Extending mutual microinsurance to 5 million uninsured households in five countries over five years.

How the ICMIF 5-5-5 Mutual Microinsurance Strategy will help eradicate poverty

Today, 17 October 2018, is the United Nations (UN) International Day for the Eradication of Poverty, and in recognition of this The ICMIF Foundation is taking the opportunity to celebrate the ways in which the ICMIF 5-5-5 Mutual Microinsurance Strategy contributes towards the eradication of poverty.

The theme for the Day this year is Coming together with those furthest behind to build an inclusive world of universal respect for human rights and dignity.

The UN website states: “It is important to recall the fundamental connection between extreme poverty and human rights, and that people living in poverty are disproportionately affected by many human rights violations. Government policies alone cannot create the social inclusion that is fundamental to reaching those left furthest behind and overcoming poverty in all its dimensions. The commemoration of October 17 each year… underscores the importance of reaching out to people living in poverty and building an alliance around their priorities with citizens from all backgrounds to end extreme poverty.

“The International Day for the Eradication of Poverty... aims to ensure that the active participation of people living in extreme poverty and those furthest behind is a driving force in all efforts made to overcome poverty, including in the design and implementation of programmes and policies which affect them. Only by creating and nurturing a genuine partnership with people living with poverty will it be possible to build an inclusive world where all people can enjoy their full human rights and lead lives with dignity.”

The ICMIF 5-5-5 Mutual Microinsurance Strategy is a five-year project based in five emerging market countries (Colombia, India, Kenya, the Philippines and Sri Lanka) which aims to provide five million households with “mutual microinsurance” (ie microinsurance delivered by cooperative or mutual insurers) for the first time. The intended beneficiaries of the 5-5-5 reside in poor communities, and the ultimate objective is to build resilience in these communities by providing a mechanism to protect them from the everyday risks they face through microinsurance cover. Three country intervention programmes to develop mutual microinsurance in India, Kenya and the Philippines have already commenced.

Microinsurance can stop low-income families from slipping into poverty
Providing low-income communities with affordable insurance coverage through the 5-5-5 Strategy will help people escape the vicious cycle of poverty and provides a safety net to vulnerable communities. For example, the National Rural Health Mission of India stated in 2012 that a single event of hospitalisation leads to 25% of families slipping into poverty.  This can be significantly reduced if families have access to adequate and affordable health insurance which can cover the cost of medical treatment which otherwise would be too costly and force families into poverty. Furthermore, it is a recognised fact that countries with greater penetration of insurance coverage have faster economic recoveries from disasters and rebuild with greater resilience to future disasters thus ensuring a better standard of living.

The 5-5-5 will create an insurable population for the future
However, simply providing insurance alone is not going to have the required full impact on livelihoods and reducing poverty; to be truly beneficial, microinsurance requires proximity to communities in order to understand people’s specific needs and deliver relevant and timely products.

Therefore, the 5-5-5 focuses on building awareness of the role of insurance; developing trust with communities; involving local people in the governance of the mutual/cooperative which is providing the cover: promoting gender equality; and providing risk mitigation strategies which support the development of a long-term “insurance-friendly” and insurable population.

For example, the 5-5-5 project in India is working with the Development of Humane Action (DHAN) Foundation, which is aiming to provide over 1.06 million households with life, health or livestock insurance protection for the first time. The DHAN Foundation’s work includes an insurance literacy training programme so that low-income policyholders understand the value of a policy and how it can be utilised for their benefit if needed. In the first year of their project, the DHAN Foundation conducted 3,573 insurance literacy training sessions which were attended by 54,695 member/policyholders.

For the 5-5-5 project in Kenya, ICMIF is working with Kenyan cooperative insurer CIC Insurance Group, which aims to provide an additional 250,000 low-income farmers with affordable microinsurance over the next five years. As well as providing affordable risk-mitigation solutions, CIC’s livestock policy includes targeted actions on financial literacy training for the intended recipients, as well as access to veterinary services and improved animal husbandry practices.

The work being carried out as part of the DHAN Foundation and CIC Insurance Group projects is creating and nurturing genuine partnerships between the mutual/cooperative insurer with the people living with poverty with the aim of building a more inclusive world where all people can enjoy their full human rights and lead lives with dignity.

As well as contributing towards the eradication of poverty, the first of the United Nations Sustainable Development Goals (SDGs) (Goal 1: No Poverty), the 5-5-5 will specifically assist with at least four other SDGs, namely; Goal 2: Zero Hunger; Goal 3: Good Health and Well Being; Goal 5: Gender Equality and Goal 13: Climate Action.

The ICMIF 5-5-5 Mutual Microinsurance Strategy is overseen by The ICMIF Foundation, a registered charity in England and Wales which was formed by ICMIF in 2015. The Strategy is predominantly supported directly by ICMIF member companies, and a total of 21 member companies in 15 countries have so far come together to support the 5-5-5.