MICROCAPITAL STORY: Co-operative Insurance Company of Kenya Introduces Microinsurance Products through International Labor Organization (ILO) Microinsurance Innovation Facility

The Co-operative Insurance Company (CIC) is introducing new microinsurance products in Kenya. The project, which is in conjunction with the International Labor Organizations’s (ILO) Microinsurance Innovation Facility and the Swedish Co-operative Center (SCC), will allow approximately one million low-income Kenyans benefit from “comprehensive family insurance.”

According to the Business Daily, the project will focus on individuals who save as little as KES 20 (USD .30) per day. According to the paper, the projects owners believe that “the experience might prove that a composite insurance product could provide better coverage at a more affordable price for low-income people while still remaining simple and accessible.” Details about premiums and coverage of specific products were not readily available online.

This is not the first attempt by CIC to introduce microinsurance services, but earlier attempts had limited outreach as individuals in the area continued to view insurance as a luxury. Still, CIC was chosen because it has “delivery channels that can dramatically upscale the access to micro-insurance and has significant experience in mass communication and financial education.”

The program will also provide a public education campaign, though details were unavailable. According to Anette Gärdeklintof of the Swedish Co-operative Centre, however, “this initiative could also demonstrate whether education campaigns can help the target groups understand better the benefit of insurance and demand good value for money products.”

The Microinsurance Innovation Facility, founded in 2008, is a new project of the International Labor Organization (ILO). Ending in 2012, the program will grant approximately USD 18m to between 40 and 50 projects that increase or improve insurance services available to the poor. Specific focuses of the project will include agriculture, health, life and property insurance. Potential partners include insurance companies, researchers, delivery organizations, and trade associations. This project is financed by a USD 34m donation to the ILO by the Bill & Melinda Gates Foundation. To learn more about the donation and nature of the project, please read this previous MicroCapital story.

The International Labor Organization (ILO), founded in 1919, brings together employers, governments and workers “to obtain decent and productive work in conditions of freedom, equity, security and human dignity.” It became the first specialized United Nations agency in 1946.

The Co-operative Insurance Company of Kenya Limited (CIC Insurance) was founded in 1978 by “the co-operative movement” in Kenya. In 2007, CIC reported gross premium of KES 1.7b (USD 25m) and in 2005 the company grew by 37 percent. As of December 31, 2007, CIC had raised KES 412m (USD 6.2m) through the private sale of equity shares to various stakeholders, including individuals, investment firms and financial institutions in the co-operative financial sector. Further sale to co-operative financial institutions in Kenya is still underway.

The Swedish Cooperative Center (SCC), founded in 1958, is an umbrella organization for over 60 development organizations based around the world. According to their website, “The primary target group for SCC [in Africa] is poor women and men mainly in rural areas, who are members or potential members of democratic organisations or informal groups working for common goals.” Projects for the SCC are primarily financed by the Swedish Development Agency.

By Greg Casey, Research Assistant

Additional Resources:

Business Daily: “Insurance for low-income families planned”

International Labor Organization: Microinsurance Innovation Facility

ILO Press Release: “ILO announces availability of microinsurance grants”

Opportunity Internaitonal Press Release: “Opportunity International’s Micro Insurance Agency to Develop and Provide Life, Health and Crop Insurance for 21 Million Poor People”

MicroCapital Story, December 17, 2007: The Gates Foundation Makes USD 34 Million Grant to the International Labour Organization to Set Up Microinsurance Initiative

Bill & Melinda Gates Foundation: Home

Swedish Cooperative Center: Home

SCC: SCC Africa

Co-operative Insurance Company of Kenya Limited: News Centre

CIC: About Us