Insurance is an odd thing. You pay up front for nothing tangible at all, and if all goes well (i.e., nothing happens to trigger a claim) then at the end of the period for which you’ve bought coverage you’ve got nothing in return — and indeed have “lost” your premium for good. Unlike credit, savings, remittances or other payment or transfer facilities, the value of an insurance policy is not immediate or clearly measurable. You need it if — and only if — you need it.
It’s no wonder that insurance is a hard sell, and that many insurance products are mandatory rather than voluntary. Buying insurance is not the way that low-income populations usually cope with shocks and build — and maintain — resilience in a household or business. Traditionally, they’re more likely to turn to informal coping mechanisms and other financial products to manage risks, including saving and borrowing. But savings are rarely sufficient to cover large-scale emergencies, and many struggle to save consistently due to daily financial constraints. Informal networks, such as family and community support, provide some assistance, but these resources can be unreliable, and during widespread crises, other members in the network are often affected too. And dependence on short-term credit can destroy the resilience of a household every bit as much as the financial shock that precipitated this “last resort” in the first place.
That’s not to say that traditional and informal methods don’t play a role in financial resilience: They can be useful tools, but they’re not suitable or sufficient for all types of risk. As anyone who has faced a major shock while insured can attest, effective insurance helps households and businesses mitigate losses, recover more quickly and build resilience against future shocks. By the same token, anyone who has found themselves uninsured against a catastrophic occurrence will be aware of how anxiety and stress can also exact a high price. Insurance can empower individuals to approach life with greater confidence, enabling better planning, investment and financial stability in the face of uncertainty. Expanding access to affordable and tailored insurance products is essential to ensuring sustainable economic security and resilience for vulnerable communities.
However, despite the enormous value that access to affordable and suitable insurance offers, its benefits are too often poorly understood, and as a result, it is often deprioritised when disposable income is tight. Compounding this, many potential clients prefer to avoid thinking about or planning for negative events, and the perception that paying premiums feels like a waste if no claims are made further deters interest. It’s no wonder there is a widespread industry aphorism that “insurance is not bought, it’s sold.”
A growing — but still mostly underserved — market
Yet despite these challenges, the insurance market (including both inclusive insurance and microinsurance) is substantial and growing in emerging economies. According to Microinsurance Network (MiN)’s recently published report, “The Landscape of Microinsurance 2024,” insights were gathered from 294 insurers in 37 countries offering just under 1,000 products across the health, life, agriculture and property sectors. These products extended coverage to an estimated 344 million individuals across Africa, Asia, and Latin America and the Caribbean — a number which has grown from just over 331 million in 2023. For insurance providers, these products represent revenues of US $6.2 billion in written premiums, up from US $5.8 billion in 2023.
Nevertheless, there remains a significant protection gap, which represents an important opportunity for insurers. The estimated market for microinsurance in the countries included in the study is almost 3 billion people — a potential market worth approximately US $41 billion in microinsurance premiums. Customers covered through the products highlighted in the report represent just 12% of that target population, and just 15% of the total estimated value of the market. This leaves a massive unserved market, which indicates a pressing need to close the protection gap, as well as a major business opportunity for insurers.
The EMA2025: ‘Building Resilience through Inclusive Insurance’
To reflect the enormous importance of insurance and the challenges of its sustainable implementation at scale — particularly among low-income populations — we at e-MFP and MiN are delighted to announce the launch of the European Microfinance Award 2025 (EMA2025), which will focus on “Building Resilience through Inclusive Insurance.” The award will highlight organisations that enable low-income and vulnerable people to build resilience and manage risk thanks to inclusive and effective insurance. MiN — an international multi-stakeholder platform that unites organisations and experts committed to advancing inclusive insurance — this year joins e-MFP, Luxembourg’s Ministry of Foreign and European Affairs, and InFiNe as a strategic partner in designing and implementing the Award. As for the Award itself, after 20 years it now attracts enormous exposure, and there are significant benefits not only for the winner (which gets EUR 100,000) and the two finalists (which receive EUR 10,000 each). Additionally, the 10 semi-finalists get profiled in various publications and platforms that attract the attention of funders, support providers and other sector stakeholders.
