Nigeria and seven other African countries are considering some special policies for micro-insurance in order to speed up its development.
The other countries are Ethiopia, Egypt, Ghana, Kenya, Uganda, South Africa and Zambia.
Professor Festus Epetimehin, an insurance expert said at the 6th Inaugural lecture of Joseph Ayo Babalola University that some African countries are already making efforts to roll out measures and policies that will speed up the wide acceptance of micro-insurance.
Epetimehin whose lecture anchored on ‘Small but Big: Micro-insurance and the Reduction of Social Risk of Poverty’ said: “Currently, some African governments, such as those of Nigeria, Ethiopia, Egypt, Ghana, Kenya, Uganda, South Africa and Zambia, are in the process of considering special policies and regulatory frameworks to spur micro-insurance market development.”
Epetimehin further tasked African governments to learn from policy approaches at the global level, “Across the globe, many governments particularly finance ministries, financial sector regulators and insurance supervisors have recognised that expanding the insurance sector to include broader population segments can spur economic development and welfare.”
He said “the creation of a financial sector characterized by competition, market efficiency and outreach is on the development agenda of numerous governments in Africa. Enabling policies and regulations, along with effective supervision, facilitate the growth of private-sector involvement and enhance the distribution and quality of micro-insurance, he expatiated.”
He said South Africa is the only one so far that has taken definite steps to develop a special policy approach that has helped to improve access to insurance while a good number of governments are yet to take steps towards integrating the poor into the formal insurance sector.
He said the role of governments in insurance provision has undergone a fundamental change in the past decade. For years, governments were direct providers of insurance in many developing and emerging market countries.
Governments in the continent, he put forward should provide enabling environment which he defined as “the set of conditions that promote a sustainable trajectory of market development”
The conditions with which micro-insurance can thrive better, he mentioned, are factors that impact the operation of the market in a country, including the regulatory environment, infrastructure, and availability of information.
“The role of micro insurance as intervention which reduces poverty and the vulnerability of the community ex-post in the event of disaster becomes crucial. Micro insurance as a tool for risk transfer for the poorest community faces a lot of challenges which includes the literacy level of the community to understand and appreciate the importance of micro insurance.”
Governments, he added have increasingly regarded market-led micro-insurance as a serious option for making insurance markets more inclusive and extending their reach to low-income households.
“In many countries, areas such as health coverage for the destitute and agricultural insurance or pensions for the elderly poor are still covered by the government through social assistance such as cash transfers, direct public provision (public healthcare) or subsidised insurance schemes where the market does not reach (often the case with agricultural insurance.”
“The new paradigm is based on a shift towards the government serving as a facilitator of market development, including a clear development mandate for the insurance supervisor based on his role as a facilitator of financial access.”
Insurance regulators, he said, has a lot to do in providing an active balance of stability, soundness and market development that will ensure consumer protection and inclusion
At the same time, he asserted that stakeholders from both the private and public sectors should confirm that good policy solutions are significant in helping to spur and sustain growth while at the same time protecting consumers.
He said with the growing markets and new players coming in, sound regulatory responses to protect micro-insurance consumers that allow valuable and innovative growth are of utmost importance in market development.