Technology is finally making microinsurance for the poorest viable for both consumers and companies, with African countries leading the way in innovation. 

Low-income communities in emerging markets are prone to risk. Weather-related events can wipe out crops and livestock, while death, disability or injury can undermine the income streams of urban and rural dwellers alike. 

Confronting these risks, and others, in order to develop resilience among the poor is at the forefront of efforts to achieve sustainable economic growth. Microinsurance options are being offered increasingly to achieve this.

This has not always been the case. In the past, large, traditional insurance providers have seen little sense in offering microinsurance products. For one thing, it is very difficult to make a profit. But a lack of meaningful data on the activities and livelihoods of the poor also made it nearly impossible to price risk appropriately, which, in turn, made microinsurance too expensive for the very constituency it was designed for.

Technology is changing all this. New microinsurance players are now partnering with larger insurers, or even telecommunications firms, to provide affordable products and services. The use of drones and satellites, for instance, is helping insurers gauge the impact of weather-related incidents on small farmers without the expense of site visits. Meanwhile, the provision of mobile insurance options is helping to scale products and services to all-time highs.

Insurance industry veterans recognise these developments as something of a breakthrough for the sector. More importantly, they offer more evidence of Africa’s stellar rise as a global hub of financial sector innovation, driven by African entrepreneurs, who are developing local solutions for local problems.

As crucibles of innovation, business hubs such as Nairobi, Lagos and Johannesburg may lack the clean edges of ‘fintech sandboxes’ found elsewhere in the world. But an enterprising spirit can’t be manufactured and Africa has this in abundance. For the next answer to the world’s most pressing economic and social problems, look beyond Beijing, Abu Dhabi or New York. All eyes should be on Africa. 

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