Affordable products can grow micro-insurance uptake — Experts

KAMPALA - Experts are optimistic that with affordable products on the market, Micro-insurance can go a long way in transforming the lives of low-income communities and changing their perception about insurance.

These observers require that micro-insurance companies must offer solution-tailored products that are easily accessible, offer saving options and help to bridge the gap between economic vulnerability and financial security.

The sentiments were raised during the unveiling of Opportunity Sanyu, a partnership between Opportunity Bank and Turaco held in Bugolobi on Thursday. The partnership is aimed at growing Microinsurance uptake through embedding Health Insurance into Savings Accounts.

According to Owen Amanya, CEO of Opportunity Bank Uganda, the product is designed to protect Ugandan families from the financial stress of hospital visits and bereavement without the hassle of traditional insurance sign-ups.

“Our customers' savings are their future, but one health emergency can take it all away. With Opportunity Sanyu, we’re helping our customers stay on track and build resilience through banking that truly protects them. The product name ‘Sanyu’, which means “joy” in Luganda, represents the peace of mind that comes when a family’s savings are protected even during life’s hardest moments,” Amanya explained.

Statistics indicate that over 60% of Ugandans rely on savings or borrowing to pay for healthcare, often derailing long-term plans like school fees or business investments.

Opportunity Sanyu is expected to make microinsurance accessible, automatic, and truly affordable, starting at just Sh2,000 per month. Out of the monthly savings, a customer benefits hospital cover of Sh200,000 to sh1m per year. They also get a funeral cover of Sh500,000 to sh2m.

Cedrick Todwell, Director of Business Development at Turaco, noted that through Turaco’s tech-driven systems, they will ensure claims are paid instantly to limit the distress customers might encounter.

“Opportunity Sanyu is what inclusive insurance should look like: embedded, simple, and ready when emergencies arise. Together with Opportunity Bank, we’re bringing dignity and financial stability to households across Uganda,” Cedrick Todwell, Director of Business Development at Turaco, said.

Similawo Resty, a Turaco customer, shared that the product has been helpful, recounting how the support came in handy when she was admitted.

“When I was admitted to the hospital, I feared for my health and how I’d pay. Turaco came through for me. I could settle my bill and repay those who helped. I’m so grateful.”
Since 2019, Turaco has partnered with banks, fintechs, and mobile operators to insure over 4 million people across Uganda, Kenya, Nigeria, and Ghana, with more than 1 million lives covered in Uganda alone.

Market survey

According to the Financial Sector Deepening (FSD) Uganda Micro-Insurance Challenge Fund 2018, it was stated that despite ongoing efforts by Uganda’s insurance industry to widen access to insurance services, substantial barriers remain.

A fundamental issue is the mismatch between existing products and the needs of potential consumers. Findings indicated that the current products on the market are designed for high to middle-income earners with regular disposable income seeking to protect themselves from risks through the risk transfer mechanism.

On the other hand, low-income earners have irregular incomes, with no disposable income after meeting the basic needs of life. The concept of paying insurance premiums, and potentially losing that money if no claims arise, competes with other urgent priorities such as food, education and healthcare.

The above findings are consistent with the Insurance Regulatory Authority's 2022 study report on the uninsured market. Among the reasons for being uninsured, the existence of other pressing needs ranked highest, followed by negative perception of insurance and then limited knowledge about insurance.

The negative perception could be attributable to ignorance about how insurance works, failure by some insurance companies to pay claims as they are presented, as well as misinformation about insurance.

The uninsured also indicated that informal insurance was more attractive to them because it is easy to join and does not require one to have huge savings, but rather small and consistent monthly contributions.