Meeting the New Year Microinsured

The issue of New Year Resolutions came up in a conversation at a recent social event, obviously because we are getting to the end of the year when such resolutions are made. 

One of the people in the conversation spoke about starting a life insurance policy at the beginning of next year. This started a lively discussion during which time it emerged that most people have no awareness of life insurance policies.

This is a serious gap in people’s planning for the future, and for young people, it could be the difference between fulfilment and frustration in the future.

Today, getting an insurance policy could not be simpler. There are products and policies tailored to every income level and lifestyle and they have been structured to make payment most convenient and almost painless. The new trend that has broadened the insurance market is the micro-insurance phenomenon, which is specifically designed for low income customers.

A good example of this micro-insurance scheme is aYo Intermediaries Ghana, a subsidiary of the MTN Group which provides micro insurance to all MTN subscribers. I decided to pay a visit to its Accra HQ to learn a bit more about its operations.

The company says that its aim is to “make insurance relevant, accessible, and easy to use for all Ghanaians as part of our commitment to creating a future in which everybody uses insurance, we strive to provide a rich customer experience for our customers”.

Ayo, which passed the seven million customers mark during this calendar year operates its insurance in a very simple way. Customers pay premiums from deductions from their airtime. As stated simply by Francis Gota, the youthful CEO of aYo Intermediaries Ghana, “the more you buy MTN airtime, the more cover you get at a better price. The cover that you will receive is valid for 30 days.”

Customers can choose a life policy or one that covers hospital stay. In the MyLife cover option, accumulated cover will be paid to a beneficiary selected by the insured customer in the event of death. Under that option, the insured customer can choose a family member to enjoy the insurance cover free of charge,

In the MyHospital cover option, the insurance holder will be paid a fixed amount of money for every night spent in hospital between one and thirty days. This cover is on a one-year rolling basis and the amount can be used towards settling the expenses incurred while being hospitalised.

These policies provided by aYo and other companies offering similar services in Ghana at the moment may just be the beginning of a whole new world of possibilities for low and middle income people in emerging markets around the world. The Microinsurance Network, a nonprofit global organization of microinsurance industry experts comprised of 80 institutional members from more than 40 countries says in its Annual Report 2017 that almost 290 million people worldwide are covered by at least one microinsurance policy.

According to Insurance expert Janet Hunt, writing in the Balance website, microfinance can apply to any kind of insurance product; she also makes the point that “most things that can be insured with a normal policy can be insured on a small scale or ‘micro’ level”. Other examples of microinsurance products include crop and livestock insurance, home and hut insurance, natural disaster insurance, disability insurance, and so on.

In the conversation I alluded to at the beginning of this article, most people involved believed that life insurance, travel insurance and such products were luxuries reserved for the rich, but today microinsurance has shown that this is not the case. Most self-employed people who have no structured pensions can use life policies which will mature with them and provide a nest for their old age.

There is no better time than the beginning of the year to consider getting onto the insurance train. Sadly, these products, which are based on new technologies have come too late for elderly people because the policies are available to people under the age of 70, and this is the reason why young people must take advantage now. It is also the reason why the microinsurance companies must deploy innovative communication strategies to reach communities where their services are sorely needed.

The writer is a Consultant in Communication, Media and Culture