Case Study Implementation of credit life in Senegal Mathieu Dubreuil, PlaNet Guarantee

1. Case Study Implementation of credit life in Senegal Mathieu Dubreuil, PlaNet Guarantee

2. Microfinance Institutions & other delivery channels • Considerable knowledge of low-income populations • Not able to bear insurance risks • Standard insurance and reinsurance companies • No knowledge and limited access to low-income populations • Able to provide insurance activities • Specialized Microinsurance broker & Third Party Administrator PlaNet Guarantee acts as a link between Microfinance Institutions, insurers and reinsurers

3. Credit life In Senegal • 4 stakeholders : Reinsurance pool (Hannover Re, Mapfre Re & CCR), Local Insurer (Allianz Africa), MFIs (6 in Senegal) & PlaNet Guarantee • The product : basic credit life scheme • Death (illness, accident) & total & permanent disability (accident) • Coverage from 100% to 200% of the initial capital • Max amount without medical questionnaire : 22 000 € (48 months). • Compulsory membership for borrowers • In case of claim : repayment to the MFI • Keeps the outstanding capital • Transfers to the family the amount already repaid

4. Credit life In Senegal : Implementation • Subscription of the policy between Allianz & the MFI • Management proxy signature between PlaNet Guarantee & the MFI • Fees : 27%, including • MFI : 7% of total premium collected + 80% profit sharing on net income • Training process : • 1 training session to the management & some branch managers. Then the MFI shall spread the information & the documents. • Support material : information form, subscription guide, training support, leaflets, posters • Management process : • Each month, the MFI sends the list of disbursed credits with basic information & list of claims • PG control and sends the call for premium and checks the amount transferred on the insurer’s account • In case of claim : • few documents to send (scan of : ID, loan contract, death certificate, claim settlement form) • 1st level of control by PlaNet Guarantee and payment by the insurer.

5. Credit life In Senegal • Some figures • 17 MFIs signed the credit life policy in 9 countries / 7 in Senegal • 189 000 people insured since 2007 / 76 809 in Senegal • 371 000 € of premiums / 97 630 € in Senegal • Claims : most contracts have no claims. • Egypt : 1 contract with C/P > 100% in 2009. 36% 2010 • Madagascar : 1 contract with C/P = 31% • Senegal : 1 contract with C/P = 9% in 2009 / 2% in 2010

6. Credit life In Senegal : Lessons learnt • Training • We noticed a very low level of information in the staff of MFIs • A much lower level of awareness in the insured population (also on the price) • Absence of support materials in branches • Sent someone to inform, train and provide the documents • Membership process • ID issue • Difficulty to have the information on every members of groups • Files transfer : technological & costs issues • The president of the group attests the age of the member • Test of a new MIS & changes in the MFIs’ loan contract / MIS • Complete change of management process

7. Credit life In Senegal : Lessons learnt • Claim settlement process • The MFIs find it difficult to gather all necessary documents. Long claim settlement process • We notice real mistakes in the information sent by the MFI in the membership file. • Waiting period : example in Madagascar • Weaknesses of the product • MFIs are not necessarily the best distribution channel for microinsurance • Credit life is a basic microinsurance scheme. How can we cover new types of risks without being a heavy burden for clients? • Interest for MFIs to distribute a product they can manage themselves? • Technical capacities to distribute basic schemes • What happens if the MFI decides to stop paying the premium? What if it has no financial capacity to disburse credit? • What if the MFI decides to work with several insurers at the same time on the same product?