Currently, less than 20% of the global population has access to social protection coverage through pensions – with even lower rates in developing nations. Access to insurance, particularly in rural or informal sectors, is equally low.

On 26 November, AFI hosted a webinar exploring how inclusive pensions and insurance can help boost the economic resilience of vulnerable groups.

Over 85 AFI members and external policy experts joined discussions which centered on the importance of innovative microinsurance and inclusive pension schemes to mitigate financial risk, promote long-term financial health, and protect against climate shocks.

“Today, more than 75% of the world’s adult population have access to a transaction account, equating to 1.5 billion people coming into formal financial services for the first time,” said Robin Newnham, AFI’s Head of Policy Analysis and Guidance.

“But true inclusion requires that consumers are also able to deal with unexpected shocks, and to plan for their financial futures across the life cycle. Both pensions and insurance have been recognized as critical tools to achieve these goals and to contribute to financially healthy lives.”

In Kenya, 74 percent of the population lacks pension coverage – according to Brenda Mwangi from the Retirement Benefits Authority of Kenya (RBA) – 83 percent of which work in the country’s informal sector. 

“This is a portion of the population we simply cannot ignore,” insisted Mwangi. “We need to develop policies and regulatory frameworks to help these people save for retirement.”

The challenge, she explained, is that informal sector incomes are low and irregular and traditional pension schemes – with their rigid onboarding and KYC processes – fail to cater to the sector’s low literacy levels. To help solve this, the RBA has partnered with the country’s Micro and Small Enterprise Authority (MSEA), allowing them to tap into the small business market where they host sensitization and outreach programs that help business owners understand the importance of saving for retirement. 

The winner of this year’s Nestor Espenilla Jr. Award, the Reserve Bank of Fiji (RBF) shared how its innovative parametric micro-insurance initiative helps Pacific islanders build climate resilience:

“Increasing natural disasters are having a disproportional effect on vulnerable Fijians’ livelihoods, explained Lepani Uluinaviti, RBF’s InsuResilience Solutions Fund Project Manager. “Parametric insurance is specifically designed for low-income populations with quick distribution of funds and affordable premiums – addressing the gap left by traditional insurance products. We need insurance products like these if we want to enhance our communities’ resilience to and recovery from climate impacts.”

Other speakers included Parul Khanna from pinBox Solutions, Kofi Polley of the Peoples Pension Trust (PPT), and Katherine Miles from the InsuResilience Global Partnership.