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

AXA shares insights on and solutions to women's unmet insurance needs in emerging economies.

By <a href="https://group.axa.com/en/about-us/profile/garance-wattez-richard">Garance Wattez-Richard</a>, Head of Emerging Customers, AXA Group

Women-focused insurance solutions are a central part of AXA’s Emerging Customers work. In our <a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwiPgJOBxo7XAhUK2oMKHQBJCJMQFgg0MAA&amp;url=https%3A%2F%2Fcdn.axa.com%2Fwww-axa-com%252F57b5a3a4-c7cc-4dea-97c9-5f7d9f47232c_sheforshield_final-web2015.pdf&amp;usg=AOvVaw0YQN3Y_Twiv2ykoHDo86TX">SHEforSHIELD</a> report, launched with the International Finance Corporation in 2015, we found that the market is growing quickly, as women become more risk-aware and willing to invest in protection. We conducted focus groups with women in Indonesia, Nigeria, and the United Arab Emirates (UAE) and learned that women have very specific, yet unmet needs when it comes to insurance. I am happy to share the stories of three of the women we met on our customer insights journey, diving into their fears and desires and the role that inclusive, women-focused insurance solutions could play.



Nurul

”We are in good health, there are no problems,” we hear from Nurul and other women at the beginning of a focus group in rural Indonesia. Nurul, a 33 year old mother of three, is in her 4th loan cycle with a large group micro-lender. She and her husband live just above the national poverty line, earning an average of 3 million Indonesian Rupiah per month (around USD 220) through dairy farming, selling food and doing small jobs in the nearest town.

[gallery ids="24390,24388" type="square" columns="2" link="file"]

When we ask more, we discover that while Nurul does not worry about her own health, she is concerned with that of her husband, children and parents. She shares, “My husband is the head of my family, so if something happened to him, my family would not survive.” While her husband is the primary income earner, Nurul serves as the family’s primary caregiver, ensuring everyone is taken care of—particularly if anyone becomes ill.

This dichotomy is reflected in Nurul’s financial priorities, as well as that of many of her fellow borrowers. Despite the fact that one-fourth of Nurul’s neighbors have experienced pregnancy or newborn complications, with one-third of her fellow group members having given birth at home, our maternal health insurance concept was rejected unanimously during the focus group. Meanwhile, spouse life insurance and family hospitalization coverage a with transport allowance are in high demand among the women in the village.

While we still see a need for maternal health packages, we are adjusting our products to meet the actual desires of community members. We have bundled our family hospitalization coverage and spouse life protection, with health check-ups and basic education during weekly repayment meetings. In addition, we continue to improve our maternal health offerings. Together with medical device manufacturers and telemedicine providers, we have prototyped a solution that would make maternity care, including pre-paid check-ups and insurance for complications, safer and more affordable.

Ifunanya

Across the ocean, we speak with almost-middle-class women in bustling Lagos. Ifunanya, a 36-year old mother of three, graduated from agricultural university and followed her husband 10 years ago when he got an accounting job in Lagos. After maternity break, Ifunanya got back to teaching, and together the couple earns a regular income of 200,000N every month (USD 566)—very close to a middle-class threshold in Nigeria. Ifunanya, along with the other women in the focus group, say all the right things about healthy lifestyle: prevention is better than a cure, good diet is important and physical activity is a must. They laugh when asked if they apply these concepts in practice, but are hungry for more information on how to live a healthy life.

[caption id="attachment_24389" align="aligncenter" width="1024"]<img class="aligncenter size-large wp-image-24389" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/10/photo-17-05-2017-11-24-53-e1509171338285.jpg?w=2048" alt="AXA Photo Nigeria" width="1024" height="700" /> Focus group in Nigeria. Photo credit: AXA[/caption]

“Cancer is a situation that is feared in Nigeria. It is very difficult to handle... It cannot be managed,” admits Ifunanya. She is right. According to the World Health Organization, about 10,000 cancer deaths <a href="http://www.who.int/cancer/country-profiles/nga_en.pdf">are recorded</a> annually in Nigeria, while 250,000 new cases are recorded yearly. Specifically, Nigeria records 14,000 cervical cancer cases annually, part of the 85% of deaths from cervical cancer that occur in low- and middle-income countries. While Ifunanya does not know much about cancer, it is top-of-mind for her, and she and the other women in the group rank cancer as the most difficult health event to manage financially. “You will definitely need to have at least half a million naira to cope with it.” Ifunanya’s husband has a good insurance package from his employer, but it does not cover her at all.

