The need for financial services in poorer communities is universally acknowledged and the practice of making microcredit available to these people is a common practice throughout Africa. However one micro- financier, Blue Financial Services, expanded the service they are offering to these communities to include much needed micro-insurance.
Poor people are in dire need of micro-insurance. When resources are limited and unexpected financial losses occur, low-income earners experience great financial disruption that could result in them never being able to recover the losses.
Even though a poor person’s property may be limited to a few crops, animals and a modest shelter, the destruction of any one of these could deliver a mortal blow to the family’s economic situation. But, if the family was insured, even for a small amount, this would lighten the financial loss and ensure some peace of mind and dignity for the people involved.
Greg Niemand, Divisional Director International Insurance for Blue says, “Micro-insurance protection products are designed specifically for the protection of low-income earners. Blue’s role is to assist poorer communities with the recovery from the financial consequences of common risks. Since these communities can’t afford a high level of insurance, Blue is committed to delivering protection in the form of affordable and appropriate insurance products that will return victims of a loss to the same living conditions they enjoyed before the unfortunate event.”
The need for insurance is clear and statistics highlight why it is so important to ensure that these communities enjoy the same insurance privileges as higher income earners. Blue identified that two-thirds of human beings suffering from extreme poverty are woman who manage to survive on approximately R10 per day. This makes them extremely vulnerable to negative influences.
Micro-insurance savings products, may also be beneficial to curb this problem, however the main aim is to create wealth and sustainability for the destitute. By utilising micro-insurance savings opportunities effectively, Blue strives to assist in empowerment, upliftment and creation of sustainability in South Africa and the rest of Africa.
Gaining exposure into these markets takes a unique and strategic approach. Blue utilises various models suited and adapted for the needs of each country, such as:
· Broker Model: Blue acts purely as a distribution for off the shelf products from local or international providers.
· Provider Model: Blue provides the product design in conjunction with the providers. The providers are responsible for the underwriting and actuarial calculations while Blue is responsible for the product design and distribution.
· Full Service Model – Blue is in the process of setting up cell captive arrangements to design, price and distribute appropriate and affordable products.
· Community Based Model – Partnering with their SMME and CSI divisions, Blue Insurance will launch community specific products, tailor-made to the needs of the community.
“Blue is confident that by expanding our product range to include micro-insurance, we will assist and empower those communities who will be left destitute if a loss occurs,” says Niemand. Blue has implemented a phased approach in relation to specific countries which will allows it to:
· Build distribution capacity;
· Build administrative capability;
· Gain exposure to the prevailing legislation and impending changes;
· Obtain volumes of local market research; and
· Record its claims experience in each country.
Phases in relation to specific countries have also been identified and some of the countries in phase one include Swaziland, Lesotho, Namibia, Kenya, Rwanda and Nigeria. Phase two Uganda, Phase three Botswana, Malawi and Tanzania and Phase four South Africa and Zambia (registered as a Life Insurance company).
Products have been selected to fit a generic scoping, however this scope has been adapted to suit local and cultural differences in each country. In conclusion Niemand mentioned, ”Blue is confident that the comprehensive research done in each country helped to identify trends, competitor analyses, consumer education, market appetite, legislative restrictions and adopt best product-to-market model approach.”
Article provided by: FAnews