The insurance industry has just celebrated the Customer Service Week in the month of October, 2018. It is therefore important to think once more about how Rwandans perceive insurance in relation to their day to day lives.
Rwanda has registered one of the fastest GDP growths as reported by the IMF, cited by BNR in “Monetary Policy and Financial Stability March 2018”. For the last four years Rwanda has continuously registering a resilient GDP growth above 5% and this year’s projections is set at 6.5%.
The same report states that the private insurance industry is still facing challenges of poor performance and underwriting losses. On the other side, the customers still complain of poor service, lack of innovation from the insurer and delay in claims settlement which erodes in the insurance business.
So, what is the rationale behind the industry challenge? From my experience in the last 17 years in the insurance sector supported by some experts’ report, the Rwandan market has been driven by compulsory insurance. The product with most sales is the mandatory Motor insurance representing 51% of insurers’ portfolio from ASSAR’s (Rwanda Insurers Association) report. The performance of this product affects therefore has a serious effect on the insurers’ books and its performance influences the perception of insurance in the entire population.
BNR report further states that insurance penetration is still below 2%. FinScope 2016 report for Rwanda revealed that only 9% of the adult population had subscribed to a voluntary insurance product.
As we celebrate the customer service week, this is a good opportunity to ask ourselves the right questions regarding the benefit of insurance to Rwandans:
It is time for the industry to focus on market research and design of products that meet customers’ real life risks through a human centered design approach.
Access to Finance Rwanda through its inclusive insurance market development department is working on various initiatives and partnerships with the regulator, ASSAR “Rwanda Insurers Association”, public and private institutions to make insurance accessible for all.
Various studies and reports highlight that the informal and agriculture sector represents more than 90% of the working labor force. Unfortunately this segment remains unserved by classic insurance services.
We expect in the near future new products will be developed enabling the underserved and low income segments access to insurance services.
Insurance procedure, papers and manual processes are too costly and time consuming. Digitalization of different processes beyond distribution is particularly useful for serving the low-income market where reaching scale is vital due to small profit margins.
On the regulation space there improvement with AFR supporting the development of a new regulation on microinsurance which will soon be gazetted. It will support in addressing challenges related to serving this market segment.
We believe that the insurance offers a better risk management tool for people regardless of their income level, if well designed and distributed.
Access to Finance Rwanda will continue working with the market actors in developing a blended approach that emphasizes digital transactions, strengthening relations between insurers, products that result in increasing market share and revenue while generating value for the customers and making insurance services accessible to all.