All of this demonstrates demand for a solution that bundles health information, diagnostics and critical illness insurance, which can be delivered on a mobile platform.

Mary

The last stop of our consumer insights journey is the UAE, where we researched the needs of migrant women from Asia. Mary is 34 years old and has worked as a domestic helper in Dubai for the past five years. She earns AED 2,000 every month (USD 283), half of which she sends half home to her husband, two children, mother and sister. Improving the well-being and future prospects for her children is what motivates Mary. She is worried that if something happens to her, they will not be able to prosper. While she is very interested in our diaspora life insurance policy, she would prefer to put her mother or sister as beneficiaries to ensure her children’s welfare. Mary also saves money in a joint account with her sister to make sure she has easy access to funds when she gets back home. Many other Filipino domestic workers in our group in the UAE have accounts for the same purpose, creating a touch point with formal financial services. Migrant workers like Mary have a clear need for life insurance to cover their families in the event of a death, as well as easy ways to save money while they're abroad.

[gallery ids="24387,24391" type="square" columns="2"]

Lessons Learned and Implications 

Nurul, Ifunanya and Mary have many things in common. Being exposed to and unprotected against many risks, they are responsible caregivers with high aspirations for the future of their children. At the same time, they are so different. We need to start with a very simple offering for customers like Nurul in rural Indonesia, but if we build awareness, the solution prototyped for Ifunanya in Lagos might be also relevant for Nurul in the medium-term. Mary shows us that women face specific risks but also have specific preferences that need to be at the center of product and process design. For us, this is a thorny challenge, but also an incredible opportunity to ideate solutions for different stages of the emerging customer journey.

This all might look familiar to those of you who have been in the financial inclusion space for a long time. We are aware of the work done by <a href="https://www.freedomfromhunger.org/microfinance-and-health-protection">Freedom from Hunger</a>, among others, on bundling health and microfinance. Is this a déjà vu? We don’t believe so. We are taking lessons learned in the past and using them to fuel business model innovation. The issues are the same, but the rise of new technology and new health players makes it possible to come up with scalable and affordable solutions. It’s not only about cost anymore, it’s about changing behaviors by offering the right solutions to the right segment at the right time. For us, at AXA Emerging Customers, this is "make it or break it." If we can’t provide health solutions to emerging customers, we won’t be successful in the long term. Join us to make it a reality.

Insuring “Emerging Women” – Old Issues, New Solutions

<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

[caption id="attachment_17447" align="alignright" width="125"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/demographic_infographic_web.jpg"><img class="wp-image-17447" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/demographic_infographic_web.jpg?w=297" alt="" width="125" height="431" /></a> (click to enlarge)[/caption]

&gt; Posted by Sonja Kelly, Fellow, CFI

Since the release of our paper, <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/aging-financial-inclusion">Aging and Financial Inclusion: An Opportunity</a>, I have been considering the challenge of market segmentation using the life course. This is not unexplored terrain at the Center for Financial Inclusion. Beth Rhyne articulated a life course approach during our <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/demographic-window">Looking Through the Demographic Window project</a>, which we have captured in the infographic embedded at right. I have been hearing from microfinance institutions that some efforts are underway to segment clients by their life stage, though this remains a relatively untouched area in the industry. For a great example of segmentation, however, I only had to look to the spam filter on my email.

