April 7th, 2022

The picture

The COVID-19 pandemic has pushed an additional two million Kenyans into poverty. Health shocks are particularly devastating for low-income households, most of which lack access to insurance and hardly save towards such eventualities due to a myriad of competing daily priorities.

According to the 2021 FinAccess national survey, only 23 out of every 100 adult Kenyans had access to health insurance, a 16% drop from the level reported in 2019. This means that almost one out of every five Kenyans who previously had health cover opted out of insurance due to reduced household incomes during the COVID-19 pandemic. Eight out of ten Kenyans (83%) who reported having health insurance, were using the National Health Insurance Fund (NHIF). Given the high proportion of inactive accounts at NHIF, it is likely that many of these had lapsed into arrears and were not effectively covered.

Although there has been a general decline in access to health insurance, the gender gap in access to insurance is stark, with women – who bear the brunt of the care burden – being disproportionately excluded.  The same gap is evident between rural versus urban populations.

54 out of every 100 Kenyans reported going without medicine during 2021, a 34% increase from 2019. Government and development partners efforts are making a difference. For instance, universal health care (UHC) initiatives in some of the four UHC pilot counties (Isiolo, Kisumu, Machakos, and Nyeri) have contributed to the uptake of NHIF. The recently proposed NHIF bill mandates contributions by all adult Kenyans. However, not every household will afford. Secondly, NHIF doesn’t cover everything – there are many exclusions and even some of those covered have to incur out of pocket expenditure or forego care.

The partnership

It is in the backdrop of this growing health concern that FSD Kenya partnered with Insurance For All (IFA) in 2020. IFA had launched AfyaPoa in 2018 in partnership with Sanlam as the underwriter. The product was initially targeted at informal micro-entrepreneurs and distributed through groups typical of microfinance institutions, SACCOs and other community based organisations.

The uptake of the product was slow. The onset of COVID-19 and the related management measures made this delivery channel unviable.  IFA then started to explore alternative channels and entered into discussions with Sendy, a tech company that builds fulfillment infrastructure for e-commerce and consumer brands, and provides gig work to drivers of all vehicle types including motorbike riders.

The aim of the FSD Kenya – IFA partnership was to research and refine IFA’s health micro-insurance AfyaPoa product design, distribution channels and business model in order to enhance its value proposition to gig workers and informal entrepreneurs in Kenya. This was done with technical support from 17 Triggers and Emerging Markets Acturial Consulting.

The process

We used a human-centric design (HCD) approach to research, design and pilot the revised AfyaPoa products. Out of the distribution partnerships that IFA had cultivated over the years, we narrowed down to Sendy and a Nairobi-based SACCO whose membership constituted informal business owners.  Two personas were developed during the market research: Eric, a 35-year-old married father of two to represent boda boda motorcycle drivers from Sendy, and Sylvia, a 39 year old market vendor, to represent members of the SACCO.

The team mapped out customer journeys of previous AfyaPoa products and built a series of hypotheses about the motivators and barriers to insurance uptake amongst the two groups defined by these personas. These included the difficulty in the paying annual premium, lack of trust in insurance companies, and horror stories about slow claims processes.

From three weeks of field visits, interviews, focus group discussions, ideation sessions and pitch tests, the team surfaced insights, built and narrowed solutions to the two personas. Separate products and customer journeys were designed for the Sendy riders and the SACCO members. Unique delivery approaches were also developed for each partner organisation.

We distilled the following insights from this intensive HCD process:

• People mainly rely on their social networks such as friends and family to cope with health events.
• Out of pocket expenditure is prevalent but people hardly take stock of the accumulated expenditure on health.
• Insurance is perceived as expensive – a product for the richer in society and beyond reach for the majority.
• Many in this target group do not understand insurance because of the jargon used and thus don’t trust it.
• While NHIF doesn’t cover everything, it is useful and trusted and hence is a comparator in gauging value.
• The target market has many competing priorities and health is not necessarily the highest ranking.

Based on these research insights, it was clear that a pure health micro-insurance solution would have limited traction.

The revised AfyaPoa product was therefore a bundled product with a health, income loss and business loss cover for the informal entrepreneurs, and health plus an optional rider protection (disability and accidents) for the riders. The micro-entrepreneur’s (AfyaPoa Mfanyi Biashara) product was categorised into platinum, gold and silver and the rider (AfyaPoa Sendy) one into gold and silver based on cost. Armed with these and a clear protocol, we set out for the pilot.

The pilot

The Sendy partnership was already in place. IFA set up marketing bases at central places that the riders frequently visit such as Sendy’s head office. Social media such as use of the rider product banners on the Sendy platform and WhatsApp were effective for marketing (awareness creation) but IFA still needed to follow-up with those who expressed interest.

Though the SACCO had the potential to aggregate the numbers and finance the premiums, the channel proved problematic. After months of follow-up, it emerged that the members were not keen to buy the product through the SACCO due to underlying governance issues.

IFA then pivoted to offering AfyaPoa Mfanyi Biashara to individual micro-entrepreneurs who were not affiliated to the SACCO. Some of the SACCO members also bought the product. About 300 AfyaPoa policies were sold (1,200 people covered) within the 6-month pilot period, much higher than the cumulative sales since 2018. Roughly two-thirds of these sales were for the AfyaPoa Sendy product and thus to male clients.

Our perceptions

We had an intense 16 months of learning, right from the research and into the pilot itself, and we continue to learn.  Outlined below are the key lessons and insights from this work:

• A combination of high-touch and high-tech distribution works best. For the rider product, field agents were needed to educate the riders and build trust in the product and the Sendy platform to make the processes (onboarding, premium payment, etc) easy and more efficient. Similarly, social media marketing such as WhatsApp was effective in creating awareness, but making the sales required one-on-one engagement.
• Insurance marketing is not a one-touch event. Most of the Sendy riders and micro-entrepreneurs registered on subsequent visits or after follow-up calls.
• Financing of insurance premium is a real barrier to uptake and scale. The three-month period provided for the informal entrepreneurs and riders outside the Sendy platform to pay the premium was too short. Premium payment plans need to be aligned to the incomes of those targeted and a flexible, convenient, and cost-effective way of making the payments availed.
• In business-to-business customer models, success hinges on the credibility of the business partner. A robust due diligence of potential partners is crucial before any engagement. An independent end customer view should be central to this.
• The product, onboarding and claim processes should be simple to enhance trust. Lengthy policy forms, complex product features, and unclear claim processes make insurance hard to understand, and creates distrust.
• Informal groups (chamas) provide a logistical opportunity for scaling micro-insurance uptake. But there is need to understand the group dynamics and design around this.

From the pilot, IFA has figured out how to work with gig work platforms to provide insurance to their partners (gig workers) and several conversations for this are underway. IFA has also partnered with Power Financial Wellness, Inc. for financing of premiums. Moreover, IFA is also exploring ways of refining its business to customer delivery channel which was not as successful as the digital platform. To IFA, informal groups provide a great opportunity for distribution and the route to scaling up micro-insurance.

Informal groups are a proven delivery channel for micro-credit, yet there have been many failed attempts at using groups for micro-insurance distribution.  Understanding the underlying group dynamics and how to navigate them, and the value proposition that micro-insurance providers can offer to groups will be crucial.

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