The Landscape of Microinsurance in Africa

Approximately 1 billion people live in Africa, of which an estimated 60% live below USD 2 per day. These low-income households are particularly vulnerable to risks. Illness, death, natural disasters, damage to property, and accidents all can have devastating effects on livelihoods without a buffer to mitigate the financial impact. The informal mechanisms developed by the poor rotating savings and credit associations, depleting savings, informal borrowing, selling assets, taking children out of school offer short-term protection at long-term costs, preventing escape from poverty. Furthermore, most individuals in Africa cannot count on government safety nets to mitigate risks. Failure of informal schemes and government-led programs opens a significant window of opportunity for microinsurance. This paper provides a detailed picture of the landscape of microinsurance activities in Africa.