By Michael J. McCord, Roland Steinmann and Molly Ingram; published by Deutche Gesellschaft für Internationale Zusammenarbeit (GIZ) and Munich Re Foundation; 2012; 11 pages; available at: http://www.microinsurancecentre.org/resources/documents/doc_download/918-briefing-note-the-landscape-of-microinsurance-in-africa-2012.html
This report presents an analysis of the status and characteristics of the microinsurance industry in Africa. It is an update and expansion to the 2010 “Landscape of Microinsurance in Africa” study released by the International Labor Organization (ILO). For the 2012 study, researchers collected data on 511 African microinsurance providers from 39 countries including company structure, performance results, descriptions of microinsurance products offered and perceptions of the current state and future trends of the African microinsurance industry. This includes eight countries that had not been identified as having had access to microinsurance in the 2010 study. The report identified a total of 598 microinsurance products serving approximately 44 million people and properties as of the end of 2011.
A total of nine countries have at least one million lives and properties covered by microinsurance providers. The study indicates that the southern region of Africa has 30 million lives and properties covered by microinsurance services, more than twice the number served by microinsurance providers in all other regions of the continent combined. The authors conclude that the greater degree of microinsurance penetration in the southern region is due to “strong cultural promotion of funeral insurance”.
According to the report, microinsurance coverage in Africa has “grown tremendously over the past few years”. Between 2008 and 2011, the number of lives and properties covered by microinsurance in Africa more than tripled. Life and accident microinsurance products are the “main driver” of the growth of the microinsurance industry, with the number of lives and properties covered by life microinsurance products increasing by roughly a factor of ten between 2005 and 2011.
The research team identified 12 different types of microinsurance providers within the body of 511 organizations studied. These include commercial lenders, hospitals, non-governmental organizations (NGOs), microfinance institutions (MFIs) and mutuals. 77 percent of these organizations are community-based and therefore have “few covered lives and properties per group.” The second most common type of microinsurance provider was found to be regulated commercial insurers, which accounted for 13 percent of the organizations studied.
The report notes that although the majority of microinsurance providers are community-based organizations, they only account for 12 percent of the total number of lives and properties covered. Regulated commercial insurers, despite accounting for only 13 percent of the organizations studied, provided cover for over 77 percent of all lives and properties covered by microinsurance services in Africa.
When the authors asked respondents to report “on their perception of the microinsurance market as well as their view of the regulatory environment in their country,” they found that the survey responses “very much fit the perception of excitement mixed with apprehension”. According to the survey, 71 percent of respondents believed that the microinsurance market would “grow at least 10 percent in the coming year.” However, 67 percent of respondents believed that microinsurance providers demonstrate a “lack of knowledge about insurance needs of the low-income population.” Additionally, the report notes that “a majority of organizations indicated a lack of affordability and a lack of distribution channels for microinsurance.”
The report was produced in partnership with the 77-member African Development Bank Group, the Luxembourg-based Microinsurance Network and the Microinsurance Innovation Facility of the UN’s International Labour Organization.
By Makai McClintock, Research Associate
About Munich Re Foundation
The Munich Re Foundation was established in 2005 by Munich Re, a German reinsurance company with assets of USD 313 billion as of December 31, 2010. Munich Re Foundation seeks risk-reducing solutions in the context of international development and globalization, concentrating on population growth, urbanization, diminishing resources, environmental pollution and climate change.
About Microinsurance Network
Originally established in 2002 as the CGAP (Consultative Group to Assist the Poor) Working Group on Microinsurance, the Microinsurance Network was spun off as an independent organization in 2009. Based in Luxembourg, the membership organization aims to promote the development of insurance products for low-income populations by providing a platform for information sharing and stakeholder coordination. As of 2011, it reports 52 member organizations.
