> Posted by Olivia Caverly, Microinsurance Network
The Financial Inclusion 2020 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, SBI Life Insurance’s 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.
Impact investing as a sector is still very, very young, according to Sean Foote, Managing Director of Labrador Ventures (a venture capital firm), syndicated lecturer on microfinance at the University of California Haas School of Business, and member of the Center for Financial Inclusion’s Faculty Council. I recently heard Foote make the following assessment of the sector, speaking, as he noted, with his venture capitalist’s hat on.
Courses featuring microfinance can be found in most colleges or universities, and the development of the syllabi for these courses has begun to create a sort of “microfinance canon.” As the next generation of microfinance professionals enters the market, there are a few things that many of them have read, and a few questions that many of them have been required to consider.
As the market for the Smart Campaign’s recently launched Client Protection Certification Program kicks off, we’d like to acknowledge the important role that investors will play in the success of the program. What we mean by success is the creation of a viable, sustainable market for certification that encourages the industry’s standards of practice to improve. As suppliers of funds to retail financial providers who serve the poor, investors are in a key position to incentivize their portfolios to improve practices and work towards certification. And by encouraging their investees to get certified, they are helping them to meet public, industry-wide standards of practice that can be understood by everyone – including indirect investors, regulators, and ultimately even clients.
In the latest installment in the Microfinance Matters Interviews series, reporter Lucy Conger speaks with Anne-Marie Chidzero about her career in Africa’s microfinance industry, the developments it has undergone in recent decades, and the work of AfriCap, where she serves as CEO. An edited transcript of the interview follows.
The following post was originally published on Mobile Payments Today.
The other day, I received a text message from an engineer keen on financial inclusion matters. He wrote:
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