Page 24 - The Insurance Times October 2024

requirements such as identification cards or bank accounts deducted directly from their mobile wallets, and claims are
can be significant barriers to entry. processed through mobile networks, reducing the need for
in-person interactions with agents. As of 2023, this model
4. Regulatory and Policy Challenges has reached over 1 million low-income subscribers, proving
The regulatory environment for insurance varies significantly that mobile platforms are an effective way to deliver inclu-
across countries, with some developing nations lacking the sive insurance (Allianz X) (Insurance Thought Leadership).
supportive policy frameworks necessary to foster the growth
of microinsurance. In certain cases, insurance regulations 2. India: Government-Sponsored Crop Insur-
are designed for large-scale commercial insurance models ance
and fail to account for the unique needs of microinsurance. In India, the Pradhan Mantri Fasal Bima Yojana (PMFBY)
For example, stringent capital requirements for insurers scheme provides subsidized crop insurance to millions of
may deter them from offering low-premium products that smallholder farmers across the country. Launched in 2016,
would be profitable only on a larger scale. the program has made significant strides in closing the pro-
tection gap for farmers vulnerable to climate-related risks
Case Studies: Success Stories in Bridging such as droughts and floods.
the Gap
PMFBY uses technology to track weather conditions and crop
Despite these challenges, several countries have successfully yields, and payouts are made automatically when weather
implemented inclusive insurance initiatives that demon- conditions deviate from predefined thresholds. By providing
strate how the protection gap can be bridged through in- affordable premiums with government subsidies, this program
novative strategies. has improved the financial resilience of farmers, ensuring that
they can recover from crop losses without falling deeper into
1. Rwanda: Scaling Microinsurance through poverty. As of 2024, the scheme has insured over 50 million
Mobile Technology farmers, making it one of the largest agricultural insurance
In Rwanda, mobile technology has become a powerful tool programs in the world(Insurance Thought Leadership).
for expanding access to microinsurance. The partnership
between Rwandan mobile operator MTN and MicroEnsure, 3. Kenya: Parametric Insurance for Livestock
an international microinsurance provider, has resulted in the Owners
creation of affordable insurance products available to low- In East Africa, parametric insurance has been successfully
income consumers via their mobile phones. used to protect livestock owners from the devastating effects
of drought. Kenya's Index-Based Livestock Insurance (IBLI)
The initiative allows MTN users to access a range of insur- program uses satellite data to monitor vegetation levels,
ance products, including life, health, and accident coverage, which serve as a proxy for pasture availability. When drought
by simply opting in through a text message. Premiums are conditions cause pasture levels to fall below a certain thresh-
old, payouts are triggered automatically, allowing livestock
owners to purchase feed and water for their animals.

This innovative insurance model is especially beneficial because
it eliminates the need for traditional claims processes, which
can be cumbersome and time-consuming in remote areas. IBLI
has been credited with helping pastoralists maintain their live-
lihoods during periods of drought and has been expanded to
cover multiple regions across Kenya as of 2024 (Etherisc).

Policy Recommendations: Strategies to

Close the Protection Gap
To effectively bridge the protection gap, policymakers and
insurers must implement targeted strategies that address
the unique needs of BoP populations. Below are several
recommendations that can help scale inclusive insurance.

22 October 2024 The Insurance Times