Global launches for mobile microinsurance (MMI) products have significantly increased over the past three years, specifically in low-income countries, according to research from the Consultative Group to Assist the Poor (CGAP). The focus of these deployments has shifted from lower-middle-income countries to a range of low-income nations.
The CGAP study showed immense growth in the number of new MMI products in health, accident, life, travel, cattle and crop insurance. With the exception of 2009, product offerings grew each year, from two in 2006 to fifteen by August 2013.
Early MMI deployments were primarily concentrated in South Africa and East Asia. Since 2010, two-third of new MMI products have been launched across a broader range of low-income countries. Fifty-four percent occurred in Sub-Saharan Africa, 23% in South Asia and 20% in the East Asian and Pacific regions. Just three products launched in Latin America and none made their way to North Africa, Central Asia or Eastern Europe.
The recent wave of activity in low-income regions appears to be driven by mobile network operators (MNOs) seeking to build customer loyalty. A third of these deployments is performed by MNOs and insurers, respectively. Banks, governments, donors and third parties complete the remainder.
The increased additions to the ecosystem of digital financial products to low-income countries represent a new phase in microinsurance provision. Collection of premiums is a longtime problem in this sector, as many members in the target market have low incomes and unpredictable cash flow. They also are spread throughout remote locations and have little access to financial service payment mechanism. Most members use the mobile channel for payment reminders and self-payments.