SPECIAL REPORT: Lessons from Giving Away, Selling Microinsurance with Remittances

As part of the ongoing search for models that can make microinsurance profitable, the Luxembourg-based nonprofit ADA partnered with UAE-based insurtech Democrance to sell policies to migrant workers in Dubai as they send money to family in their home countries. The incentive for remittance providers to participate is that the draw of microinsurance can increase their customer base and allow differentiation from competitors.

The target population is migrants from India and the Philippines, who are generally tech savvy and aged 25 to 45 years old. Most workers earn up to AED 4,000 (USD 1,100) per month and send about a quarter of that amount home. Rise, a UAE-based facilitator of financial services to migrants, enrolled 1,000 customers by offering the insurance at no charge as a way of increasing brand loyalty. HelloPaisa, which is based in South Africa, enrolled 12,000 customers in a mix of free and paid policies. The free product covers accidental death and total disability. The paid option adds coverage for partial disability, medical expenses, tele-health consultations and repatriation. The firm also offers a product covering family members in the worker’s home country. All of Rise’s customers are women, and 20 percent of the policies sold by HelloPaisa were to women.

Among the roles of Democrance is to allow data to move freely among the partners. These include France-based AXA, which actually writes the policies. As for the retail partners, ADA and Democrance spent the first year of the project engaging a larger UAE-based firm, only to have that partnership fail. Despite losing the larger outreach of that firm, Rise and HelloPaisa hold deep customer knowledge that led to better results. The smaller firms were more willing to experiment and more able to help with appropriate product design because of this closeness to their customers.

Among the lessons learned is that overcoming regulatory hurdles is quite time consuming. Building customer awareness also requires significant resources as well as a long-term focus.

This effort was launched in 2017, and Democrance is continuing the work indefinitely. ADA exhausted its funding for the project, which had been provided by the UN’s International Fund for Agricultural Development (IFAD), in 2020.

This feature is part of a sponsored series on European Microfinance Week 2020, which took place online from November 18 through November 20. The event is held annually by e-MFP. MicroCapital has been engaged to promote and report on the conference each year since 2012.

Sources and Additional Resources

Presentation by ADA’s Matthew Genazzini; “Linking insurance with remittances to improve resilience;” November 19, 2020; European Microfinance Week

European Microfinance Platform (e-MFP) information on European Microfinance Week 2020
http://www.e-mfp.eu/european-microfinance-week-2020

MicroCapital coverage of European Microfinance Week, including the European Microfinance Award
https://www.microcapital.org/category/european-microfinance-week/