A simple text message is all it takes for a Papua New Guinea (PNG) citizen to sign up to affordable, new microinsurance products providing a crucial safety net for families.
These new microinsurance products have managed to do away with the usual lengthy paperwork processes, preliminary health checks and identification associated with some traditional insurance products. Subscription via text message leads to enrollment and periodic insurance premiums are set up for automatic, deductions.
For a price as low as PGK3.60 (USD $1.43) per month, a person’s life can be insured for a minimum of PGK 4,000 (USD $1,596). The maximum cover an individual can take up under the Family Life Insurance scheme, costs just PGK10.80 a month, providing a payout of PGK12, 000 (USD $4,788) to beneficiaries upon the death of the insured person.
Another product called Hausik Hospital Insurance has affordable plans that range from as little as K3.60 (USD $1.14) per month for ‘basic cover’, PGK 7.20 (USD $2.29) per month for ‘medium cover’ and PGK 10.80 (USD $3.41) per month for ‘high cover’, which pays out PGK 32 (USD $10.11), PGK 64 (USD $2.22) or PGK 96 (USD $ 30.34) respectively per night if a policy holder stays in hospital overnight.
According to World Bank data, the average weekly wage for PNG in 2015 was PGK140.80, or PGK 3.52 per hour (based on a 40 hour week). In this economic context, an investment of PGK 3.60 is affordable for the mass market. In comparison, it would take 92 years of saving PGK 3.60 per month to save PGK 4.000 – the typical payout for the life insurance product.
Though the sum insured may seem relatively small in the developed world, these timely payouts (claims are paid within three business days) can greatly help low income families with the high cost and resulting financial stress of funerals for example, especially if the deceased was the sole bread winner. Policyholders enjoy the peace of mind that their families will be taken care of financially, even while dealing with the loss of their loved ones. Payouts could also help cover the cost of rent, school fees and day-to-day expenses for a few months, allowing families to recover faster, rather than falling prey to predatory moneylenders or having to rely on borrowing money from family and friends.
These innovative and first-of-their-kind microinsurance packages were introduced to PNG by BIMA, a world-leading mobile micro-insurance provider, focused on offering mobile financial services to financially underserved communities.
BIMA entered the PNG market in 2014, operating in partnership with local insurance company Capital Life Insurance (the underwriter) and the largest mobile network operator in PNG, Digicel.
The company embraces an ecosystem approach providing end-to-end microinsurance solutions harnessing the resources and expertise of mobile operators and insurance companies to bring affordable insurance to a low-income market. BIMA’s insurance products are cheaper and more convenient to buy than traditional insurance available in the market, which makes them appealing to low-income customers.