Page 41 - The Insurance Times October 2024

viding affordable health, life, and agricultural insurance, the benefits of insurance and offering flexible premium pay-
these products offer a buffer against financial shocks. ments are critical to increasing coverage.

One of the key findings is the critical role of technology in Lessons from Index-Based Livestock In-
enabling the expansion of microinsurance. Mobile insurance
products have been particularly successful in reaching rural surance (IBLI) in the Horn of Africa
populations who otherwise lack access to traditional finan- The Index-Based Livestock Insurance (IBLI) program, imple-
cial services. The report, however, highlights the trust defi- mented in East Africa, has proven effective in protecting
cit that continues to limit uptake, with many potential poli- pastoralists from climate risks. The program uses satellite
cyholders unaware of the benefits of insurance or suspicious data to measure pasture conditions, triggering payouts
of insurers due to past experiences. during periods of drought when vegetation is scarce. The
2024 report on IBLI and the associated DRIVE initiative
Dealing with Basis Risk: Minimizing Pit- outlines how these insurance schemes have helped stabilize
the livelihoods of herders by reducing the need for emer-
falls of Parametric Insurance gency aid during droughts.
Parametric insurance has emerged as a popular tool for
managing climate risk, as it provides pre-determined The report also highlights the success of digital platforms in
payouts based on triggers like rainfall or temperature lev- facilitating these insurance schemes, reducing administra-
els, rather than requiring proof of actual loss. However, the tive costs and improving payout efficiency. By 2024, the IBLI
2023 report highlights the challenges associated with basis program had expanded to cover more regions, providing
risk, where the insurance payout does not fully cover the critical financial security to thousands of households depen-
actual losses suffered by policyholders. This mismatch can dent on livestock for their livelihood.
erode trust in the product and deter participation.
Creating Innovation Ecosystems through
To minimize basis risk, the report recommends refining the
triggers used in parametric insurance and adopting hybrid Multi-Stakeholder Practices
models that combine traditional insurance with parametric The A2ii (Access to Insurance Initiative) 2024 report dis-
triggers. Additionally, educating consumers about how para- cusses how multi-stakeholder collaborations can foster in-
metric insurance works can mitigate dissatisfaction when novation in inclusive insurance. Through case studies of four
payouts fall short of expectations. inclusive insurance labs, the report showcases how coopera-
tion between regulators, insurers, and non-governmental
Women, Insurance, Risk Management, organizations (NGOs) can lead to the development of prod-
ucts tailored to low-income populations. For instance, one
and the Path to Financial Empowerment
A 2024 report by the World Bank highlights the gender dis-
parities in access to financial services, particularly in insur-
ance. Women in developing countries face unique challenges
in accessing risk management tools, often due to their roles
in informal labor or unpaid care work. The report under-
scores that inclusive insurance products tailored to women's
specific risks—such as maternal health, small business ven-
tures, and household resilience—are essential for financial
empowerment.

The report also points to successful case studies, such as
gender-focused microinsurance products in Bangladesh and
Kenya, where targeted financial literacy programs have
helped increase women's participation in insurance schemes.
These programs have shown that educating women about

The Insurance Times October 2024 37