Page 34 - The Insurance Times October 2024

quakes, has developed microinsurance solutions to protect for in-person assessments. IBLI has been especially success-
vulnerable populations from the financial impacts of natu- ful in helping pastoralists maintain their herds during peri-
ral disasters. CARD MBA, a mutual insurance association, ods of drought, reducing their reliance on emergency aid.
provides microinsurance to low-income households across
the country. It offers life insurance, health coverage, and Challenges: Despite the successes, the affordability of pre-
disaster insurance, and is known for its community-based miums remains a significant barrier for many low-income
approach to distributing insurance products. farmers. Even with subsidies, many households struggle to
afford the cost of coverage. Additionally, scaling paramet-
Successes: The integration of disaster insurance into ric insurance to cover other types of risks (e.g., health or
broader microinsurance products has allowed CARD MBA property loss) has proven difficult due to the lack of reliable
to provide holistic protection to its members. The mutual weather data in some regions.
insurance model, where members are also stakeholders,
fosters trust and high participation rates. With over 20 mil- 2. Rwanda: Mobile-Based Health Insurance
lion insured individuals, CARD MBA has been recognized as In Rwanda, microinsurance products are primarily distrib-
one of the most successful microinsurance providers in Asia. uted via mobile platforms. The partnership between MTN
(a mobile network operator) and MicroEnsure has enabled
Challenges: One of the main challenges is the high frequency the delivery of affordable health insurance to low-income
of natural disasters, which increases the overall claims bur- users. With premiums deducted directly from mobile wal-
den on insurers. Sustainability can be threatened if insur- lets, the model eliminates the need for physical infrastruc-
ance providers are not adequately reinsured or if premiums ture and allows for greater accessibility in rural areas.
are too low to cover catastrophic risks. Additionally, there
is still a need for more education to improve clients' under- Successes: Mobile-based insurance has significantly ex-
standing of microinsurance products. panded health coverage in Rwanda, where rural populations
previously lacked access to affordable health insurance. By
Microinsurance in Africa: Leveraging integrating with mobile money platforms, insurers have
Mobile Technology been able to reach millions of previously uninsured individu-
als. The convenience of mobile payments has also improved
Africa's microinsurance sector has been defined by the use
customer retention rates.
of mobile technology to reach underserved populations. The
continent has one of the highest rates of mobile phone pen- Challenges: While mobile-based insurance has broadened
etration among low-income populations, making mobile plat-
access, digital literacy remains a challenge in some rural
forms an ideal channel for delivering insurance products.
areas. Low-income populations may not fully understand
Countries such as Kenya, Ghana, and Rwanda have made how to use mobile wallets or the benefits of insurance.
significant strides in using mobile platforms to distribute Moreover, there is a need for more awareness campaigns
health, life, and agricultural insurance.
to educate consumers about their coverage options and the
claims process.
1. Kenya: Agricultural and Livestock Insurance
In Kenya, microinsurance has been used to protect farmers
and pastoralists from climate-related risks. Programs like Microinsurance in Latin America: Gov-
Index-Based Livestock Insurance (IBLI) and agricultural ernment Involvement and Community-
microinsurance provided by Acre Africa offer coverage for Based Models
droughts and crop failures. These schemes use parametric
insurance models, where payouts are triggered by specific In Latin America, microinsurance has grown significantly, with
weather conditions (e.g., rainfall levels) rather than actual governments playing a key role in promoting inclusive insur-
ance. Countries like Mexico, Colombia, and Peru have imple-
loss assessments.
mented government-supported microinsurance programs that
Successes: Parametric insurance has allowed for faster target low-income populations, particularly in rural areas.
payouts, which are critical for farmers and pastoralists fac-
ing immediate needs after droughts or crop failures. This 1. Mexico: Government-Backed Microinsurance
model is also less costly for insurers, as it reduces the need Mexico has developed several microinsurance programs in

The Insurance Times October 2024 31