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

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Life Insurance

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&gt; Posted by Center Staff

<a href="https://www.flickr.com/photos/55267733@N04/8378728848/"><img class="aligncenter size-full wp-image-16718" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/11/8378728848_b5044892c0_b.jpg" alt="A mother and child stand outside a health clinic where they both received check-ups and necessary vitamins and vaccines. Great Rift Valley Region, Kenya" width="490" height="367" /></a>

In Kenya, where public health insurance has been available since 1965 and access to health care is a constitutional right, only <a href="http://www.worldbank.org/en/news/feature/2014/10/28/improving-healthcare-for-kenyas-poor">20 percent</a> of the country actually has access to some sort of medical coverage, according to the World Bank. With a population of 44 million, this means that 35 million are excluded from coverage and millions are unable to afford services at private or public health facilities. In terms of the money spent, about one quarter of health care services spending in Kenya comes out of pocket. Each year, about one million Kenyans fall below the poverty line because of health care related expenses. Recent investments in the industry indicate that this grim reality could be changing, however, and soon.

A few days ago fund manager LeapFrog Investments <a href="http://www.ventures-africa.com/2014/11/leapfrog-set-to-acquire-east-african-health-insurance-firm-for-18m/">bought a majority stake</a> in Resolution Insurance, Kenya’s fourth largest insurance provider, for $18.7 million. The new funds will go towards realizing Resolution’s growth strategy of diversifying product offerings and extending services access to more Kenyans and other East Africans. The investment comes at an exciting time for both investors and providers. Though coverage remains low overall, the industry is growing rapidly. The non-life insurance market in Kenya is expanding at 20 percent annually, with health insurance at 38 percent annually. The deal is currently undergoing final regulatory processes.

Beyond Resolution Insurance, LeapFrog recently raised $400 million which it says will go toward investments in financial services across Africa and Asia, with a quarter of funds reserved for East Africa.



A few months ago, the Kenyan government, in partnership with the IFC, UKAid, the Gates Foundation, and others launched a collaborative <a href="http://www.worldbank.org/en/news/feature/2014/10/28/improving-healthcare-for-kenyas-poor">Health Insurance Subsidy Program</a> (HISP). The program offers Kenyans health insurance subsidies for coverage of care at public and private facilities. Administered through Kenya’s National Hospital Insurance Fund under its Ministry of Health, the first phase of the program covers 125,000 Kenyans and 23,500 families. These lower-income individuals were selected by the Ministry of Labor, Social Protection and Services to ensure that the program was addressing those in need.

Of the program, Cheikh Oumar Seydi, IFC’s regional director for East and Southern Africa said, “HISP is part of the World Bank Group’s Health in Africa Initiative’s support to the Kenyan Government’s priority agenda of achieving universal health coverage by expanding medical cover to the poorest and vulnerable.”

If successful, HISP will scale up to include nine million Kenyans.

Photo credit: <a href="https://www.flickr.com/photos/55267733@N04/8378728848/">Julia D/Flickr.</a>

Have you read?

<a href="http://cfi-blog.org/2014/10/06/bundling-mhealth-info-and-microinsurance-to-improve-health-outcomes-in-kenya/">Bundling mHealth Info and Microinsurance to Improve Health Outcomes in Kenya</a>

<a href="http://cfi-blog.org/2014/08/15/300-households-for-one-year-results-of-the-kenya-financial-diaries/">300 Households for One Year – Results of the Kenya Financial Diaries</a>

<a href="http://cfi-blog.org/2014/03/05/balancing-client-value-and-the-business-case-in-kenyan-health-microinsurance/">Balancing Client Value and the Business Case in Kenyan Health Microinsurance</a>

Kenya Edges Closer to Universal Health Coverage

Kenya

Kathleen Yaworsky

Sub-Saharan Africa

Zambia

Advisory Services

Alternative Data

Data Analytics

Financial Service Providers

Financial Technology

Insurance Companies

Insurtech

Underwriting

Underserved Groups

Article

When a family member falls ill, especially a breadwinner, the unexpected costs can tip the family finances from coping to crisis. Insurance can help families manage and recover from shocks — a key indicator of <a href="https://www.centerforfinancialinclusion.org/beyond-financial-inclusion-financial-health-as-a-global-framework">financial health</a>. However, according to the <a href="https://www.fsdzambia.org/publication/finscope-2015/">2015 Finscope</a>, only 2.8 percent of adults in Zambia are insured.

