The Benefits of Microinsurance for Africans

It is ironic that insurance is usually completely inaccessible to those who need it most.  For many Africans, the idea of being able to take out insurance is simply something they could only dreamt about – but slowly it’s becoming a reality.  It’s a simple fact that poorer people need insurance much more than the wealthy.  If only because the rich have other options, credit, savings or other assets to protect them if something goes wrong.

Many of the poor in Africa are stuck in a cycle of poverty struggling to survive until someting goes wrong.  A failure in the crops, a drought or perhaps an accident or illness to the main breadwinner.  The sickness is the real poverty trap as a reduction in income is usually combined with expensive hospital fees.

However now insurance markets are opening up to the poorer sections of Africa.  Previously few companies were prepared to enter a market which promised only a huge volume of very small value policies.  However the model established for microcredit using mobile phones is ultimately perfect for microinsurance too.  Now 33 of the top 50 insurers in the world offer some sort of microinsurance policy.

The insurance doesn’t just offer a safety net for the vulnerable it actually helps stimulate the economy too.  People who have insurance are more likely to take investment risks and provide more opportunities.  Also having insurance is a gateway to othe possibilities like loans, mortgages and development finance.

The insurance market itself is also developing into a valuable source of employment and opportunity as well.  A huge network of self employed agents are able to sell small insurance policies throughout many of  the African countries.  The internet is also a viable way to sell to fellow Africans due to the improving infrastructure.  Many Africans are finding the internet is a great source of income, entrepreneurial advice/inspiration and some even use it to watch BBC Iplayer from outside the UK – check this link.