Think of Microinsurance like a Running Shoe

April 15, 2019

A Client Story: How Caregiver protected Latifah and her children…You might be wondering how exactly that analogy works, but Shilpi Shastri, a microinsurance specialist at Women’s World Banking, explained it while speaking on a panel at a CSW side event hosted by the Islamic Development Bank titled Microinsurance: A Means to Women’s Empowerment on March 11. Other speakers on the panel included Sally Yacoub, a consultant at the Swiss Capacity Building Facility, Dr. Ammar Abdo Ahmed, Senior Global Health Specialist at the Islamic Development Bank. Michael McCord, Principal and Managing Director of the Microinsurance Centre at Milliman, moderated the event.

“It’s exactly what shoes do to a runner,” Shastri said of microinsurance, drawing some bemused chuckling from the audience at the start of the panel discussion. She went on to explain that, although runners can still physically run without shoes, it isn’t ideal. “If you have a good pair of shoes, they protect you from future injuries so you’ll have peace of mind, but a really well-designed pair of shoes can also enhance your performance.” Microinsurance works similarly because it helps people maintain peace of mind about their own bodies and their financial situation if their health becomes precarious. In the very best cases, people with insurance can perform better, or run farther, by taking more risks to invest in their businesses, their children, or their homes.

Shastri explained Women’s World Banking’s microinsurance product, Caregiver. It doesn’t work like traditional health insurance in which a portion of medical costs is covered. Instead, it gives a fixed amount of money per night during a hospital stay. It is meant to assuage the fear, anxiety, and potential resistance to seeking healthcare treatment due to loss of income. Caregiver comes with life insurance as well, which provides an added level of comfort and security for women who want to ensure that their family is provided for.

Insurance companies tend to assume the program will be expensive and that the low-income population segment is high-risk, but Women’s World Banking has made it financially profitable to the insurance companies and the financial service providers we work with to make Caregiver an option for women in several different countries.

When the panel took questions from the audience, someone asked simply “why microinsurance?” instead of universal healthcare or existing mainstream healthcare. In answer to the question, Ammar Abdo Ahmed described Rwanda as an example of universal health coverage with a strong commitment to covering the whole population, but acknowledged that there is no gold standard. Microinsurance, meanwhile, can fill in gaps where low-income people are disproportionately and negatively affected.

That emphasis on the low-income population is what sets microinsurance apart from other mainstream insurance options. Michael McCord’s view was that traditional marketing needs to come much closer to the customer in order to cover low-income people. He gave the example of marketing to an illiterate customer base as a place to start, but also explained that health insurance products need to be different for different segments of the population—offered in a different way, sold in a different way, and serviced in a different way.

That, again, brings us to microinsurance as a more customer-centric avenue to health coverage for low-income families. Sally Yacoub emphasized the importance of market players recognizing the need and context (including specific needs for women) for microinsurance in their respective markets. For this, Yacoub explained later on, public and private partnerships are essential.

Shastri did not offer additional running analogies to close the panel, but she did name curiosity about the customer as one of the most important tenets of any microinsurance program. Understanding clients must remain at the center for microinsurance solutions to truly serve as a good pair of running shoes.