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What is inclusive insurance?
Inclusive insurance is a term increasingly used to define insurance products aimed at markets currently excluded or underserved by insurance. In some ways it is a late-stage metamorphosis of what was once called “microinsurance”. However microinsurance as a term, is somewhat limited in that it can too narrowly define the level of premium, regulatory categorisation, or income levels of prospective policy holders. It also infers that the products are a “micro” or “mini” version of existing products, distribution networks, and processes. Inclusive insurance is broader than that. Denis Duverne, Chairman of the Board of Directors at AXA has argued for a broader approach, saying 3 : “We cannot simply downsize traditional products. We must spend time in the field to understand customer realities, build appropriate products, and innovate beyond credit life towards health, property, and micro-savings.” An important 2017 paper from the Center for Financial Inclusion at Accion and the Institute of International Finance -
Inclusive insurance: closing the protection gap for emerging customers - helpfully defines inclusive insurance as, “access to and use of appropriate and affordable insurance products for the unserved and underserved, with a particular emphasis on vulnerable and low-income populations.” The emphasis appears to be on the creative and adaptable process or methodology of value creation for new customers and new markets. Inclusive insurance starts from the recognition that there are unserved and underserved markets in emerging economies and that the lack of insurance protection makes them especially vulnerable to risks. As markets develop and insurance penetration deepens the term itself may even become obsolete. Fiona Stewart from the World Bank believes that “we are moving away from calling it microinsurance or even inclusive insurance. Regardless of who the policyholder or beneficiary is, we should be calling it ‘insurance’. We want to encourage insurance more broadly and develop markets as a whole.”
3 https://www.centerforfinancialinclusion.org/storage/Inclusive_Insurance_Final_2018.01.06.pdf
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