Cooperatives and Inclusive Insurance: Unlocking Protection for Low-Income Communities

Authors: Sabbir Patel & Matthew Genazzini.

In the seventh in our blog series to celebrate the International Year of Cooperatives, Sabbir Patel of ICMIF Foundation and Matthew Genazzini of the Microinsurance Network discuss the role of cooperatives in scaling up inclusive insurance, what these partnerships can look like in practice, and what challenges have to be overcome for cooperatives to reach their full potential in scaling inclusive insurance

When Maria, a small-scale farmer in the Philippines, lost half her rice crop to flooding, it could have been the end of her family’s livelihood. But through her local cooperative, Maria had enrolled in a smallholder crop insurance scheme. The payout she received didn’t make her rich, it simply meant she could replant, repay her loan, and keep her daughter in school. That’s the silent power of inclusive insurance when it’s delivered through organisations people trust.

Despite the growing recognition of insurance as a critical safety net, millions of low-income individuals worldwide remain excluded from financial protection. The latest data from the Landscape of Microinsurance, published by the Microinsurance Network, reveals that around 90% of people in low-income countries lack access to insurance, leaving them vulnerable to devastating shocks - whether from illness, climate disasters, or sudden unemployment. For these households, even a minor crisis can push them deeper into poverty, undermining years of hard-earned progress.

This is where cooperatives emerge as a powerful solution. Rooted in community trust and built on principles of solidarity, cooperatives have a unique ability to reach populations that traditional insurers often overlook. With 3 million cooperatives worldwide serving over 1 billion members (roughly 12% of the global population) they represent a vast, decentralized network for delivering inclusive financial services. Their member-driven structure ensures that products are designed with local needs in mind, fostering higher uptake than conventional insurance models.

Why Cooperatives Matter

Cooperatives - member-owned and democratically governed organisations - are rooted in communities. They exist not to maximise profits, but to serve the needs of their members. This model makes them especially well-suited to deliver insurance that is accessible, affordable, and responsive to the realities of low-income households.

Cooperatives are built on mutual trust and shared interest. They often emerge from the community itself, meaning they speak the language (literally and culturally) of the people they serve. For low-income populations who may distrust commercial institutions or lack awareness on the benefits of insurance, this can make all the difference.

Furthermore, the International Labour Organization (ILO) underscores their role in advancing the Sustainable Development Goals (SDGs) through a paper entitled Cooperatives and the Sustainable Development Goals (ILO Coops SDGs 2014), particularly in reducing poverty (SDG 1), gender inequality (SDG 5), and climate vulnerabilities (SDG 13).

Cooperatives are also inherently inclusive. Many offer bundled services - savings, loans, financial education, and insurance - creating integrated safety nets and promoting a holistic approach to managing risks. They often prioritise women, smallholder farmers, informal workers, and other groups typically excluded and marginalised from mainstream financial services.

Examples From The Field

In the Philippines, CARD Mutual Benefit Association, part of the CARD MRI cooperative group, serves over 8 million members, most of whom are low-income women. Their insurance offerings include life, disability, and calamity protection. Beyond financial services, CARD invests in community education, disaster preparedness, and healthcare access - an integrated approach that builds both resilience and dignity.

Meanwhile in India, the DHAN Foundation has developed a grassroots, community-based model for providing services to the low-income underserved communities. Through its People Mutuals initiative, DHAN has established locally based mutual federations to design, deliver, and manage its life and health mutual insurance products, while also providing risk awareness and risk prevention advice. To date Dhan Foundation has reached over one million households with mutual insurance though its unique community-based approach. Dhan is now introducing mutual crop insurance coverage to small scale farmers already part of its network.

These are not isolated examples. Across Latin America, Asia, and Africa, cooperative and mutual insurers have become central actors in financial inclusion and their reach is significant.  The members of the International Cooperative and Mutual Insurance Federation (ICMIF), which is a global network of cooperative and mutual insurers committed to values-based insurance and sustainable development, serve alone over 350 million policyholders globally, many of whom are in low-income or underserved segments.

Challenges That Stand In The Way

Despite their strong performance and social mission, cooperatives face many challenges in scaling up inclusive insurance:

First, regulatory frameworks in many countries don’t always accommodate non-traditional distribution partners and cooperative and mutual insurance models. Licensing requirements, solvency standards, and reporting obligations may be designed for large commercial players, unintentionally excluding smaller community-based insurers.

