Helping low-income women protect their assets: microinsurance

February 26, 2013

There has been much research done about the potential impact of women’s participation in the economy—both as producers and consumers. The World Bank estimates that the Asia-Pacific region is losing $42 to $47 billion per year because of restrictions on women’s access to employment opportunities and another $16 to $30 billion per year because of gender gaps in education. Women now represent 40 per cent of the global labor force, 43 per cent of the world’s agricultural labor force, and more than half of the world’s university students. Eliminating barriers that discriminate against women working in certain sectors or occupations could increase labor productivity by as much as 25 per cent in some countries.

Why then, is an entire market segment struggling to get access to capital, or any financial services? Bringing women into the economy, particularly the poor, requires a shift in our perception of women and the poor as powerful economic agents. We know from our research that for poor women there are major barriers that impede their inclusion in the financial sector. If we want to reach financial inclusion for women we must understand the lives of women.

VIDEO: Mary Ellen discusses microfinance for AusAID

In a recent project we worked with our network member Microfund for Women (MFW, Jordan) to launch Ri’aya (The Caregiver Policy). Ri’aya is a unique micro‐health insurance product that provides a cash benefit after hospitalization to help with costs associated with loss of business, medical expenses, transportation and other household needs. To create the product, Women’s World Banking and MFW conducted in-depth gender research with more than 1,000 of MFW’s clients to gain a thorough understanding of client needs. The study revealed that the majority of MFW’s clients were not insured, and when in the need of health care, used public facilities paid for by savings or borrowings.More than 2.5 million people are currently excluded from the global financial system. Women’s World Banking, with support from AusAID, is committed to ensuring that we close the economic access gap. We work with institutions to create and design products that work for women and have the greatest financial and social impact. For example, women want confidential savings accounts that allow them to save without the whole family knowing how much she has and making demands on that money. Poor women value convenience – they want to make frequent deposits without taking time away from the family or business. They also value the peace of mind that comes with knowing that they can take care of basic health needs because they have insurance.

Microinsurance has tremendous potential to provide security and stability to a poor household. As of 2009, it is estimated that only 3 per cent of the low-income population in the world’s 10 poorest countries have a microinsurance product, leaving approximately two billion people unserved. Research has demonstrated that healthcare costs exert the most financial pressure on poor families given that they have little ability to absorb risk. The need to meet the cost of an unexpected health emergency is the most common reason poor families must liquidate their businesses or sell productive assets, such as livestock or equipment. This deprives families of the tools they once had to generate income and serves as a catalyst for moving further into poverty.

To best serve low-income women it is essential that product design and delivery take into account women’s unique needs. In the case of insurance, women face health issues related to pregnancy and childbearing, however, the majority of microinsurance products currently available preclude care for many of women’s most pressing health concerns. Finding coverage that supports the entire family can be a challenge, often forcing families to pick and choose who to insure often leaving women and girls uninsured. The Caregiver product, the subject of our latest report, has no pregnancy exclusions and was so successful it is being expanded to include family coverage.

This is what we mean by economic empowerment—a solution to problems that doesn’t involve charity, but is truly sustainable. If we can ensure that women have access to a full suite of financial products and services, we can have a multiplier effect for improving the well-being of whole families for generations.

This post was originally published in Engage</em rel=”nofollow”>, Australia AID’s blog.