Insurance is beneficial. It helps individuals, businesses and families in the face of unexpected events including accidents, alleviates worries about potential financial burdens, increases the ability to recover from losses without significant financial burden and brings other benefits, fostering economic development of different countries. But the lack of it hinders economic development and leaves many people financially at risk or unable to recover from accidental losses many times. Though resourceful countries have widespread insurance coverage, both life insurance and general insurance, according to multiple sources including the BBC and CNN, the coverage of insurance is low in less resourceful countries, despite its importance. More importantly, it remains unclear how much insurance can be promoted in less resourceful countries.
It is notable that there are resource based, policy oriented and other challenges to promoting insurance in different less resourceful countries. Insufficient regulatory framework and enforcement to protect consumers in the insurance market, inadequate infrastructure, limited access to insurance products — driven by several causes including limited options — and the lack of the affordability of insurance premiums for low-income individuals and families are some of the crucial barriers in less resourceful countries in Asia, Africa and other continents. The lack of awareness about the importance of insurance and distrust in insurance companies due to past negative experiences also put barriers to promoting insurance in different countries. Cultural beliefs and superstitions surrounding insurance sometimes hinder insurance promotion efforts in many less resourceful countries.
The governments of less resourceful countries have taken regulatory, incentive oriented and other steps to promote insurance, leading to increased insurance coverage in different countries. Many governments have established regulatory frameworks to ensure fair practices within the insurance industry, offered subsidies or tax incentives and taken special programs to make insurance more affordable for low-income individuals. For instance, India’s Prime Minister Security Insurance Scheme (PMSBY) provides affordable personal accident insurance, and Kenya’s National Hospital Insurance Fund offers health insurance to low-income individuals, resulting in increased insurance coverage. Additionally, many governments have partnered with private insurance companies to create tailored insurance products for their population and implemented public awareness campaigns to educate citizens on the importance of insurance coverage.
But there are various limitations to the steps in promoting insurance, hindering their effectiveness and leading to limited outcomes in less resourceful countries. Government steps often remain insufficient to regulate and oversight insurance providers, leading to exploitation and inadequate coverage for policyholders, and there is a lack of understanding of the needs and preferences of potential policyholders among insurance companies, leading to limited tailored insurance products and limited access to information on various insurance options in less resourceful countries. There also remain limited steps to promote insurance coverage for low-income groups in many countries and a failure to address irregularities in insurance services, cultural barriers and misconceptions that prevent many from trusting or utilizing insurance services — effectively.
Given that insurance will have beneficial impacts in less resourceful countries and its importance cannot be undermined at all, it is desired that steps be taken to address the barriers and promote insurance. But providing affordable and flexible options tailored to the specific needs and preferences of the population and establishing trust through transparent communication and reliable customer services may be helpful in many countries. Increased collaboration between government agencies and insurance companies can help implement policies that incentivize insurance uptake and protect consumers and increase trust in insurance services.
But the emphasis also needs to be given to the insurance policies that can protect vulnerable groups against financial risks associated with illness, accidents or other unforeseen events. Some sorts of insurance policies including health microinsurance policies, which provide coverage for low-income individuals, and index-based microinsurance policies, which use a specific index to trigger payouts for losses due to events such as natural disasters or crop failures, may be pertinent for many less resourceful countries.