About African Development Bank (AfDB)
Established in 1964, the African Development Bank (AfDB) provides loans and grants to governments and private companies in Africa. Owned and funded by member governments, the bank has a mandate to reduce poverty and promote sustainable development. AfDB shareholders consist of 77 member countries, including 53 African countries to which it commits an approximate total of USD 3 billion annually. Donald Kaberuka serves as president of AfDB as of 2012.
About Microinsurance Innovation Facility (MIF)
Launched in 2008 with a USD 34 million grant from the US-based Bill & Melinda Gates Foundation, the Microinsurance Innovation Facility (MIF) is housed at the International Labour Organization’s (ILO’s) Social Finance Programme. MIF’s goal is to increase the availability of insurance for low-income families in developing countries to help them overcome poverty. MIF provides grants to help organizations develop innovative microinsurance products, with an emphasis on agriculture, health, life and property insurance. MIF also provides technical assistance and advice. ILO is an agency of the United Nations and is located in Geneva, Switzerland.
About International Labour Organization
Founded in 1919, the International Labour Organization (ILO), is an agency of the United Nations, an organization promoting peace and improved living standards. The objective of ILO is to advance opportunities for men and women to obtain productive work in conditions of freedom, equity, security and human dignity. Headquartered in Switzerland, its founding mission is that labor peace is critical to prosperity. For the biennium 2012-2013, ILO anticipates a budget of USD 861 million.
Sources and Additional Resources
“Briefing Note: The Landscape of Microinsurance in Africa 2012”; GIZ and Munich Re Foundation; 2012; http://www.microinsurancecentre.org/resources/documents/doc_download/918-briefing-note-the-landscape-of-microinsurance-in-africa-2012.html
“The Landscape of Microinsurance in Africa”; International Labour Organization; 2010; http://www.ilo.org/public/english/employment/mifacility/download/mpaper4_landscape_en.pdf
MicroCapital.org story: “MICROCAPITAL BRIEF: Making Finance Work for Africa (MFW4A), Munich Re Foundation Survey: African Microinsurance Triples in 3 Years”; Published November 6th, 2012; https://www.microcapital.org/microcapital-brief-making-finance-work-for-africa-mfw4a-munich-re-foundation-survey-african-microinsurance-tripled-in-3-years/
MicroCapital.org story: “MICROFINANCE PUBLICATION ROUND-UP: Impact of Property Insurance in Ghana; Priority Issues for the Microfinance Sector; Investment in Sub-Saharan Africa”; Published June 21st, 2012; https://www.microcapital.org/microfinance-publication-round-up-impact-of-property-insurance-in-ghana-priority-issues-for-the-microfinance-sector-investment-in-sub-saharan-africa/
MicroCapital Universe Profile: Munich Re Foundation
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Munich+Re+Foundation
MicroCapital Universe Profile: International Labour Organization (ILO)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Labour+Organization+%28ILO%29
MicroCapital Universe Profile: MicroCapital Innovation Facility (MIF)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microinsurance+Innovation+Facility+%28MIF%29
MicroCapital Universe Profile: Microinsurance Network
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+Microinsurance+Network
MicroCapital Universe Profile: African Development Bank (AfDB)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=African+Development+Bank++%28AfDB%29
Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/+
Similar Posts:
- MICROFINANCE EVENT: International Conference on Inclusive Insurance (ICII); October 23-27, 2023; Accra, Ghana
- MICROCAPITAL BRIEF: AfDB Seeking $1b for African Climate Risk Insurance Facility (ACRIFA) to Boost Microinsurance for Farms, Livestock Against Drought, Floods
- MICROCAPITAL BRIEF: First Consult, Mastercard Foundation, Seek to Create 400k Jobs in Ethiopia via Access to Finance, Wraparound Support for MSMEs, Entrepreneurs
- MICROCAPITAL BRIEF: Stanbic Bank Uganda, IFAD Seek to Reduce Costs of Remittances via FlexiPay E-wallet, Encourage Adoption via SACCOs
- MICROCAPITAL BRIEF: ILO, UNCDF to Expand PICAP Climate Microinsurance Program to 8 Pacific Countries
