LEACH: Mobile phones can help insure the poor

If you visit health facilities – whether in villages or cities – you will probably notice the proliferation of posters offering financial aid screaming messages such as "instant credit" or "ready within 48 hours".

It is by design, and not by accident, that microfinance institutions and other credit companies find clients in hospitals. Being sick in Kenya is expensive, with many patients not protected by health insurance. This, in turn, leads to an addiction to fundraising or loans to offset medical bills.

The efforts of county governments like Makueni and national government institutions such as the National Hospital Insurance Fund to lower the cost of insurance coverage more users of health insurance products . The Makueni County government's coverage requires that households pay only 500 shillings a year, while NHIF payments are graduated according to income with Sh500 as a monthly minimum.

Despite these efforts, the penetration of health insurance remains low. The latest data from the Insurance Regulatory Authority (IRA) show that penetration stands at 2.73 percent against the world average of 6.28 percent.

One of the biggest challenges in increasing insurance penetration rates, especially in the low-end

In addition, many insurance products are not designed to meet the needs of low-income people. For example, many annual insurance policy premiums must be paid from the outset.

Fortunately, the rapid adoption of mobile phones and mobile wallets across the continent offers a particularly effective way of distributing insurance to underserved consumers. It is a profitable and accessible channel for registration, premium collection, customer service and claims processing. It also provides the insurer with access to a vast pool of clients.

This means of insurance distribution is so effective that the GSMA has found a nine percent increase annually in mobile insurance services. The first successes in Africa include Tigo Ghana's family insurance product launched in 2010 that resulted in 500,000 registered members in the first 25 months.

Data from the Consultative Group on Assistance to the Poor (CGAP) found that in Kenya, the model of mobile insurance began to take effect with the introduction of products such as Riziki Cover by Equitel of Finserve Africa.

The government's plan to expand universal health care under the "Big Four Agenda" should consider the merits of the model of mobile insurance

. For Kenya, mobile insurance is a relatively new concept. However, it is very promising as a mechanism to bridge the financial inclusion gap and reduce the financial burden for the most vulnerable consumers.

Jeremy Leach is Executive Director and CEO, Inclusivity Solutions. [email protected]