Reducing vulnerability: demand for and supply of microinsurance in East Africa

December 2003 Monique Cohen, Michael J. McCord, and Jennefer Sebstad This paper synthesises the findings from two studies carried out in Uganda, Kenya, and Tanzania. The first study examines the demand for risk management tools by the poor and the second assesses the experience of seven institutions providing microinsurance to satisfy this demand. The paper identifies three major risks faced by poor people in East Africa: death of an income earner, illness, and property loss resulting from theft and fire. It reviews poor people’s current options for managing these risks and differences by gender and wealth levels. It then discusses implications for microinsurance, considering issues of coverage, access, timeliness, and affordability – all key issues in assessing the market potential of microinsurance products and services. These issues are considered in light of lessons learned from the seven institutions providing microinsurance. While these institutions focus specifically on health microinsurance, the issues and implications may be applied to other forms of insurance. The research findings reveal a huge opportunity for microinsurance in the low-income markets of these countries. Formal insurers cover only the top five to ten percent of the population and the rest are left to fend for themselves. The institutions included in this study are all trying to service this market, learning important lessons along the way. The cases show that meeting the demand for microinsurance in a responsible, professional manner will take much effort. The paper includes practical lessons for designing and delivering insurance products drawing on the views and experiences of clients, potential clients, and the institutions that aim to serve them. Promoting high quality financial services for poor people