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

ICMIF members P&V and CIC partner to provide Kenyan farmers with microinsurance

In June 2016, ICMIF launched the 5-5-5 Mutual Microinsurance Strategy (the “5-5-5”) with the ambition of providing access to microinsurance for the first time to 5 million households in five countries in emerging markets (Colombia, India, Kenya, Sri Lanka and the Philippines) in a period of five years.

In 2017, P&V Assurances decided to provide financial support to the project in Kenya through the 5-5-5, and provided additional support (through a 5-5-5 Technical Assistance assignment) which enabled local cooperative insurer, CIC Insurance Group (CIC), to formally launch a livestock microinsurance product last year (2018).

P&V and CIC are both long-standing members of ICMIF; Hilde Vernaillen, CEO of P&V, is also the Chair of the ICMIF Board of Directors. American ICMIF member Thrivent and We Effect (a Swedish development agency) are also part of the partnership in Kenya through the 5-5-5.

Income security for families

CIC’s livestock microinsurance policy is designed for dairy livestock farmers with two to 10 cows. The milk from the cows is an invaluable source of income, and the loss of an animal can therefore have very negative consequences on the farmers and their families.

CIC’s policy covers the death of a cow as a result of illness or accident. The farmer is compensated for 90% of the value of the cow (which is determined each year by a veterinarian).

The cost of visiting the veterinarian, as well as comprehensive training for the farmer on better animal farming practices, is included in the price of the insurance premium. Educating farmers has the additional benefits in that they can reduce the risk of cows dying, increase milk production and generate more income for the farmer.

This project, however, did not meet with immediate success

Jan Verkest (Account Manager Life, P&V), who visited the project on the ground, identified the following obstacle: "Kenyan farmers were being asked for an advance payment for the annual insurance premium for their cows, which was proving unrealistic. To make the policy more accessible, we put in place a monthly payment system which allowed farmers to finance their insurance premiums with the income they were making from the cooperatives that buy their milk.”

The importance of a strategic plan

The launch of CIC’s dairy livestock microinsurance product saw a few set-backs for a number of reasons. These included; lack of contingency; lack of a consolidated distribution strategy; and lack of appropriate monitoring tools. However, things have improved since September 2017, thanks to the help of P&V.

P&V colleagues Philippe De Longueville (Director – Member of the Executive Committee), Fabian Melis (Program Manager Prevention) and Jan Verkest (Account Manager Life) visited Nairobi (Kenya) to meet with local insurer CIC and learn more about the Kenyan insurance market.

The importance of a solid business plan

"CIC’s livestock insurance already existed as a pilot product, but we needed a solid business plan prior to any investment. We visited CIC to gather the necessary information before establishing a financial and operational plan, such as what is covered under the policy and what is not, the expected premiums, the claims envisaged, what will be the commercial approach, and expected sales. On the basis of our preparatory work, P&V has decided to commit itself to fund this project for the period of five years.” explains Fabian Melis, about the first stages of their Kenyan venture.

Fabian visited Kenya three times and, in total, spent two months with CIC to help develop the business plan for this project.

Kenyan roadshows

In addition to raising awareness, a considered marketing and distribution strategy was needed to ensure the success of the livestock insurance project. During the first year, CIC concentrated its efforts on the province of Kiambu County (which is north of Nairobi). Training sessions for farmers are currently being organised in this region by local savings and credit cooperative organisations (SACCO) and by dairy cooperatives.

During the training sessions, farmers are given financial literacy training on the importance of planning, budgeting, investing, saving, but also on risk management, the final point at which CIC can introduce its microinsurance product. To date, several hundred farmers have already attended a training session.

A close follow-up

The work of P&V on the ground is for the time being complete: CIC is now ready to implement the jointly-established business plan. Two employees from Thrivent (Ellie Anderson and Dan Wanous) have also visited CIC in Nairobi to provide Technical Assistance to CIC’s project under the 5-5-5. Their role is to help write the financial reports and assist with coordinating the training session. Of course, P&V continue to monitor the progress of the project closely. A monthly consultation is organised via Skype with all the parties, and P&V’s sponsorship will continue for a few more years.

"Our financial commitment is systematically limited to one year, but in principle we will renew it for the five years of the project. The objective set for this first year is that CIC reaches 10,000 previously uninsured families with dairy livestock microinsurance, and succeed in collaborating with 10 dairy cooperatives. Within five years, the product will have to be profitable and self-sufficient” concludes Philippe De Longueville.

P&V’s commitment to the 5-5-5

Pascal Jacobs (Advisor to the CEO) explains: “P&V decided to participate in the Kenya project because it corresponds 100% to the vision and missions of the P&V Group. Making insurance accessible to as many people as possible is one of the elements of our vision. It reflects our commitment to a society based on sustainable development and solidarity.”

Pascal continues: “In addition, the P&V Group was created to help people without access to insurance compatible with their means, to find a solution. That’s why the P&V Group is committed to provide both financial resources and technical support.”

About the 5-5-5

ICMIF launched the 5-5-5 Mutual Microinsurance Strategy in June 2016 to develop mutual microinsurance in five countries over five years, reaching out to 5 million uninsured low-income households. The ultimate objective being to take low-income people out of poverty. The governance of the 5-5-5 is overseen by The ICMIF Foundation, a registered charity in England and Wales.

The 5-5-5 is predominantly supported by other ICMIF member companies and like-minded organisations in more developed markets, either through Financial or Technical Assistance projects. Contact Naomi Davison at naomi@icmif.org for further information.