By Mrs. Susan Chibanga,
CEO, Agora Microfinance Zambia (AMZ)
Introduction
Navigating the complexities of modern life often highlights a universal need for financial security. The uncertainty of tomorrow poses an evident challenge to effective and efficient planning. With low-income communities the cost of business inactivity even for a day as a result of an unforeseen circumstance is grave. Due to the many needs that compete for daily resources, it is almost impossible to set aside funds for unforeseen eventualities such as ill health, loss of a loved one, and adverse climatic conditions.
Traditionally, insurance has been an option mainly for those in higher-income brackets. However, microinsurance has emerged as a solution to extend this financial safety net to Zambia’s low-income communities. As we explore the theme for Insurance Week 2023, “Insure Today for a Sustainable Future,” it becomes evident that microinsurance holds a pivotal role in the sustainability of Zambia’s broader socio-economic landscape. We celebrate the strides so far made in ensuring the inclusion of low-income communities. The Bank of Zambia’s FinScope 2020 Survey revealed that over the past five years, there has been a marked increase in the adoption of microinsurance, specifically targeting the unique requirements of low-income sectors like health, funeral, and agriculture. According to the survey, adult engagement with formal financial services has seen growth across the board since 2015. Notably, insurance usage nearly doubled, rising from 2.8% in 2015 to 5% in 2020. Increased and conceited efforts from financial service providers, the government, as well as mobile network operators have contributed significantly to the results we see today.
The Core Messages
Insure Today
The notion of “Insure Today” is more than just a cautionary mantra; it is a life strategy with deep implications for societal resilience and individual well-being, leaning into tomorrow with the benefits of hindsight. For those in vulnerable economic situations, small financial setbacks can spiral into enduring poverty. Microinsurance, therefore, serves as a safeguard against such unforeseen adversities.
Sustainability
In the collective pursuit of sustainability, microinsurance stands as a unique financial instrument that goes beyond economics—it’s a social covenant. It builds resilience, enabling holistic economic and social progress. Sustainability is also achieved through consistent financial literacy.
Future
Life’s uncertainties are inevitable, and insurance provides a mechanism for future stability. Microinsurance expands this safety net to those who have traditionally been left out, offering a future that is less dependent on the whims of chance and adversity. It creates a sense of security and dignity with the understanding that the impact of adverse risks can be constrained.
The Microinsurance Landscape in Zambia: AMZ’s Key Wins
At Agora Microfinance Zambia (AMZ), we are avidly driving inclusion for the formally excluded low-income and rural communities. Our aim is to provide an opportunity for them to come out of poverty and be economically sound. With that understanding, we engineer products and services that address their specific needs.
Our contribution to the microinsurance space spans over 6 years. During this period, we have chronicled success in providing voluntary health and funeral cover for over 32,000 clients and a weather index cover for over 3,000 smallholder farmers in partnership with Insurance providers such as Sanlam and Mayfair (through Risk Shield)
Our Funeral and Hospital Cover offers:Financial Safety during hospitalization: Most of our clients are engaged in hands-on businesses, and every hospital day affects their income. Our microinsurance products relieve them from financial stress, allowing them to focus on health and regain strength in readiness for their return to business.
- Strategic Debt Settlement: Some beneficiaries have employed part of their claims to clear outstanding loans, averting the potential of sliding into debt post-recovery.
- Swift Claim Processing: Trust is a valuable currency in this business, and our commitment to this is clear within our 48-hour claim processing time.
- A dignified send-off: In the unfortunate event of the demise of a loved one or indeed the demise of the breadwinner, there is a guarantee of a dignified send-off through a funeral grant that cushions funeral expenses.
Weather Index Insurance for Farmers
Climate change has become a significant risk affecting nutrition and causing hunger in many jurisdictions. Inconsistent weather partners can cause a loss of production, as evidenced in the recent past. AMZ’s weather index insurance acts as a safety net against adverse weather conditions and also promotes sustainable farming practices.
Conclusion: A Shared Vision for a Sensitive Market
To make microinsurance transformative, a shared vision among stakeholders such as insurance companies, policyholders, and regulators is vital. At AMZ, we recognize that our destiny is inextricably tied to that of our clients, therefore their economic well-being mirrors ours. It is almost impossible to measure our success outside the success of our clients. This market is both price-sensitive and fragile in terms of consumer trust and confidence. As an organization, AMZ has been successful in addressing these nuances by focusing on affordability, building trust, and ensuring timely service.
We are not just offering an insurance product or service; we are building a culture of financial resilience and inclusivity. Together, let’s work towards a more inclusive insurance paradigm in Zambia, where everyone—irrespective of their economic status—can “Insure Today for a Sustainable Future.”
