Kenya’s cooperative movement setting pace for Africa in mutual micro insurance

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In Africa, we have a saying that if you want to go fast, go alone; but if you want to go far, go together with others. This is a maxim that holds true for Kenya which has over the past five decades flourished its cooperative movement.

2016 was a defining year for Kenya’s cooperative movement. In addition to making strides towards greater inclusivity, the country continued to lead the African continent in expanding and deepening its involvement in the economy and social development. Nowadays, big Saccos rival big corporates!

For the third time in its history, the International Cooperative and Mutual Insurance Federation (ICMIF), of which CIC Group has been a member since 1980, held its annual board meeting in Africa, in Kenya.

ICMIF is a unique global organization representing the interests of over 225 “people-centered insurers” in more than 70 countries. Its main aim is to develop mutual insurance in emerging markets with emphasis on micro insurance. Mutual micro insurance is a mechanism of protecting people against risk in exchange for payments tailored to their needs,and in a manner where they participate in the design, development, management and governanceof such products, services or institutions. Mutual micro insurance is deemed to be inclusive as itencompasses all types of low income populationsthat may not fall under the conventional insurance.

In January 2015, ICMIF’s Development Committee adopted what has come to be known as the ‘5-5-5’ initiative. It is an ambitious initiative aimed at reaching five million households in five emerging marketsin five years (by the year 2020).The countries identified are Philippines, Kenya, India, Sri Lanka and Colombia. Collectively, these countries have a total population of nearly half a billion people.

CIC Group being an expert in micro insurance and due to the long relationship with the cooperative movement, was chosen as a lead partner in the implementation of the 5-5-5 Kenya Project.We have sought to first establish the depth of financial inclusion and understand the landscape of mutual micro insurance in the country that will feed into evidence based country response strategy.

Takaful Insurance (our associate) is the other Kenyan implementing partner. Ultimately, the 5-5-5 Project seeks to form a common industry platform that will reach out to 1 million low income households in Kenya within five years under the mutual insurance model.

While this approach speaks to the expansion of insurance uptake in Kenya, it also responds to our national aspirations to meet the global Sustainable Development Goals. The United Nations 2030 Agenda that includes 17 Sustainable Development Goals approved by most governments in September 2015 recognises the diversity of business models, including co-operatives and states thus; “We acknowledge the role of the diverse private sector, ranging from micro-enterprises to co-operatives to multinationals, and that of civil society organizations and philanthropic organizations in the implementation of the new Agenda”.

This is a turning point for us in the insurance industry and the cooperative movement in Kenya and globally for it now shows that the continued development of micro insurance particularly through the cooperative movement will promote deeper financial inclusion and lead to a more sustainable economic empowerment.

In order to roll this out effectively, CIC and ICMIFwilldevelop micro insurance products cutting across life, medical and property insurance for this market. The 5-5-5 Kenya project will help identify the gaps in product design, pricing distribution and interventions needed for scale up these products to the rural and marginalized communities.

Kenya already has the third highest micro insurance coverage ratio in Africa and we believe there is scope for further development. The ICMIF 5-5-5 Kenya project will enable us realize the untapped potential for micro insurance in the co-operative and micro insurance space.

It is expected that this will be achieved through a balanced social and economic model that ensures profitability while offering a fair price to customers, making insurance more affordable. Technology is expected to play a great role in easing accessibility and reducing distribution costs.

As we begin the year 2017 in earnest, the work is clearly cut out for us in the insurance and cooperative sectors respectively to deliver the required micro insurance products that the market thirsts for and therefore show the rest of Africa how to deepenand expand the uptake of insurance covers.

(The writer is the Group Chief Executive Officer of CIC Group. He can be reached at [email protected] ).

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