How Do We Create Profitable Solutions That Solve The Insurance Protection Gap For The Next Billion People? Thoughts From One Of The Industry’s Founding Fathers

Author: Richard Leftley.

On March 12th, e-MFP was pleased to launch the European Microfinance Award (EMA) 2025 on ‘Building Resilience through Inclusive Insurance’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. This year, e-MFP is also delighted to welcome as a strategic partner our friends at Microinsurance Network (MiN).

In this third piece in a series of guest blogs that we’ll be running throughout the year on this topic, we hear first-hand the journey of Richard Leftley – a true ‘founding father’ of modern microinsurance. In this piece, he talks about how a week in a Zambian village hut, with a once-middle-class family, crystallised a question that would capture him for the next 20 years: How do I provide an insurance safety net to low income people? We’re delighted to have this contribution (adapted from an interview with VisionFund) from a true microinsurance pioneer as he reflects on what he’s learned at the genesis of the industry – and what it tells us today. 

It began in 2001. My journey into micro insurance. If I knew then what I know now, I can categorically say I would never have set out on this journey.

I had no idea of the level of risk I was placing myself and my family in. I was 29 and blissfully unaware – which turned out to be a real benefit. I didn’t know how thin the line was. It was a knife edge. I didn’t know how close I was to disaster. I just put left foot in front of right – a very intentional, constant, determined path, in which I took whatever relationship was immediately accessible to me, and used it.

I knew insurance and I started to tweak it in incremental ways. I kept going, not randomly, but with one focus: how do I provide that insurance safety net to low income people? I did that little by little. Until one day we had 60 million customers.

The Cost in Dollars and Lives

As a London reinsurance broker, in 2001, I was dealing with insurance companies in Africa. One defining document was a report into the impact of natural disasters which laid out the cost in dollars and the cost in human lives. The dollar measurement was for the US, Japan, the UK. The measurement in lives was Bangladesh and India – emerging markets.

Only one or two percent of the population in Africa or in Asia had insurance. And they were the people who had a car, a bank account and were employed – so might have some embedded insurance.

While in developed markets there is a safety net – so when bad things happen, individuals, corporations and society don’t just slip back into poverty – that safety net doesn’t exist in emerging markets. I wanted to understand why people in emerging markets did not buy insurance. So, I went to Northern Zambia to find out.

Snakes & Ladders

I joined a two-week school-building trip to Zambia, but I was there to find out why rural Zambians didn’t buy insurance. I came away with a very clear understanding. I was fascinated with the life-story of the single-parent family I was living with: a single mum and her kids. She’d been born in the village and had progressed to become middle class. They had moved from the village to the Capital city where they had an apartment and a motorbike. She was a schoolteacher, and her husband was a security guard.

They’d progressed economically; they’d become middle class. Yet here they were back in the village – with one set of clothes, and no shoes. She explained that her husband got sick. They spent their money on doctors, and when he died, she spent the remaining money on his funeral. They had no safety net – so came back in the village.

She told me her life was like a game of snakes (or chutes, in the US) and ladders. She actually showed me the snakes and ladders board.

She explained her challenge: “I am trying to work my way up, and from time to time – thanks to a micro finance loan – I go up a ladder. That accelerates my move towards being wealthier. But my experience is that when I hit these snakes, or chutes, there is nothing to stop me sliding all the way back down to the bottom”.

And she challenged me: “I am happy to work my way out of poverty – I have done it once, and I’ll do it again. But what I need is a safety net that moves up underneath me. So that when bad things happen I don’t go all the way back down to the bottom in the way that I did”.

To me this was the challenge, the signal I needed.

The Genesis of an Industry

I started by working out what stopped people buying insurance. The complicated process excluded people who were not financially literate: a 20-page document; a visit to an office; the need for a bank account; the payment of a year’s premium up front.

I knew we had to simplify the products. We had to be able to explain the product in a single text message: If you die for any reason, we’ll give your dependant $1,000. If you go to hospital for any reason for two nights or more, we’ll give you $100.

To sign up, clients didn’t have to go to an office – they could send a text. They didn’t have to sign a form. They could pay the premium weekly, alongside their loan payment at the bank. Our clients didn’t have cash flow, so we worked on how to get claims paid quickly – on the same day, or next day, and certainly in the same week.

That was the focus to begin with and that was where the industry started off. And, in the first five years we developed simple products - working mainly with the microfinance sector.

Then the challenge shifted to how do we reach massive scale? 

From Scale to Sustainability – And Profit

The second phase was scale, reaching beyond the microfinance community (which then had around 150m borrowers globally) to access more of the four billion people without insurance. We explored working with telecoms providers; money transfer companies; ride hailing, to understand who made a good partner.

