In an exciting collaboration between Minet Malawi, Britam, and The Daily Times - Malawi's leading newspaper - we are thrilled to introduce a groundbreaking initiative that will redefine your Wednesdays. Welcome to the Insurance Insights Column – a weekly rendezvous with the world of insurance and contemporary issues that matter. Every article aims to illuminate the intricate landscape of insurance products and relevant topics that impact us all. The articles will be educative at all levels, catering to both practitioners and non-practitioners.
As published in The Daily Times (Malawi) on June 19th, 2024
Malawi nation mourns vice president Dr. Saulos Klaus Chilima and eight others who died in a plane crash on Monday, 10 June 2024, on Nthungwa hill in Chikangawa forest in Mzimba district. Heartbreaking story. Condolences should go to families of the deceased. May their souls rest in peace.
Today, we discuss chipereganyo as microinsurance. There is a difference between insurance and microinsurance. Insurance is for the metropolitan affluent. Microinsurance is for the rural poor. As most readers may think, microinsurance does not refer to the size of the insurance company that provides the service or risk cover. No.
We have big insurance companies in Malawi and elsewhere that offer microinsurance. Allianz, for example, one of the largest insurance companies in the world, launched an initiative with two international non-governmental organizations, UNDP and GTZ to provide microinsurance in India and Indonesia some years ago. AIG offers microinsurance in Uganda. Microinsurance is offered, mostly, by insurance companies and micro-financial institutions jointly - the latter rides on the former to provide microinsurance as tie-in to protect their loans.
Marketing insurance is easier than marketing microinsurance. In insurance, marketers deal with the literate. Microinsurance marketers, on the other hand, deal with the illiterate and semi-illiterate clients. Microinsurers transact business with people who hardly plan for the future. This is a big challenge.
There is a secret that micro-insurers use – they avoid serving too many market segments at any one time. Dear reader, in microinsurance, one cannot be a Jack of all trades. Serving too many market segments requires many products and corresponding marketing points and strategies. This may significantly increase operating costs for the microinsurer and or broker.
Looking for anti-insurance arguments and designing marketing techniques to counter those arguments does not work in marketing microinsurance products. Here is the secret - go to the basics. What are these basics? You ask.
One - remind clients who are dominantly the poor that like everyone else, they live in a world that is full of risk exposures. They may likely challenge you to provide them with evidence. Simple - invite someone, who had wealth but suffered a heavy loss upon occurrence of a known risk, such as cyclone Freddy. Just be careful with your choice, as they may think you colluded with the person. Use someone, who is familiar to your prospective clients.
Two - emphasize on solidarity. This works well if you are dealing with a group as opposed to an individual. The point is that this marketing technique revolves around informal self-help projects that people in our villages usually undertake. For example: you may tell your clients that microinsurance works in the same way chipereganyo initiatives work. In chipereganyo, all contribute, on an agreed interval, to a common pot. Members of the group, who are in need of money, dip into the pot. The key is that the pooling mechanism must have prescribed rules and regulations. Tell clients that microinsurance, like chipereganyo, requires solidarity. Even though a member might not benefit this year, he or she might get help from the pot in future. In insurance, we refer to this principle as ‘each for all and all for each.’
Three - build optimism. One of the anti-insurance arguments is that marketing of insurance revolves around ‘doom and gloom.’ Microinsurance marketers need to paint a picture in the mind of their client that one day, he or she will benefit from the chipereganyo pot. In case of endowment policies, advise that at the end of the term, he or she will collect the whole amount and be able to build “. . . a big iron thatched house that does not leak when it rains” – to quote Dr. Kamuzu Banda, Malawi’s founding president .
Four - build trust with clients. Another anti-insurance argument is that insurance consumers do not know whether an insurer will pay out a claim in the event of loss. Traditional insurance companies have tried to convince their clients by, inter alia, having their headquarters in a large visible building to show that they are big and financially stable.
We are not insinuating that microinsurers should do the opposite – to build their head offices in the village. No. Microinsurance marketers need to simply come up with a good product name that connotates with the service on offer or the risk they protect clients against. Stated differently - use an image or impression that is trusted by clients. Names such as, Mvwiri, Mthandizi, Mtetezi, Mthunzi, Chipereganyo, Msaada have all been used by microinsurance marketers in Malawi. Having said this, dear reader, your assignment, this week, is to come up with a product name or an image that bestows an impression of indemnification assurance in a Malawian society setup vis-à-vis microinsurance.
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