Insurance functions on the concept of risk pooling, and likewise, regardless of its small unit size and its activities at the level of single communities, so does microinsurance.
Microinsurance is the protection of low-income people (those living on between approximately $1 and $4 per day) against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved. This definition is exactly the same as one might use for regular insurance except for the clearly prescribed target market: low-income people.
The target population typically consists of persons ignored by mainstream commercial and social insurance schemes, as well as persons who have not previously had access to appropriate insurance products.
According to Robert Kiyosaki, doing business without having insured the business is parallel to walking on the streets naked. Well, if you walked naked on the streets you can not agree more that the public would refer to you as insane. Doing business without insurance is, therefore, insanity. This insanity could be due to ignorance or the unaffordability of the given insurance premiums.
The legends such as Chartis, UAP Insurance and Jubilee Insurance have laid their focus on insuring the big money and laying little or no focus on the small money that we could refer to as the micro segment.
When fire razed a market, its usually the case of all hue and cry with all fingers pointing at the inefficiency of our government. The big question is, how can these legends or even new entrants in the industry, lay focus on the micro – segment?
The beauty of the small money
Let us call this segment ‘small money’. The other day, a Motor cyclist said that he pays his landlord every 30th of the month in advance before the commencement of the new month without flop.
His argument was, he had a commitment for a month’s rent and he had to pay by mobile money before close of business. The beauty of this small money is that it is disciplined and less committed vis-à-vis its counterpart, big money, which is indiscipline and committed to the hilt with loan repayments, entertainment and many more expenses. As such, the small money would actually be lucrative if tailor-made for groups such as boda – boda stages, market vendors and other small social groupings locally known as ebibiina.
Integration with mobile technology
The success of this segment lies in its integration with mobile technology such as Airtel money and MTN mobile money. Insurance premiums can then be tailored into daily and weekly payments that suit the cash flows of this target group.
Unfortunately, insurance habitually becomes a topic of discussion in the aftermath of a calamity. So one on one meetings with the target group would work out as an effective communication tool not to mention radio and television adverts. The bottom line is that insuring the uninsured should be a gateway to sustainable micro – enterprises.