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Swedish Cooperative Centre (SCC)

About the Project
Project Name: 
BIMA YA JAMI – Insurance for the family
Type of Facility Project: 
Innovation Grant
Pays d’opération: 
Kenya
Région: 
Africa
Project Thematic Focus: 
Insitutional models and business processes
Product: 
Composite
Type of Risk Carrier: 
regulated insurance company
Type of Distribution Channel: 
Credit union, cooperative or other member-based financial institution
Microfinance institution
Project Description: 

SCC and CIC plan to pilot test and distribute a composite microinsurance product (3-in-1 covering health, accidental death and disability, and funeral) on a mass scale through member-based organizations and MFIs in Kenya.

The project includes:

  • building capacity of CIC to manage the new product (new MIS, staff training);
  • building the capacity of delivery channels (SACCOs, MFIs, artisans associations, youth associations, welfare and faith-based groups) to distribute the product; and
  • developing a financial education campaign for distribution channels and their members.

Based on their cooperative values, SCC and CIC have a strong commitment to serve the poor. This initiative builds on the partners existing efforts, including a microinsurance supply study conducted by SCC (2008), and a small pilot with MFIs (2500 policies). CIC has experience in microinsurance and it is the leader on credit life market in Kenya.

The composite product is designed to provide more complete coverage at a more affordable price for low-income people. The linkage with the National Health Insurance Fund provides an interesting case for using market-based mechanisms (i.e. public-private partnership) to enable workers in the informal economy to access to health services.

Click here to view the Product Description of SCC.

Consortium Members: 
  • The Cooperative Insurance Company Ltd (CIC) of Kenya established in 1978 (with the help of Folksam) is the preferred underwriter of the co-operative movement in Kenya. Over the last seven years, CIC Insurance has recorded average growth of 37% compared to the industry rate of less than 11% in 2005. CIC is the risk carrier for the accidental death and funeral component of the 3-in-1 composite product.
  • Folksam Mutual Insurance Company was founded in 1908, has about 4 millions customers, settles over 600,000 claims every year and is one of Sweden’s largest investment managers. Folksam is a member of the advisory board for the project and will provide technical assistance for both SCC and CIC.
  • The National Health Insurance Fund (NHIF) core function is to collect contributions from very low-income Kenyans (average monthly income of less than Ksh 1000 - $12) and pay hospital benefits out of the contributions to members and their declared dependants (spouse and children). Whilst ensuring that Kenyans of all walks of life have access to quality and affordable healthcare, NHIF operates under the social principle that "the rich should support the poor, the healthy should support the sick and the young should support the old." The NHIF is the risk carrier for the health component of the 3-in-1 composite product.
Beneficiaries: 

CIC is targeting Kenya’s low-income population, particularly workers in the informal economy, members of savings and credit cooperatives in rural areas, members of other cooperatives, clients of microfinance institutions (MFIs). The insurer expects to cover 200 000 low-income persons during this project. If the initiative is successful in Kenya, the consortium plans to expand their outreach to other countries in the region.

Lessons from the Project
Learning Agenda: 
  • How can the insurer assist intermediaries to provide effective delivery and customer service?
  • What is the added value of providing comprehensive coverage in one product? Does it help? Do people understand it? Do they use it correctly? Are they being “forced” to buy some benefits that they do not really want? Are some benefits just added as “window dressing”?
  • How can the cooperative movement in East Africa be involved in massifying microinsurance through member-based organizations (SACCOs, etc.)? To what extent can the Kenyan experience be replicated in other East African countries?
  • What is the added value of education campaigns for increasing outreach and changing attitudes of the target groups?
  • How efficient is the linkage with the National Health Insurance Fund?
Premiers enseignements tirés: 
 
  • Exclusive of pilot investments, microinsurance can be profitable.
  • Public-Private Partnerships (PPPs) are a feasible option for extending health insurance coverage to low-income households as long as they are moderated by an external party and there is willingness to share information and solve problems.
  • Establishing a successful Public-Private Partnership (PPP) needs careful upfront risk analysis as he private sector partner’s reputation is at stake.
  • Establishing a PPP requires senior management commitment but, more importantly, requires streamlined process and trained front-line staff. 
  • There is a need to review the original PPP agreement.
  • Moving from a small pilot to national scale up requires upfront resource allocation and readiness of all functions across the value chain. 
  • Client satisfaction surveys reveal majority of clients appreciated the product.
  • High client satisfaction does not guarantee high renewals. 
  • Benefit of composite coverage cannot be taken for granted.
  • Client value goes beyond client satisfaction.
  • Know your market before you scale up.
  • Evaluate your marketing initiatives to come up with the best mix.
  • Customer care, renewal incentives and a system of renewal reminders should be in place from the beginning and should be integrated in the systems of delivery channels.
  • Consumer education sessions have not translated into higher take-up of products. 
  • It is hard to rely on SACCO’s staff to sell more complex products unless there is senior management buy-in.
  • Sales processes and staff training need to be streamlined to make sure that deals are ‘closed’.
  • Field and regional sales staff need to have clear incentive system.
Learning Journey: 
Learn more about the emerging lessons of SCC.
About the Organization
Relationship with the Facility: 
Innovation grantee
Country of Head Office: 
Kenya
Region : 
Africa
Type of institution : 
Non government organization
Participation in Microinsurance: 
Consulting support
Organizational Overview: 

Swedish Cooperative Centre (SCC), a non-profit, non-governmental organization, was established in 1958 to provide development support to co-operatives and other pro-poor people’s organizations. Together with its member organizations, SCC works in partnership with organizations in developing countries and Eastern Europe to contribute to the development of strong, efficient civil society, aimed at improving the living conditions of the poor. SCC is the leading partner responsible for the management and administration of the project.

More about the Organization
Websites: 
Swedish Cooperative Centre
The Co-operative Insurance Company of Kenya Limited
National Hospital Insurance Fund (NHIF)
Related materials : 
application/pdf iconscc-flyer.pdf
Quotes: 

“CIC's close relationship with the co-operative movement has enabled the company to develop suitable insurance products for the movement and utilize the co-operative structure for distribution, and this has been replicated in the provision of micro-insurance to the micro-finance institutions. I understand that they are insuring around 250,000 clients from 85 MFIs, the highest penetration in the market. I have no doubt that they will make full use of any assistance given to penetrate the low-income market further.”
Mike Ashurst, Vice-President, Reinsurance – ICMIF