Most of the emails that get caught in my spam filter are about body image. I receive messages advertising dieting pills, on the one quick fix to reduce belly fat (you won’t believe which celebrities use it!), and how to get toned abs within a week. This makes sense—I work out regularly, and I (try to) watch what I eat. The emails are tailored to me.

In chatting with my colleagues, I find that they also receive targeted emails. Some women in our office who are older than me receive emails for walk-in tubs. Singles get emails that point them to dating websites. Some of the younger men in our office get emails that refer to “satisfying” their girlfriends. And the spam filters of older men in our office collect emails about (ahem) performance-enhancing pills.

These are, of course, gross generalizations—the life course cannot possibly be reduced to dieting, walk-in tubs, and bedroom performance. But why is it that the email caught in my spam filter is more skilled at customer segmentation using the life course than my financial institution’s product line? Even more than being successful at segmenting a potential client base, spam marketers are successful at moving this potential client base to action, according to <a href="http://blog.mailchimp.com/what-good-marketers-can-learn-from-v1agr-spammers/">MailChimp</a>. They have a simple message and a call to action. Their “click rates,” or the rate at which people click on links, are higher than average.

What if financial institutions were able to take a page out of a spammer’s playbook and use it to get people in their 20s to participate in long-term savings for the future, or to save for emergencies in their 40s so that they have a cushion when their spouse gets sick, or to put aside some money for insurance in their 50s so that if their house is decimated it does not wipe out their only major asset?

Data on customer age is something that financial institutions already have given “know your customer” rules within institutions. In an online global survey of providers we conducted last year, we learned that 81 percent of financial institutions do keep track of the ages of their customers over time. In addition, 63 percent of the same sample reported that they store this information within their MIS or IT system. However, most of these institutions are not using age as a way to create suitable products for clients.

Age-appropriate products are something that customers do want. Monique Cohen related a story at <a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/">our meeting last week</a> in New York about a group of middle-aged women from SEWA, a microfinance institution in India. These women approached the institution’s leadership and asked for life insurance on their husbands, recognizing that their husbands were older and that they would likely have a significant number of years without them. When the microfinance institution replied by telling them they would not be able to afford the product, they replied with, “Create the product, and let us worry about whether we can afford it.” The institution created the product, and the women bought it.

In the last decade there has been major growth in services for youth. We’ve seen, for example, credit for school fees, training-linked credit to teach entrepreneurship to young people, and savings accounts to teach younger people the value of putting away funds for the future. These examples—of middle-aged women in India and products built for youth—are exceptions in terms of age-based customer segmentation.

While customer segmentation using age is not very common, the industry has segmented customers by income brackets for years. Lower-income customers, for example, are given accounts with fewer features and add-on services. Higher-income customers are given accounts that allow them additional services—more face time, higher interest rates on savings, higher overdraft protection.

Most financial institutions have a long way to go to be able to offer appropriately tailored financial services for each stage in the life course. And I’m not totally serious about taking lessons from spammers. But, given the age-based messages that people already get, the financial system needs to catch up—and indeed it can capitalize on this opportunity, recognizing that people have different financial needs at different life stages.

Have you read?

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/" target="_blank" rel="noopener">Moving to Action on Aging and Financial Inclusion</a>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank" rel="noopener">Microfinance as a Tool for Active Aging</a>

Lessons on Age-Based Client Segmentation… From My Spam Filter

&gt; Posted by Center Staff

<a href="https://www.flickr.com/photos/56252733@N00/5838119371/"><img class="aligncenter wp-image-16425" style="margin-top:5px;margin-bottom:5px" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/10/5838119371_28fde3fda3_b.jpg" alt="" width="575" height="383" /></a>A new micro-pension platform targeting those working as domestic laborers, appropriately named <a href="http://giftapension.com/" target="_blank">Gift a Pension</a>, launched in India last month. The platform is run by the Micro Pension Foundation (MPF) nonprofit and gives employers of domestic laborers a convenient way to support their workers in enrolling for the National Pension Scheme (NPS) Lite government product, a smaller version of the NPS offering. Across the country an estimated 40 million work for households in roles including maids, guards, cooks, and drivers. In the weeks since the program opened, <a href="http://www.financialexpress.com/news/from-pensions-to-beauty-courses-click-to-revisit-art-of-giving/1301914">over 1,000</a> domestic employers have registered themselves and gifted pensions to their workers. The platform offers more than its name suggests, as gifting workers five-year term life insurance is also available.