Second, access to reinsurance and capital remains limited for many cooperatives, particularly those in developing markets. Without adequate risk-sharing mechanisms, these organisations struggle to expand their coverage and/or withstand from catastrophic events.

Third, digital transformation can be a challenge. While cooperatives have deep local roots, they often lack the technical infrastructure or investment capital to adopt mobile platforms, data systems, and digital claims processing tools - technology that can make insurance cheaper, faster, and more accessible.

Finally, education and awareness are ongoing needs. Insurance remains a complex and sometimes misunderstood product. For many low-income individuals, the concept of paying now for a future risk that may or may not occur is unfamiliar, and even counter intuitive.

Unlocking The Full Potential

To harness the full potential of cooperatives in expanding inclusive insurance, a multi-stakeholder effort is required, which cuts across several key areas:

1. Enabling environment: Policymakers and regulators can help by adapting legal frameworks to recognise the value and structure of non-traditional distribution partners as well as mutual and cooperative insurers. Proportionate regulation, which is tailored to the size and risk profile of community-based entities, can promote innovation while safeguarding stability.

2. Investment in capacity and technology: Cooperatives need access to affordable digital tools, risk modelling, and data systems. Partnerships with fintechs, development agencies, and reinsurers can accelerate modernisation.

3. Financial infrastructure: Access to reinsurance markets, climate risk pools, and technical assistance is essential for resilience. Donors and development finance institutions can play a catalytic role.

4. Finally, knowledge sharing and peer learning: Platforms like the Microinsurance Network and ICMIF facilitate critical exchange between the various stakeholder (cooperatives, insurers, researchers, regulators, etc.) spreading lessons learned and amplifying best practices.

   
   

Cooperatives are uniquely positioned to build trust and explain value, but they need support to do it effectively.

A Human-Centred Model For Resilience

At its heart, cooperative insurance is about people helping people. It’s about turning shared risk into shared strength.

In the face of disaster, illness, and other financial shocks, a well-designed insurance product can mean the difference between recovery and ruin. And cooperatives can foster not just coverage, but resilience, dignity, and community cohesion.

As the world grapples with compounding risks stemming from climate change, economic volatility, and widening inequality, the need for inclusive, community-rooted insurance models has never been clearer. Cooperatives represent one of the of the most powerful stakeholders to improving the resilience of low-income populations, and one that has proven success throughout the world.

About the Authors:

Sabbir Patel joined ICMIF in 1996 and has held a variety of roles spanning finance, development, and emerging markets. He became Managing Director of Allnations Inc. in 2004, leading investments in Africa and Latin America, and in 2005 was appointed Senior Vice-President, Emerging Markets and CFO. He has led key initiatives including microinsurance seminars, Takaful sector collaborations, and the creation of a global microinsurance training tool. Sabbir also contributed to international regulatory work on mutual microinsurance with the IAIS. Since 2015, he has served as CEO of the ICMIF Foundation, overseeing the 5-5-5 Mutual Microinsurance Strategy, which has provided protection to over 17 million people. In 2022, he helped launch the UNDP ICMIF Innovation Insurance Challenge. He is a Fellow of the Chartered Certified Accountants (FCCA), holds a Master’s degree from the Institute of Development and Policy Management in Manchester, and a CII Diploma in Insurance.

Matthew Genazzini has 15 years of experience in development finance and inclusive insurance and is the Executive Director of the Microinsurance Network. He has a BA in Contemporary History from the University of Sussex and an MA in Latin American Studies from the University of London. He has significant experience in the inclusive finance sector with ADA – Appui au Développement Autonome, managing capacity building and product diversification projects for financial institutions, with a particular focus on microinsurance. In 2017, Matthew managed the Technical Support for MFI’s unit in ADA, which aimed to strengthen financial institutions through the provision of financial and technical assistance services, and in 2020, he changed position and launched the Smallholder Safety Net Up-scaling Programme (SSNUP), a public private development partnership aiming to strengthen the resilience of smallholder farmers by promoting investments in the agricultural sector. In parallel, Matthew joined the board of the Microinsurance Network in 2019 and later, in October 2024, become the director.