December 13th, 2022
Access to health insurance is dismal and gendered
Health shocks pose a major risk to low-income households and women. The impact is amplified for women who on average have lower income levels and bear most of the healthcare burden. Yet, according to FinAccess 2021 just about one out of every five Kenyans could use health insurance to mitigate these health shocks. The gender gap was notable, with the access by women being 19.5% compared to 25.9% for men.
Low-income households and women are disadvantaged in many ways when it comes to accessing health insurance. But women have significant social capital through their participation in informal groups. The FinAccess 2021 report showed that 29% of Kenyans were using informal groups (chamas) for financial services, with the usage by women being 15.5% higher than that of men.
Informal groups provide multiple benefits such as savings, credit, and risk mitigation through a social welfare fund for some. The welfare benefits include health – the contributions are used to meet the members’ health needs. These informal groups thus present a good opportunity for effective distribution and financing health insurance premiums.
Insurance For All had been providing AfyaPoa, an informal group microinsurance product, since 2018 but there was little traction. In 2020 FSD Kenya partnered with Insurance For All to research and refine AfyaPoa, the business model and its distribution channel using a human centric design (HCD) approach. Based on the research, the solution was initially targeted at gig workers (motorbike riders) and informal entrepreneurs. While AfyaPoa’s uptake by the riders was immediate and continues to grow, this was not the case with the informal entrepreneurs.
Can chamas enhance distribution and uptake of health insurance?
In 2022, FSD Kenya and Insurance For All with support from Emerging Markets set out to deepen our understanding of the dynamics and needs of informal groups and to explore if they can effectively be used as a channel to enhance uptake of health insurance.
The study combined ethnographic and human centric design research approaches and paid special attention to location, and social intersections such as gender, age, and income. This involved observation of the chama members’ behavior patterns and culture, and an interrogation of the influences behind these leading to insights which we used to refine the AfyaPoa chama solution.
What did we learn about chamas regarding health insurance?
Outlined below are the key findings and insights from the research.
- Chamas are not homogenous. They have varied origins and exhibit different stages of maturity. Our observation was that most chamas began as merry-go-rounds or welfare groups and with time changed into savings and loans groups before eventually maturing into more complex organisations such as investment companies or fully fledged Savings and Credit Cooperative Societies. However, not all chamas go through this cycle – for instance, some are formed as merry-go-rounds and remain so.
- Chamas’ membership varies. From the study, membership ranged from about 10 to 2000. Additionally, the membership was volatile with new members joining and others leaving during the lifecycle. The smaller groups (between 10 and 20 members) seemed more stable, better organised, and cohesive. They thus present a better platform for health insurance distribution.
- Chamas have ways of dealing with risk. For example, at least 93% of the chamas contributed towards members’ health events whenever these occur. Another 3% regularly contributed to a welfare kitty for health emergencies. Nevertheless, these contributions are not always adequate. A dismal 2% of Chama members were actively paying the National Health Insurance Fund (NHIF) premiums. Health insurance solutions therefore need to present a greater value proposition to chama members than the current coping mechanisms. They need to be more affordable and the claims settlement process more efficient.
- A chama is as good as its leadership. Chama leadership has significant influence on the decisions and the general direction of the group. If the leadership is effective, the chama The officials are opinion leaders for the group. For effectiveness, the marketing of health insurance should therefore be targeted at the group leaders.
- Payment for health insurance needs to simulate current coping mechanisms both in frequency and amounts. Chama members expressed a willingness and ability to pay similar amounts to their welfare contributions towards health insurance.
- Awareness creation is crucial for health microinsurance. Chama members have limited knowledge of how insurance works – mainly informed by other people’s experience with NHIF. Besides making health insurance affordable, the providers thus need to effectively educate members as part of the marketing process.
- Much more than health insurance is needed. In addition to health, chama members expressed need for insurance cover for other prevalent needs such as loss of livelihoods and funeral expenses. Such covers could be bundled to the health insurance solutions.
The insights from this research were used to inform design of AfyaPoa chama insurance solution which will be piloted in 2023. Similarly, the lessons and insights shared here will inform the marketing and distribution of the solution to ensure that the chama members derive optimal value from the solution.