Here’s how the service works. First, MPF encourages employers ensure that their workers understand the structure and benefits of any accounts before enrollment happens. The Gift a Pension site includes a collection of educational tools and videos for employers to use to aid their workers’ familiarity with products and with the importance of managing finances for the long-term. Once this initial learning phase is complete, the employer registers themselves with the Gift a Pension site and enrolls their worker using information from the various documents that satisfy the necessary know-your-customer requirements. To open the account, the employer pays a one-time servicing fee (Rs 300) as well as the first contribution into the account. The worker then receives in the mail a guide to go along with their new account and their personal prepaid pension card. In a few weeks’ time the worker will also receive a government-issued Permanent Retirement Account Number (PRAN).

The pension product is contribution-based, with the enroller having the ability to select their desired payment interval and amount. The card-holder is able to make payments online or through designated retail outlets. Account settings can be set so that SMS payment reminders are sent. If they so wish, the employer is able to continue making contributions, as well. Subscribers will receive an annual contribution of Rs 1,000 from the government so long as they satisfy the minimum requirement of adding an annual sum of Rs 1,000. The pensions account can carry over to new jobs.

The five-year term life insurance product offers Rs 30,000 in coverage for enrolled individuals, with annual premiums depending on the age of the account-holder.

Gift a Pension was developed by the Micro Pension Visa Inclusion Lab, a facility that develops technology-enabled solutions for micro-payments and financial inclusion. In its work the Lab is targeting the excluded client segments of domestic help, truck drivers, contract labor, those who belong to tribes, and youth. The International Finance Corporation (IFC), Visa, Grameen Foundation, and Invest India Micro Pension Services (IIMPS) are collaborators with the Lab.

In India, roughly <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0&amp;module=ArrowsNav&amp;contentCollection=World&amp;action=keypress&amp;region=FixedLeft&amp;pgtype=Blogs">12 percent</a> of the population has a pension. In 2009, the National Pension System was <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0&amp;module=ArrowsNav&amp;contentCollection=World&amp;action=keypress&amp;region=FixedLeft&amp;pgtype=Blogs">extended</a> beyond public employees to also include employees of private companies meeting certain size requirements. Lots of room for pension progress remains however. Statistics from the Indian Ministry of Labor and Employment indicated that, as of 2011, 26 million employees worked in the organized public and private sectors in India, while 433 million worked at small organizations or through informal means and so they are not covered by the National Pension System.

Image credit: <a href="https://www.flickr.com/photos/56252733@N00/5838119371/" target="_blank">Meena Kadri</a>

Have you read?

<a href="http://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank">The Opportunity in Pensions Expanding with Life Expectancy</a>

<a href="http://cfi-blog.org/2014/10/01/commemorating-international-day-of-older-persons/" target="_blank">Commemorating International Day of Older Persons</a>

<a href="http://cfi-blog.org/2013/09/20/expanding-service-accessibility-for-older-persons-and-pwds/" target="_blank">Expanding Service Accessibility for Older Persons and PWDs</a>

New Platform to Gift a Pension in India

<a href="http://cfi-blog.org/category/financial-inclusion-2020/" target="_blank" rel="attachment noopener wp-att-8901"><img class="alignright wp-image-8901" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg" alt="Financial Inclusion 2020 Blog Series banner image" width="300" /></a>&gt; Posted by Barbara Magnoni, President, EA Consultants and Client Value Project Manager, MicroInsurance Centre MicroInsurance Learning and Knowledge (MILK) Project

The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020" target="_blank" rel="noopener">Financial Inclusion 2020</a> campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process, and highlights findings from “Mapping the Invisible Market.”