And the chapter we are now entering was: how do we make this sustainable and (dare I use the word) profitable? How do we make this into a commercially viable venture?

The microfinance community has always found profit to be a difficult word, because you are making profit from poor people. Proxies like “sustainable” are more palatable. Offering microinsurance as a product through the microfinance community necessitated a lower return on our microinsurance. But Lloyds of London (who underwrote us) insures spaceships and ocean liners. We needed a version of ‘Lloyds’ where the capital could come from donors, and the expectation of return sat in line with a social business, rather than fully-for-profit business.

That is starting to take shape in various ways around the world, but we’re not there yet. But I believe that is the direction the industry needs to go in.

The model we tried was a ‘split double baseline’ (for profit in one area, sustaining loss making in a less profitable area). But there was inevitable pull to those programmes or employees generating the greatest return. However hard you try, resources and focus start moving that way. Its human nature – investors’ nature, to focus on what is profitable. It’s a very hard tension to hold.

The answer lies, I believe, in the huge burgeoning middle-income market. India has 300 million people considered to be ‘middle income’. But they are not served with insurance. I believe the answer lies in a double bottom line. Instead of talking about micro or low-income insurance only, let’s talk about the mass market, which is everyone who doesn’t have insurance. In many of these countries that is 90% of the population, many of them ‘middle income’.

Climate Resilience

The impact of insurance in these nations, is critical. On climate, historically, the model has seen the not-for-profit sector put out a TV advert when a disaster lands, and the general public give money. A disaster in East Africa or an earthquake in Nepal is, to some extent, an essential part of not-for-profits business model – it provides a percentage of the income to help cover overheads and operational costs.

The alternative to that is insurance. So when there is an earthquake, or a flood, or famine, there is insurance. Instead of waiting for the disaster to strike and then raising money, you raise a little bit of money, ahead of disaster, which is spent on insurance premiums.

But this is harder to sell to people. A TV advert asking people to contribute to pay for a climate insurance premium, ahead of the disaster doesn’t sell in the same way as a picture of a child in a disaster.

I’d note that there is, therefore, a little bit of resistance from the not-for-profit sector about replacing the current model of “a disaster happens; let’s raise some money” to “before the disaster happens, let’s buy some insurance”. Therefore I wonder – is there a way of combining these two?

It’s not feasible to replace all the potential scenarios that might happens and replace them with insurance. But would it be useful if, when a disaster does happen, we can say, with immediate effect, let’s dispatch these resources because we know the money will be coming to those who need it in the form of insurance.

It’s been a challenge for the non-profit sector to work out how to combine these approaches. But the insurance industry is potentially very well set up for this scenario. It’s a perfect fit. All we have been talking about so far is very hard for the insurance industry to get their heads around. They’re very comfortable with those infrequent catastrophic events, but not with the frequent small events which is what microinsurance tried to deal with.

So the industry doesn’t need any convincing that there is unlimited capital available for these kinds of products. There is a huge interest from the insurance market in doing this and we haven’t tapped into it in the way that we need to. 

Now What?

VisionFund [upon an interview with which this is based] is an example both of what’s being done well – but also how much more is needed. VisionFund is one of the leaders in insurance among the microfinance players, providing important products and strong value for money to borrowers, with ClimaCash+ (a new climate insurance product that offers a simple, fast, parametric payouts triggered by specific weather conditions) just one innovative solution.

But the challenge is “now what?” – how can organisations like this extend to more people – both beyond borrowers (e.g. WorldVision Savings Groups) and beyond the organisation itself, to clients of other networks?

It’s now about how do we maximise the impact. The question that hit me at the genesis of this industry was How do I provide an insurance safety net to low income people? Today the question we face as a whole sector is slightly different: How do we create profitable solutions that solve the protection gap for the next billion people?

About the Author:

Richard Leftley pioneered micro insurance, starting in January 2002 when he founded MicroEnsure which became the global leading insurtech providing insurance to over 64 million people in 12 countries across Africa and Asia. In 2020 he co-founded MIC Global which became a leading reinsurer underwriting products globally via its Lloyds syndicate 5183 and via MIC Re in Anguilla. In 2022 Richard founded Wavu as an independent consultancy providing services to the World Bank Group, serving as a non-executive director for insurtechs and helping establish new ventures for large corporates. Richard helps companies understand how to reach scale via B2B(2C) partnerships, where best to be positioned in the insurance value chain and helps insurtechs raise capital.

Main photo: VD Photography via Unsplash.