The Landscape of Microinsurance in Africa

This paper presents results of a survey of microinsurance in Africa.

The large numbers of low-income households in Africa are vulnerable to various risks. Informal schemes and government-led programs have failed to help low-income people to manage risk. Although microinsurance is not an adequate product for the destitute, it can serve the needs of the working poor and the vulnerable non-poor who constitute a market of approximately 700 million people. The survey finds that:

• Only 26 percent of the target population currently uses microinsurance products;
• Gross premiums received from the microinsurance market is only 1 percent of its total value;
• Health products cover only 0.3 percent of the low-income population;
• Wide variety of providers offer microinsurance;
• Microinsurance expansion is hindered by potential clients lack of understanding of insurance and their inability to pay premiums;
• Lack of IT, high administrative costs and lack of qualified personnel hinder microinsurance expansion on the supply side.

A diversity of providers, informed clients, innovative distribution channels, improved efficiency and human resource management will be critical for the success of microinsurance in Africa.