Apollo launches cover for borrowers

“We are counting on the continuous borrowing behaviour of microfinance borrowers for continuity of the life cover,” said Mr Shah.

Microfinance borrowers usually take small amounts of loan and progress to take higher amount as their creditworthiness improves based on repayment record.

Another weakness of the product is that unlike the conventional life insurance cover, it does not have the element of investment accessible at a later date such that premiums paid are not accessed. In conventional practice, premiums paid are accessible upon agreed maturity period of the cover with interest.

Retail systems

Moses Banda, the CEO of MicroEnsure, however, said the company is working on such a product. 

“We are planning to introduce microinsurance products that people can take without necessarily taking a loan,” he said. Such products, he said, have been rolled out in Tanzania, Uganda and India among other countries.

“We sought to start with the existing infrastructure. We must build required retail systems to be able to vend insurance products even to non-borrowers,” he said.

MicroEnsure confirmed that it is in discussion with Vodafone, the United Kingdom’s parent company of the local Safaricom to use M-Pesa service to set up a platform for retailing micro insurance products.

“We are looking at a system where you send money on your phone and you immediately become insured,” said Mr Banda.

Micro insurance services are not regulated in Kenya, meaning there are no laws that define how micro insurance services should be delivered to the poor.

“The irony is that it is the poor exposed to more risks from being in a accident-prone matatus to fires in informal settlements.”