Anyone with keen or even passing interest in Rwanda’s insurance sector knows its poorly kept, not-so glamorous secret-market penetration stands at a paltry 2 per cent. Different people, investors included, can look at and interpret this differently. One can look at this miserable 2 per cent market penetration rate as not worth their investment penny, while others can look at the remaining 98 per cent as a virgin area waiting to be exploited. Whichever way one looks at it, this situation is beginning to concern government leaders, especially those managing and regulating the country’s financial services sector, where insurance falls. It should also concern those charged with poverty reduction and sustainable community development. The most recent ‘lamentation’ came from John Rwangombwa, the central bank governor, while presiding over the rebranding of Corar Insurance Company Ltd to Saham Assurance Rwanda. The governor urged insurance service providers to come up with new and innovative products to propel penetration levels (The New Times, Tuesday January 26, 2016). According to this newspaper, experts believe the sector has a lot of potential but the stakeholders need to do more by coming up with strategies targeting especially the business community, corporate organisations, and individual citizens. Having observed and worked closely with insurance sector in Rwanda for over five years, especially in the fire insurance domain, I think the business community and corporate institutions have been over-targeted. All 12 or so insurance companies target and depend on this market segment for their survival. Yes, there could still be a penny to squeeze out of this ‘macro’ market, but the segment that has been overlooked, in my opinion, is the small ‘informal’ business sector and individual citizens, in all their capacities. That’s where a big chunk of the 98 per cent and potential micro-insurance clients reside. To reach this market segment, stakeholders need to shift their target and change their approach. A recent comment by James Gatera, immediate former Chief Executive of Bank of Kigali, suffices here. That in the past, BK was viewed as for the ‘rich-only bank’ until it decided to reach out and make ‘all our customers rich’. The insurance sector is still stuck with ‘it is only for-the-rich’ image. Yet risks or catastrophes such as fire outbreaks, floods, earthquakes etc, do not discriminate against rich or poor. The concept of ‘micro-insurance’ is probably new to many Rwandans, including those in the insurance sector. The concept can be well understood in comparison to microfinance, which has been a public policy buzzword in many countries around the world, ours included. In fact, in some countries the two are closely integrated, as Microfinance Institutions (MFIs) act as delivery channels for micro-insurance products. Simply put, micro-insurance means developing and extending insurance services to low-income segment of the population or those excluded from the mainstream commercial or health and social insurance brackets. Another plausible example to help Rwandans better understand this concept is the health insurance scheme ‘Mutuelle de Sante’. The term ‘micro’ should be understood in terms of the ‘smallness’ of target group’s income, product design, premiums and compensation paid, the process of administration etc, but not necessarily the target group itself or the size of the risk covered. Micro-insurance allows low-income individuals and SMEs to cushion themselves against common risks. Insurance service providers should, therefore, shift their thinking and design new approaches and products to target even small home-owners in say Batsinda estate, small market traders in Nyabugogo, Kimironko and all across the country . They need insurance cover for exactly the same reason as the business community and corporate entities. As different policy instruments have been devised to deepen financial inclusion, the same should be done to propel insurance penetration, as it is equally essential for sustainable development and poverty reduction. Therefore, the government can equally help the development of micro-insurance sector by putting in place policy and regulatory framework and working with other stakeholders to conduct a demand-side assessment to identify and ascertain risk vulnerability, the need for and the type of micro-insurance products, also known as inclusive insurance, among the target economic actors. The government can as well help to expand the net of stakeholders to include telecommunications companies, just as they are involved in extending micro-finance products to ordinary citizens. Mobile micro-insurance has had quite a promising start in Senegal and Rwanda could borrow a leaf from there. Rwanda can also learn from the experience from countries such as India, Bangladesh, Indonesia, Thailand, the Philippines, where micro-insurance products are sold to the general public through various channels possible, including in supermarkets. The writer is a fire safety management and training consultant.
