The Insurance theme is a new and exciting focus area for FSDT that addresses insurance, risk management and coping mechanisms.
The role of the Insurance theme is to be a market facilitator to achieve improved capacity and sustainability of the insurance sector to meet the needs of MSME’s and poor men and women.
In Finscope 2013 , the uptake for insurance was 13.0% which has almost doubled from 6.8% formal insurance recorded in the 2009 Finscope. The findings from the study illustrate that the growth of the sector has been mainly on the health insurance covers and this is attributed to the growth of both the National Health Insurance Fund (NHIF) and the Community Health Funds (CHF). The study also highlights the product spread and the low penetration for products like education insurance, funeral and personal accident covers.
The growth of the market is hindered by two main problems and subsequent constraints in the insurance industry. The first relates to the low demand for insurance which is mainly due to low understanding by potential customers on how insurance works and negative perceptions and attitudes towards insurance. The second relates to the low growth of insurance which arises due to limited distribution channels for insurance, limited skilled insurance personnel, limited product offerings (including Microinsurance) and limitations to the Enabling environment.
In line with the National Financial Inclusion Framework (NFIF), the insurance penetration target in terms of access to one insurance product stands at 30% by 2016. This is an ambitious target that requires the need to address the two main problems and constraints, change of thinking and innovative approaches in order to ensure the target is achieved.
In 2015, FSDT recruited a National Microinsurance Coordinator (MICOORD) to work with the SC, TWG, TIRA and the industry to facilitate with the execution of the NMAP. This will mainly involve development of Key Performance Indicators for microinsurance, launch of the Microinsurance Acceleration Fund (MIAF) , Capacity building for the industry and insurance education through the National Insurance Education Strategy (NIES)
The MIAF, coined the “BIMA Challenge”, is one of the key ways to drive the problem relating to the low growth of MI in the country. The MIAF will be a first for the country to drive innovation by the insurers. The objectives of the MIAF are firstly, to promote the fact that insurance (Microinsurance) is an effective risk management tool. Secondly, to promote the importance of the management of shocks that affect the livelihood of individuals, households and MSMEs and lastly, to drive innovation in insurance that will address the constraints in insurance penetration.
Comprehensive insurance training on MI based on set approved curricula and modules facilitated by MI specialists. The training sessions are based on the market needs assessments in order to ensure relevance and application in the work-place.
This is an initiative driven by the National Insurance Education Committee (NIEC) to work with the industry and different arms of the government and private sector to address the problem on low demand for insurance.
- Microinsurance Diagnostic study, 2012
- FSDT Inclusive Insurance Focus Note Series-Microinsurance Landscape 2015
- Bima Challenge Fund Brochure