According to the Microinsurance Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027 report, microinsurance is the coverage offered to low-income households with limited income access and low-valued assets.
“It aids individuals belonging to the financially weaker section of the society by formulating a tailored plan with low premiums and provides compensation for illness, injury, disabilities and death,” it says.
“It also covers various property risks against crops, cattle and fire. It merges multiple small financial units into a more massive structure and provides a cushion against unexpected losses and exorbitant interest rates charged by unorganised money lenders.”
The report says growth in microinsurance is expected particularly in places where consumers have lower incomes, yet still require insurance against the vagaries of life without the large price tag that normally accompanies this cover.
Root, a Cape Town-based startup that is building infrastructure for the digital insurance economy, recently announced that it was partnering with Mr Price Money to offer a simplified life insurance product to the retailer’s existing credit customers.
Mr Price Money is a division of the Mr Price Group, and an authorised financial services and credit provider.
Within this division, Mr Price Insurance offers relevant and affordable insurance products to customers.
The new Life Matters product, underwritten by Guardrisk, joins a range of insurance products that Root already hosts for the group. Guardrisk was granted South Africa’s first microinsurance cell captive licence by the Financial Sector Prudential Authority in 2021.
The new product requires no medical examination and customers apply simply by answering a limited number of questions.
Depending on their needs, they are offered between R100 000 and R200 000 worth of cover.
Unlike traditional life cover, which takes between 45 and 60 days to become active, cover starts right away.
“This product is a prime example of how household names with a strong brand identity and existing customer base can extend the services they offer to their customers by adding a suitable insurance product,” says Louw Hopley, CEO of Root.
“The product has been designed with Mr Price’s existing customers in mind and fulfils a very real need in the market. This means it can better serve its customers, while at the same time driving greater revenue and operational efficiency through its existing financial services products.”
In May, African insurtech aYo Holdings announced that it was seeking to power the future of microinsurance in its next step of ongoing technology transformation by rolling out a cloud-based enterprise resource planning (ERP) system to underpin its ambitious growth plans across the continent.
aYo, which is 100 percent owned by MTN, has more than 16 million enrolled customers using its microinsurance products across Uganda, Ghana, Zambia and Côte d’Ivoire. “It aims to grow into the largest financial services technology platform in Africa by providing a range of affordable and accessible micro financial services products,” the announcement stated.
In the same month, Vodacom launched VodaLend Compare, which offers micro-loans on an unsecured basis. VodaLend Compare also seeks to compare credit facilities, a much-needed service for consumers.
These new products coming to the market provide consumers with access to flexible products and an end-to-end digital experience ensuring transparency between the insurance taker and service provider. Additionally, as more products are becoming digitally available, microinsurance policies have gained preference amongst individuals in higher income segments as well.
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