Is there a business case for microinsurance? Does it provide value for clients?

We began the <a href="http://www.microinsurancecentre.org/milk-project.html" target="_blank" rel="noopener">MILK Project</a> by mapping existing research on these two questions. We were surprised to see that <a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/811-do-clients-get-value-from-microinsurance-a-systematic-review-of-recent-and-current-research.html" target="_blank" rel="noopener">very few studies were on life microinsurance</a>, particularly because life products are the most commonly sold type of microinsurance. <a href="http://www.microinsurancecentre.org/resources/documents/doc_details/69-reducing-vulnerability-the-demand-for-microinsurance.html" target="_blank" rel="noopener">A well-known study</a> also suggests that the poor are very concerned about the financial risks of death, nearly as much as they are about health events.

Given that life microinsurance is both common and potentially greatly needed, why was there so little research on this topic? Life insurance is difficult to study because in any group, only a few deaths will occur in a given span of time, making it a very infrequent and random event. The policy world has also, perhaps, been skeptical about its value. Life microinsurance lacks the glamour of the promise of microcredit and the clear social good of savings. While health and agricultural microinsurance products are often developed with donor support as part of larger investments in health services, infrastructure, or agricultural inputs, life microinsurance is more often commercially driven.

We too began our research on the value for clients of life microinsurance with healthy skepticism, asking whether there really is financial value for clients from these products and if so, whether clients perceive them as valuable. Two years into our project, our results are promising, and even to ourselves, surprising.

[caption id="attachment_10707" align="alignright" width="260"]<a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/840-milk-brief-8-qdoing-the-mathq-cashless-funeral-microinsurance-in-colombia.html" target="_blank" rel="attachment noopener wp-att-10707"><img class=" wp-image-10707 " style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/04/graph1.png" alt="" width="260" /></a> MAPFRE Colombia Funeral Microinsurance: Client Value Study[/caption]

<a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/840-milk-brief-8-qdoing-the-mathq-cashless-funeral-microinsurance-in-colombia.html" target="_blank" rel="noopener"> Our first study</a> analyzed a voluntary, cashless funeral product offered by MAPFRE in Colombia, which upon a client’s death, provides an in-kind benefit: a standard funeral package through one of several affiliated funeral homes. Using MILK’s “<a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/842-milk-brief-9-what-is-qclient-mathq.html" target="_blank" rel="noopener">Client Math</a>” methodology, we interviewed family members of insured and uninsured people who had recently died to gain insight into what the costs associated with the death were, how they were financed, and the role that the insurance product played. We found that the coverage was critical to helping families cope with the cost of the death. It covered most of their financing needs and allowed them to avoid relying on burdensome strategies such as reducing consumption or depleting savings. This was largely due to the fact that their financing need ($520) was far lower than that of the uninsured ($2,500) due to the in-kind benefit beneficiaries could access immediately. Additionally, the support of a family assistant in navigating paperwork and other requirements added value by reducing days of missed work to plan the funeral and by making the process of planning and paying for the funeral more seamless.

Similarly, our <a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/938-milk-brief-16-qdoing-the-mathq-life-microinsurance-in-mexico.html" target="_blank" rel="noopener">“Client Math” study</a> of a cash product offered to clients of Banco Compartamos in Mexico found encouraging evidence of value. Beneficiaries were able to borrow from friends and family knowing that an insurance payout was forthcoming, while the uninsured turned to more costly formal loans and reduced savings to cover the cost of the funeral. This finding is mirrored in our <a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/877-milk-brief-13-qdoing-the-mathq-funeral-and-life-microinsurance-in-the-philippines.html" target="_blank" rel="noopener">study of a funeral and life microinsurance product</a> in the Philippines. In this case, the cover did not actually provide benefits in the short term due to long claims payment periods. Thus beneficiaries still had to strategize sourcing of funds as if they had no funeral insurance. However, even when the insurance claims were paid late they helped some beneficiaries get back on their feet after the loss of a breadwinner by allowing them to invest proceeds in a business or cover short-term household expenses. Further, the insurance does not seem to have created an incentive to spend more on the funeral than beneficiaries otherwise would have (the “bigger box” phenomenon that some skeptics raise).

