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This is one sector they claim can help not only improve the financial inclusion of the bulk of citizens, but also boost the mobilization of investable resources.

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The National Insurance Commission (NIC) of Ghana, supported by the Ministry of Finance, has therefore started working with industry players to expand and deepen insurance penetration.

Against a penetration rate of 1.5 percent nationwide, Ghana?s insurance stakeholders seek to achieve at least 3.0 percent target by the end of 2015.

Micro-insurance is developed and offered by commercial insurers, mutual insurers, microfinance institutions, Non-Governmental Organizations (NGOs), governments or semi-public bodies.

Its products can cover any insurable risk, including death, illness, accident, property damage, unemployment, crop failure, loss of livestock, and many others.

Kurt Karl, Head of Economic Research & Consulting, Swiss Re, says the potential for micro-insurance is huge in Africa since it provides low-cost insurance solutions to low-income populations.

He observed that health and agriculture risk were wide-spread and most troublesome for the poor population in Sub-Saharan Africa.

Karl also says that micro-insurance of funeral expenditure has a big potential in some African countries, including Kenya.

?With around 346 million people in Sub-Saharan Africa having earnings between USD 1.25 per day and USD 4 per day, the potential target market for various commercially viable micro-insurance products is huge,? he stated in a publication entitled ?Re-insurance in Sub-Saharan Africa: Gearing up for Strong Growth?.

Its viability comes from its targeting of low income people, which leads to distinct characteristics and needs such as addressing the particular risks that low income people face.

The market is available and the right strategies can unlock the potentials, according to the experience of MicroEnsure, a British life insurance firm.

The company has been operating micro-insurance serving 15 million customers in 17 countries globally, and growing currently at one million new customers every month.

According to the marketing team of MicroEnsure, led by Peter Gross, Marketing Director, the company uses the innovation of mobile phone credit top-up as a means of paying premiums for mobile phone subscribers.

?We realized that mobile phone companies actually had an issue with loyalty, so we convinced them that they should give away free insurance alongside airtime purchases so that the more customers spent with their network, the more free insurance they received,? he explained in a mailed response to Xinhua.

Gross explained further that micro-insurance providers are able to leverage the existing distribution networks of airtime dealers and/or mobile money agents as a low-cost sales channel.

These agents, he said, could then help explain a product to customers who might not be familiar with insurance, in addition to serving as a channel for notifications, claims handling and even disbursement.

?Using existing airtime, retailers and/or mobile money agents can quickly and easily build trust and scale, since customers are often familiar with these retailers already,? he stressed.

For micro-insurance to be successful, however, Gross underscored the need for customers to understand exactly what they are buying.

According to him, Airtel provides free insurance in eight African markets to customers who recharge an average of two US dollars per month or more.

?Once those customers have a positive experience of insurance and they see that claims are paid easily and quickly, they are willing to buy more cover from us, starting with policies that cost less than one dollar per month.?

For the National Insurance Commission (NIC) of Ghana, micro-insurance has become one major strategy it is promoting and assisting the industry to do.

?Because micro-insurance is that product which can be specifically designed to meet a particular target market, so that if you have the market women with some products developed for them, if there is a group of hairdressers, a product is developed for them,? Simon Nero Davor, Deputy Insurance Commissioner told Xinhua.

He was optimistic that, through micro-insurance, all those who hitherto would not take insurance policies would now have the product which would meet their requirements to help improve upon penetration of the market.

On the continent level, most of the premiums mobilized in Africa are further re-insured with bigger firms abroad, as the African Insurance companies are not big enough to handle some of the risks.

?Because most of our insurance companies are not big, we have to go and re-insure all those risks outside, so the premiums we collect, we have to send it to them to take the risks which we cannot absorb here.

?So now the strategy for the Africa is to make sure that we retain as much of the premium on the African continent than going outside,? he added.

According to him, both at national and continental level, it has been decided to minimize the level of reinsurance premium transfer outside the countries and continent.

?When we manage to retain those premiums here, it will lead to the development of the insurance industry,? Davor said. Enditem.

Source: Xinhua


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