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IIG Insights_Old Mutual Insure Webinar: The South African Micro-Insurance Landscape

Karen Naidoo has more than 20 years of experience in the short term insurance sector, the corporate insurance field and risk management. She has a Law Degree, an MBA and Diploma’s in Corporate Finance and General Management.

Karen has been with OMI since 2014. Currently the MD of MFRF, an independent cell captive insurance licence in the group. She is a visionary leader, responsible for R3.6bn top-line business. When not running a company, she is running … she is a mother, friend, sister, daughter, mentor to many, art & music lover, and a dedicated supporter of women’s empowerment initiatives.


On 14th October 2021, the IIG held a webinar sponsored by Old Mutual Insure. The IIG President, Tshepiso Chocho welcomed all in attendance and introduced our speaker and the topic of the day as the South Africans insurance market is set for take-off through micro insurance, digital innovation and insurtech partnership.

Tshepiso encourages the IIG community to register on the IIG CPD vault to earn CPD points for attending the insight sessions.


Karen introduced the topic of Micro Insurance in South Africa, which is a new concept and it will transform the landscape of insurance in our country. Africa is home to more than 700 million low-income citizens, and it is considered a major market for micro-financial offerings, including microinsurance. Only 2% of Africa’s low-income population is currently served by microinsurers.

According to EY, out of 11 countries surveyed in Africa between 9 million and 28 million people were covered by microinsurance products.


Karen spoke about the emergence of microinsurance and why it is important.

Africa has been the most underinsured and uninsured continent and economic disparity on the continent means lots of people do not have access to financial services, especially insurance products.


Karen shared a video on how microinsurance works.

Before the Corona Virus, South Africa had the highest expectation of insurance growth only behind Latin America, because we have such low penetration rates. Research shows that the insurance industry was set to grow at an annual compound growth rate of 7% per annum between 2020 – 2025. 


The set – back is a delay in Karen’s view- it has forced insurance companies to look at more digital solutions to reach consumers, products that address our new and adjusted lifestyles. With digital, more people can be reached, and more products can be made affordable to those that previously could not afford insurance. 


Karen mentioned ‘WHY’ is microinsurance important:

  • Financial Inclusion
  • Bridging the gap, through access to financial products
  • Allowing for innovation, digital insurance solutions and providing consumers with options


An indicator of insurance sector development compared to other countries:



Karen gave us some fast facts on microinsurance:

  • Insurance Act of 2017, introduced Micro Insurance as a class of business
  • Regulated the same as Life and Non – Life Insurers, through the Insurance Act
  • Prudential Standards for Micro Insurance include :
  • Min Capital Requirement of 15% of the net written premium with an absolute minimum of R4m
  • Approved classes of business = Life, Non- Life and Reinsurance
  • Cannot reinsure or retrocede more than 75% of premiums to one insurer
  • ORSA is required only if a material change is made to the risk profile or as requested by the PA
  • The micro insurer must have ‘ head of actuarial ‘ and ‘ head of internal audit function’
  • PA expects, annual audits, annual audited returns, quarterly unaudited returns
  • Accounting method = IFRS 17
  • The FSCA standards for Micro Insurance Include :
  • Rule 2A of PPR sets out the Product Standards for Micro Insurers ( I will unpack this later )
  • The Governance and Operational Standards for Micro Insurers (GOM) are aligned to the Governance and Operational Standards for Insurers (GOI)


She also mentioned the Features of microinsurance:

  • Benefits are limited to risk only and cannot have a surrender or investment value
  • Policies are limited to R100k for Life and R300k for Non – Life
  • Rider Benefits limited to 20% of the total primary insurance premium
  • Term of contract restricted to 12months
  • Waiting periods are 3months in the case of death by natural causes and ‘ no waiting ‘ periods for accidental death, renewed or replacement policies
  • Exclusions are only included for non – funeral products and cannot exceed 12months for suicide
  • Also, no exclusions for pre-existing health conditions for funeral products
  • Claims must be settled within 2 business days after receipt of all relevant documents
  • Commission for all products in uncapped, except for credit life
  • Furthermore, only one standard excess is allowed which should not exceed 10% of the benefit or R1000 whichever is lower
  • Cannot offer loyalty benefits without the prior written approval of the PA


On microinsurance distribution, this is what Karen had to say:

  1. Historically microinsurance distribution channels in Africa were largely reliant on partnership models – nothing wrong with that! For example, MicroEnsure, a company based in several African countries, operates on a partner-centric business model, collaborating with upwards of 70 insurance companies, 13 telecom partners, and approximately 90 financial-services providers and microfinance institutions to make insurance accessible to low-income clients and gain access to large existing client bases. About 85 per cent of their clients have never had an insurance product before. 
  2. 68% of microinsurance companies in Africa distribute their products using brokerage & agency channels.
  3. Another 22% of companies partner with microfinance institutions to either directly sell the individual microinsurance policies or bundle them with other micro-financial products.
  4. On the continent, microinsurers are increasingly using more digital platforms for distribution
  5. Partnerships with MNO’s (Mobile Network Operators ), reduce the cost of distribution and increase product penetration. Improves premium collection and claims payments


Karen concluded that microinsurance protects those who need it the most. People with low incomes need insurance even more than those with higher incomes because they are more vulnerable and have a smaller cushion of resources to draw upon in times of need. They are one disaster away from falling below the breadline.

By providing insurance to these audiences micro-insurers are driving real financial inclusion on the continent and providing the first steps towards closing the continent’s insurance gap


Article by Mpho Tlagadi       


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