These studies provide encouraging evidence of value, suggesting that life microinsurance can play an important role in alleviating the financial strain from a death. But what of all those people who do not “use” the insurance because, thankfully, they don’t die? Do they get any value? To address this question, we conducted a <a href="http://www.microinsurancecentre.org/milk-project/milk-docs/doc_details/939-milk-rct-protecting-those-left-behind-an-experimental-study-of-life-microinsurance-purchase-decisions-of-compartamos-bancos-borrowers-in-mexico.html" target="_blank" rel="noopener">randomized control trial in Mexico</a> with Banco Compartamos clients to see whether clients themselves perceived value in this product. A randomly chosen group of clients was told that they would no longer receive a free basic insurance package, while another randomly selected group kept its free coverage. When clients lost access to the free insurance, many compensated by voluntarily purchasing coverage. In focus groups, they emphasized the peace of mind that insurance brings. Clients’ reaction to losing free coverage is a powerful indication that they see value in the product, despite the fact that most are unlikely to “use” it. Of course, Compartamos clients were familiar with this product from prior loan cycles when it was offered for free. Many were aware of the product’s reliability, and had seen examples of claims being paid and used, which helped to develop understanding and trust of the product. In future studies, we will start to analyze the process of gaining familiarity with insurance, and to what extent clients become active buyers of insurance products as they gain familiarity with them.

So far, our work suggests that if insurers keep their end of the bargain, life microinsurance can contribute to both their perceived and actual financial security. We encourage you to look through <a href="http://www.microinsurancecentre.org/milk-project/milk-docs.html" target="_blank" rel="noopener">our work</a> and offer your thoughts on our findings to date.

For more information on Financial Inclusion 2020, <a href="http://bit.ly/FI2020signup" target="_blank" rel="noopener">sign up for campaign updates</a>.

<img class="alignleft wp-image-10711" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/04/barbara2_resize.jpg?w=150" alt="" width="125" />Barbara Magnoni is President of EA Consultants and Client Value Project Manager for the MicroInsurance Centre’s MicroInsurance Learning and Knowledge (MILK) Project.

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New Insights From the Field on the Value of Life Microinsurance

&gt; Posted by Olivia Caverly, Microinsurance Network

<a href="http://cfi-blog.org/category/financial-inclusion-2020/" target="_blank" rel="attachment noopener wp-att-8901"><img class="alignright wp-image-8901" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2012/12/blogseries.jpg" alt="Financial Inclusion 2020 Blog Series banner image" width="300" /></a>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/financial-inclusion-2020" target="_blank" rel="noopener">Financial Inclusion 2020</a> campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process, and highlights findings from “Mapping the Invisible Market.”

The microinsurance sector has grown rapidly over the past 10 years and is expected to double by 2020, producing coverage for over 1 billion people. With it, this significant growth brings new and exciting innovations in products addressing health, agricultural, and property insurance, as well as new business models that find unique delivery methods to be sustainable.

Endowment Products Assist People to Finance Their Old Age

As life expectancy continues to rise globally, endowment products, which pay a lump sum upon maturity or death, are becoming more relevant. People need to find ways of financing their old age. Historically, standard endowment products have had limited uptake because of their lack of value compared to other saving options, mainly due to the high commissions that agents are paid. However, a new wave of products combining savings and insurance are becoming popular.

These new endowment products are more appealing to low-income clients because they counter the notion that investing the money is in "vain" when the insured event doesn’t happen. They do this by combining insurance with savings over time. Grameen Shakti, <a href="http://www.sbilife.co.in/sbilife/content/home" target="_blank" rel="noopener">SBI Life Insurance's</a> product, for example, bundles a term life product that is the same price regardless of the age or gender of the policy holder, with a cash benefit on survival of the pre-determined policy term. The simple terms of the product, which include limited choices of term and of death benefit, help it reach a wider audience by allowing people who might be less familiar with insurance to better understand what they are paying for. Grameen Shakti is now offered throughout India (Rusconi).

