Opportunities for remittance-linked insurance products in SSA
Opportunities for remittance-linked insurance products in SSA22 January, 2022 •
A demand-side perspective of the risk management and resilience needs of remittance senders from South Africa to Ghana, Malawi and Zimbabwe
Remittance-linked insurance products (RLIPs) are insurance products distributed by remittance service providers. These products have great potential to positively impact livelihoods in sub-Saharan Africa. They cover the risks of either remittance senders or receivers.
For example, a migrant worker may purchase insurance that covers hospitalisation costs. This insurance cover would pay out a set amount if the migrant worker were to get ill or injured and had to spend time in hospital, thereby enabling the migrant worker to send money home despite not having earned an income while in hospital. A migrant worker could also purchase funeral insurance for individuals they send money to. This could avoid the sudden and large sum of money required to cover the funeral costs of a loved one.
In partnership with FSD Africa, we spoke to people who send remittances through three corridors – South Africa to Ghana, South Africa to Malawi, and South Africa to Zimbabwe – about their concerns and gauged how RLIPs could address their needs.
Senders’ financial product preferences for themselves
Senders’ product preferences were similar across corridors, and the main risks for which they would purchase insurance for themselves were:
- Health costs: Respondents across the corridors were most interested in products that cover doctors’ and/or hospital costs.
- Costs incurred from passing away: Respondents were interested in products that covered either funeral or burial costs in the event of their death, including some interest in a product that covered the costs of repatriating their body.
- Loss of income due to the loss of employment: Respondents noted that they would be interested in a product that would cover their lost income due to losing their job.
Senders’ preferred products to cover recipients
The major receiver risks for which senders indicated they would purchase insurance products were:
- Costs related to a family member passing away: Respondents across the corridors would purchase products that cover the costs associated with receivers passing away, such as funeral or burial costs.
- Education costs: Respondents preferred a product that would cover children’s education back home; either the fees, additional costs, or both.
- Health costs: Respondents showed interest in products that cover doctors’ fees or the cost of being hospitalised.
Remittance senders expressed a clear interest in insurance products to strengthen their resilience and that of their families. We see that several insurance and savings products could play this role. However, for these products to be successful, the design must be specific to the consumer and the context.
You can access further detail on this work in the report.
If you would like to discuss remittance-linked insurance products with us, please contact Michaella Allen.