To combat this problem, we’re supporting a Zambian insurtech startup to develop and pilot a new digitally delivered microinsurance product. This work is part of a multi-year project focused on <a href="https://www.opml.co.uk/projects/deepening-financial-inclusion-in-sub-saharan-africa">Data Management and Analytical Capability</a> (DMAC). One of the primary goals of the DMAC project is to develop financial service providers’ capacity to leverage data strategically so they can develop innovative and inclusive products that respond to the needs of unserved and underserved adults. One such product is a mobile-based hospital cash plan in Zambia.

When this product launches, mobile money subscribers will be able to pick a plan and pay the premiums straight from their mobile money account. If they or a family member falls ill and is admitted to the hospital, they can initiate a claim. They’ll receive a mobile money payout directly to their wallet for each day spent in the hospital. This fast, flexible cash benefit can be used to pay for whatever the family needs to make ends meet. It also saves the family from falling prey to exorbitant rates for small short-term loans from moneylenders or others.

To develop this product, the insurtech startup partnered with a national Mobile Network Operator (MNO) as part of their data strategy to use alternative data — such as mobile KYC and mobile money transaction data — for customer acquisition and underwriting. Following a <a href="https://www.accion.org/are-you-unleashing-the-full-potential-of-your-data">data-driven product development methodology</a>, we helped the insurtech map out the data inflows and outflows that the new hospital cash plan will generate. This exercise informed the operational processes and technical requirements needed to support product delivery. For example, the insurtech pinpointed the minimum set of data fields required in the mobile phone menu that the MNO database would need sent to their backend system through their Application Programming Interface (API) for underwriting. They also identified the critical success metrics to measure and track customer usage and satisfaction with the product experience through <a href="https://www.accion.org/preparing-financial-service-providers-for-digital-transformation-2">customized analytics dashboards</a>. This evaluation process will enable a data-driven feedback loop for continuous product improvements.

This experience has underscored that an organization’s ability to <a href="https://www.accion.org/implementing-big-data-10-tips-fsps">strategically leverage big data</a> and build data-driven products depends on identifying and implementing the appropriate mix of staff skills, tech, and operational systems. Strategic partnerships make it possible to meet these business objectives. In Zambia, for example, the insurtech would not be able to digitally acquire and underwrite new customers without the backend insurance administration and reporting systems they’ve developed, an in-house data analyst supported by a local firm specializing in data collection and management, and a strong partnership with the MNO.

Today, there are very few microinsurance plans available to low-income segments in Zambia.  As we prepare for the pilot launch of this new product, we’re hopeful that it can help make insurance more inclusive. Once the tool is live, the dashboards built will be used to track customer usage and experience and enable refinements. This data-driven product has the potential to insure people in Zambia who’ve never had quality insurance, helping them find new resilience in the face of a health crisis. As the <a href="https://www.economist.com/international/2019/08/22/the-poor-who-most-need-insurance-are-least-likely-to-have-it">Economist</a> recently reported, the poor, who most need insurance, are least likely to have it. But mobile phones and innovative fintech, like the projects we’re working on with DMAC, can make a difference.

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Data Management and Analytics Capabilities (DMAC) is a two-year program that uses data-driven evidence to help Financial Service Providers (FSPs) in sub-Saharan Africa to designing inclusive and affordable financial products and services that respond to the needs of unserved and underserved adults, with a particular focus on women and youth. 

Initiated by <a href="https://www.fsdafrica.org/">Financial Sector Deepening Africa</a> (FSD Africa) and <a href="https://www.idrc.ca/">International Development Research Centre</a> (IDRC) in partnership with <a href="http://www.fsdt.or.tz/">FSDT</a> and <a href="https://www.fsdzambia.org/">FSDZ</a>, it’s being implemented by <a href="https://www.opml.co.uk/">Oxford Policy Management</a> (OPM), in collaboration with Accion’s <a href="https://www.accion.org/how-we-work/advise/accion-global-advisory-solutions">Global Advisory Solutions</a> and <a href="https://www.masterdata.co.za/">Master Data Management</a> (MDM).

The program is operating across three different markets of varying digital maturity — Sierra Leone, Zambia, and Tanzania — and with three different types of FSPs: insurers, fintechs, and commercial banks.

Helping families in Zambia cope with a health crisis

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Accion Global Advisory Solutions

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Helping families in Zambia cope with a health crisis

From the Center for Financial Inclusion

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

Kenya Edges Closer to Universal Health Coverage