Protection gap movement to launch in Kenya

Pulling together and improving the lives of all peoples might seem a grandiose ambition. However, Lukas Mueller, head market underwriter Middle East & Africa at Swiss Re, is humble about the plans, which he believes a company like Swiss Re has a responsibility to undertake. Closing the protection gap is crucial, the firm believes, in helping making the whole world more resilient. Looking at the 2015 figures, there were some $92bn of global economic losses, from a combination of natural catastrophes and manmade events. But of that figure, only $37bn was insured, leaving a massive gap to fill, often by those who can least afford to do so. And Mr Mueller reminds us that 2015 was actually a relatively quiet claims year, so the danger of much higher figures looms large. A classic example is hurricane Matthew, which has ripped through Haiti just this weekend – one of the world’s poorest countries. “As a group, what we have wanted to do is to look at ways to close that gap,” he says.hideThere are four stumbling blocks to buying the insurance that would help people cope with natural disasters, as well as manmade events. The first of those is a complete lack of awareness of the concept of insurance, particularly for those who live outside major cities. “People just don’t know what insurance is or what benefits it could bring,” says Mr Mueller. “Then, if they have heard about insurance, there is often a complete lack of trust in the system and people don’t believe that if they had a claim, the insurance company would honour the promise to pay.” The third block is accessibility – how do insurance companies contact people who live without communication or even electricity? It is difficult, admits Mr Mueller, if insurers stick to traditional methods of accessing their customers. Finally, there is the question of affordability. For people living on less than $2 a day, finding those extra pennies for insurance can seem utterly out of reach. “When I think about the costs,” says Mr Mueller, “I think of the sugar manufacturer who tried to sell 1kg bags of sugar but found no buyers. After investigation, they realised it was a matter of cost – people couldn’t afford a kilo of sugar. They could afford smaller bags so they started repackaging the sugar and found their market.” However, solving the whole world’s issues is no easy thing. To kickstart the ambitious project, Swiss Re has launched a pilot project in Kenya, together with one in Colombia, to find out how the industry, government and other stakeholders can work together. Mr Mueller says: “The protection gap movement connects people, communities, governments and organisations to raise awareness, connect ideas, provide education, develop and align initiatives across the public and private sector, to reduce the protection gap.” Swiss Re plans to orchestrate the process but buy-in from the whole insurance community from end to end is vital. From the start of this year, it has been working to bring interested parties together and, most importantly, to engage with fellow insurers to make sure the project is a full industry collaboration. “This is not about selling insurance; we don’t want to mention products at all,” says Mr Mueller. “This is all about the first block – the lack of awareness. As an industry, we can come together and talk about the value of insurance. We do not want to sell a single product as part of this initiative but we do want to educate people about the value of insurance and the benefits it could bring. We want to explain how insurance works and to demystify the concept.” In the first few months of this year, Mr Mueller says they have set up working groups to brainstorm how such a campaign could work. He has been delighted by the response from the Kenyan market. “We decided to start in Kenya because a combination of factors made it look like the perfect place to start. So far, it has been fantastic to see the buy-in of the whole market. The insurance regulator is fully onboard too and the response can only be described as overwhelming.” The group is also working together with the Association of Kenyan Brokers and the Nairobi-based College of Insurance. The working groups are looking at a number of challenges, from the use of technology to the actual message they want to convey. The idea is that the Kenyan blueprint will be transferable to many other markets across the world. “We know it will not work in its entirety if we just copy and paste to every market but hopefully it will form a framework from which we can roll out the idea to other markets. “We will use the Swiss Re staff worldwide to make this happen. And it is not just about emerging markets, although they might seem the most obvious candidates. Even in Switzerland there is a protection gap – for example, very few people have earthquake cover even though there is a significant earthquake risk in the country.” He adds: “We see the Kenya pilot as the creation of a cookbook of ideas that will fuel development elsewhere. But this is not a one-day wonder, we want it to be a continuous process. “We are not so arrogant that we think we can solve all the world’s problems overnight but by working as an industry, together with governments and a range of other stakeholders, we can steadily make a difference.” The first campaign should roll out in the first quarter of next year. As Mr Mueller says, this is about helping people find solutions and encouraging them to help themselves. He hopes to draw in ideas and best practices from markets across the world and start a movement that really makes a difference. The concept: Think big. Assume we want to reduce the protection gap in your markets. What does it take to get there? If one approach cannot reasonably contribute to this target, do not pursue it. Pursue the ones that can. Think concept, not product. In insurance, it is hardly ever a specific product or product feature that turns into a huge success. Success is the result of an overall customer experience, in which the product only plays a secondary role. Think end customer value. The gap can only be closed if a previously uninsured customer decides to buy insurance. The value proposition must target this decision point

Protection gap movement to launch in Kenya

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