Regulating m-insurance in Zimbabwe: managing risk while facilitating innovation

The aim of this paper is to learn lessons from the EcoLife m-insurance case and develop recommendations with the aim of protecting clients and ensuring positive synergies between financial inclusion and these other policy objectives in the m-insurance space. The methodology utilised for this paper includes desktop research, an in-country visit to Zimbabwe to engage with key stakeholders (the insurance supervisor, MNOs, insurers, technology service providers), a demand side survey, as well as additional discussions with global stakeholders including regulators and m-insurance providers.

Insurance sold through and/or with a mobile network operator (MNO) (henceforth defined as m-insurance) has gained significant attention in recent years due to its rapid growth in African and Asian markets and its potential to grow inclusive insurance markets.Over 70 m-insurance schemes have been launched globally across 15 countries (CGAP 2014 & BFA internal research), with one initiative winning an award from the insurance supervisor for its innovation and value to the consumer (Tigo, Ghana). On the other end of the spectrum, however, there has been one dramatic failure (EcoLife, Zimbabwe), in which 20% of the adult population was impacted overnight due to the immediate cancellation of the product. What lessons can be learnt from this experience?

Whilst failures of financial services companies are an inherent risk of any financial system, this failure of an m-insurance scheme highlights the critical need to balance the sometimes competing financial policy objectives of financial inclusion (of which m-insurance could be a powerful driver), financial stability, integrity, and consumer protection (also known as ?ISIP?) (CGAP 2013). On the one hand, there is a desire to encourage innovative new delivery mechanisms to increase access to insurance, and on the other there is the imperative of maintaining trust and stability.