Technology Plays a Key Role

Technology has proven to be a huge enabler for microinsurance distribution, especially through mobile telephones. This is particularly true for those microinsurance target customers who reside in rural and semi-urban areas of developing countries with limited access to traditional sales and management methods.



<a href="http://www.microdinero.com/index.php/english/nota/4525/m-insurance-expands-in-previously-uninsured-markets" target="_blank" rel="attachment noopener wp-att-10545"><img class="alignright wp-image-10545" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/03/4525_ghana_farmer-on-cell-phone.jpg" alt="" width="300" /></a>Microinsurance actors such as <a href="http://www.tigo.com.gh/Internet/Tigo-Mobile-Internet.aspx" target="_blank" rel="noopener">Tigo</a>, a mobile phone operator, <a href="http://www.bimamobile.com/" target="_blank" rel="noopener">Bima</a>, a mobile insurance provider, and <a href="http://www.microensure.com/" target="_blank" rel="noopener">MicroEnsure</a>, a microinsurance provider, have teamed up to distribute insurance in a more cost-effective manner. In 2011, Tigo offered free insurance to its clients for 12 months as a loyalty product, to introduce clients to the product and allow them to wait on purchasing until they have a better understanding of how it works with their mobile phone. If a customer uses a certain amount of airtime minutes per month, she receives free life insurance for herself and one family member. She also has the ability to pay an extra fee to increase her insurance cover. All of the fees are paid through the customer’s airtime balance. The use of such mobile based payments platforms is an exciting innovation, and many microinsurance providers are experimenting with this in Africa and India. Though still new, the service has already provided basic life coverage to 978,000 Ghanaians who were previously uninsured. Not only did this service benefit the insured, it also gave Tigo an edge over its competitors as it provided incentive for potential customers to choose Tigo as their provider (Zetterli).

Lack of Financial Capability is a Challenge

A substantial challenge faced by microinsurance providers is that the services target clients who are unfamiliar with insurance, and as a result have a hard time understanding its value. Many believe that there is no point in investing in a product unless they receive some immediate benefit. Financial education is therefore extremely important. One microinsurance education success story is the <a href="http://www.care.org/" target="_blank" rel="noopener">CARE</a> and <a href="http://www.bajajallianz.com/Corp/index.jsp" target="_blank" rel="noopener">Bajaj Allianz</a> partnership created in 2008 to provide property and health insurance to people in Tamil Nadu after cyclone Nisha. In their work the team soon realized that many individuals were uninformed about what insurance actually entailed. To raise awareness about its benefits, the team put up posters, created self-help groups, and organized Bollywood-style presentations with puppets to educate potential clients. Though effective, this proved to be costly. To offset this cost, Bajaj Allianz raised the premium, which was possible because they had succeeded in making the product well known and demand was increasing (Butt).

With microinsurance growing at such a high rate, with more and more people benefiting from it each day, such innovations are very promising.

For more information on Financial Inclusion 2020, <a href="http://bit.ly/FI2020signup" target="_blank" rel="noopener">sign up for campaign updates</a>.

Works Cited:

Aaban Butt, Experiences in Micro-Insurance (CARE International, 2010).

Rob Rusconi, Savings in Microinsurance: Lessons from India (International Labour Organization, 2012).

Peter Zetterli, "Can Phones Drive Insurance Markets? Initial Results From Ghana," CGAP, Feb. 15 2013.

Image credit: <a href="http://www.microdinero.com/index.php/english/nota/4525/m-insurance-expands-in-previously-uninsured-markets" target="_blank" rel="noopener">microDINERO</a><a href="http://www.cgap.org/blog/so-where-are-we-link-between-g2p-and-financial-services" target="_blank" rel="noopener">
</a>

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Life Insurance

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