertilizers. The insurance provides income stability for farmers who are at the mercy of droughts, floods, and pests. Pula uses satellite data and imagery to be able to underwrite these policies more efficiently and provide timely agronomic advice.
Across Pula’s eight African markets, insurance penetration rates are typically less than 5 percent. Pula innovates to improve this. The farmers realize that insurance is useful, but they are not willing to pay its upfront cost.

<blockquote class="graf graf--pullquote graf--startsWithDoubleQuote">“They don’t wake up in the morning thinking, ‘I want to buy new insurance.’ They think, ‘I have school fees to pay’ or when it starts raining, ‘I need to buy fertilizer now; where is my money for fertilizer?’”</blockquote>
So, Pula figured out another way; they partner with input distributors to insure all bags of seeds and fertilizers — the costs are simply included in each bag. If the rain doesn’t arrive on time, the farmers can receive a voucher for another bag and plant again for a second chance at the harvest. The key is that the distributor pays for the insurance, not the farmer.
Technology underpins Pula’s business model. Satellite imagery monitors weather conditions to facilitate underwriting and expedite claims processes. QR codes allow farmers to register for insurance policies by pushing a few buttons. SMS messages relay immediate advice on when to apply fertilizer or top-dressing to maximize yields. This use of technology allows Pula to scale much faster than most insurance companies and to reach previously inaccessible communities.
“What do farmers really want? They don’t necessarily want insurance, but they do want fertilizer, they do want seeds,” says Rose. Pula’s short-term insurance products are revolutionary for many of its customers, especially considering how few of the world’s 500 million smallholder farmers have insurance. For Rose, the future means expanding Pula’s work to provide seeds, fertilizer, and insurance around the world.

Pula and protecting smallholder farmers through insurance