November 29, 2011
Key stakeholders representing insurance companies, commercial banks, donors, NGOs and the Reserve Bank gathered at Tanoa Plaza in Suva last week for the presentation of findings from the Microinsurance Demand Research implemented in Fiji in August to October of this year. The half-day workshop highlighted the way that low income families in Fiji cope with emergencies and their demand for insurance or other methods to protect themselves against risk. The study was conducted by Tebbutt Research with financial and technical support from the Asian Development Bank (ADB), Pacific Financial Inclusion Programme (PFIP) and AusAID Fiji.
Microinsurance is more than selling smaller insurance policies. It is insurance designed to be accessible to vulnerable populations- people with low and irregular incomes, that are far from any bank, and have little if any experience, with insurance.
In opening the workshop, Chairman of Fiji’s National Financial Inclusion Taskforce, Mr. Robin Yarrow, indicated that, “With a focus on building community resilience, microinsurance development builds upon our resources and capacities on top of alleviating weaknesses and gaps. Such a strategy will celebrate the Fijian tradition of helping members of the vuvale or nuclear family and extended members of our mataqali or clan. Similar concerns are shared in other communities where while protecting our brothers and sisters, we are mindful about protecting members of the wider community from hardship in a sustainable way.”
The research findings were generally positive about the potential for microinsurance, although challenges remain. In terms of willingness to pay, it found that respondents valued products enough to pay a premium that could satisfy insurers, which was a positive sign. There was much discussion around building partnerships that would help insurers build distribution and service channels. As premiums tend to be low in microinsurance, a key challenge is selling enough policies to cover high set up costs and making sure that premiums are paid regularly with little collection cost.
Insurance providers took it upon themselves to rethink ways of investing additional resources into building distribution channels to grow their outreach, which is estimated to be only 9% of the Fijian population.
General Manager, BSP Life Insurance Mr. Malakai Naiyaga, articulated that this research gives insurers a large step forward to develop client education, product promotion, product design, and potential distribution partnerships. He added that, “the largest hurdle is around premium collection and ensuring consistent payments if premiums are paid in monthly installments rather than in annual lump sums.” This will be a key challenge in Fiji, where lapse rates for conventional insurance policies are high.
Donors who were present at the discussions responded to the study results with calls for stakeholders to focus on the most poor and for insurance providers to design products that will serve to meet their most important risks. First Secretary, Australian Agency for International Development (AusAid), Mr. Tim Gill, reiterated that, “to fulfill a development mission, they are most interested in supporting products that assisted the lowest income people.”
The research was implemented with the Catholic Church of Fiji, Fiji Muslim League, TISI Sangam, and Partners in Community Development Fiji (PCDF). These groups were chosen after a national search for potential partners and were eventually selected for their experiences in client education, management control and large outreach. PFIPalong with ADB will now look into holding individual sessions with stakeholders to help them use this research.
PFIP is a Pacific-wide programme helping to provide sustainable financial services to low income households. It is funded by the Australian Agency for International Development (AusAID), the UN Capital Development Fund (UNCDF), the European Union and the United Nations Development Programme (UNDP) and operates from the UNDP Pacific Centre. The ADB’s Private Sector Development Initiative, co-financed by AusAID, aims to alleviate poverty in the Pacific through private-sector led growth. It has focused on improving access to finance, reforming business laws, and improving the delivery of infrastructure services through assisting state-owned enterprises (SOEs) to become more efficient and promoting public–private partnerships (PPPs).