The EMA2025 focuses on inclusive insurance, but what does that even mean? It refers to insurance products designed to be accessible, affordable and tailored to the needs of low-income populations that are often excluded from traditional insurance markets. Unlike conventional insurance, which typically requires extensive documentation and regular premium payments, inclusive insurance is structured to accommodate individuals with irregular earnings, limited financial literacy and lower ability to pay. It is frequently bundled with other products, and features flexible premium payments, simplified enrolment systems, and coverage that aligns with the specific risks faced by vulnerable communities, such as health emergencies, crop failures or climate-related disasters. The goal of inclusive insurance is to extend financial protection to those who would otherwise remain uninsured, helping them manage risks more effectively.
Inclusive insurance can come in different types or product categories. For instance, indemnity insurance can range from the most basic types of coverage (such as “credit-life,” where a borrower’s outstanding debt is paid off upon their death) to products that cover business interruption, accidents or broader healthcare needs, among others. A growing category in recent years is index/parametric insurance, especially for crops or livestock, which automatically pays out benefits on the basis of a predetermined index (e.g., rainfall levels) to cover the loss of assets and investments, primarily working capital, resulting from weather and catastrophic events.
Cracking the insurance code
Inclusive insurance continues to face substantial barriers, starting with the inherently unattractive proposition of asking potential customers to reflect on the very risks that most people would prefer not to think about. In response, the sector has been developing innovative approaches, both in product design as well as delivery — and in the process, it’s showing that inclusive insurance can be a real-world solution for millions of low-income customers. Meanwhile, regulators have been actively working to enhance the enabling environment and foster the development of effective solutions. As a result, 40 countries have established specific regulations, with an additional 16 currently in the process of developing such frameworks.
Affordability remains a major barrier, as even low premiums can be a burden for low-income individuals, who often face irregular income streams and competing financial priorities. To address this, insurers can introduce flexible payment options, link premium payments to customers’ cash flow, or bundle insurance with other products. Additionally, partnerships with mobile money platforms can enable convenient and low-cost transactions.
Many underserved communities also lack the physical infrastructure or distribution channels needed to access insurance products. To overcome this issue of accessibility, insurers are leveraging digital platforms, such as mobile phones and apps, to reach remote areas where traditional brick-and-mortar offices are impractical. Innovative delivery methods, such as offering pay-as-you-go models or integrating insurance with existing services (e.g., seed purchases or healthcare), also improve accessibility and ensure that insurance reaches those in need.
Additionally, low awareness of how insurance works and a lack of trust in insurers — often due to concerns about claim denials or lack of transparency — pose significant challenges to adoption. To tackle this, insurers can launch targeted education campaigns that use simple, culturally relevant messaging to explain the benefits of insurance. They can also build trust by mitigating the risks of aggressive mis-selling, ensuring transparent claims processes, providing clear documentation and honouring payouts promptly.
Furthermore, it is not always easy for insurers to achieve long-term viability and sustainability when serving low-income populations. To ensure sustainability, insurers are developing innovative business models, such as index-based or parametric insurance, which reduce administrative costs and streamline claims processing. They are also using data analytics and technology to better assess and manage risks, improving efficiency.
Partnerships play a crucial role in the success of inclusive insurance, particularly in reaching underserved communities. Financial service providers offer one of the most effective distribution channels for insurance products — particularly microfinance institutions (MFIs), which have deep roots in low-income communities, well-established trust and extensive networks. By integrating microinsurance products into their existing portfolio of services, MFIs make it easier for clients to access insurance alongside savings and credit. Their close relationships with clients also help them build awareness and trust in insurance products, addressing common barriers like scepticism and low financial literacy.
An example of an innovative partnership model might involve an insurer, an agri-tech company, and local cooperatives that collaborate to distribute parametric insurance to smallholder coffee farmers, protecting them against climate risks like drought or excessive rainfall. The agri-tech company provides satellite data and weather indices to trigger automatic payouts, while the cooperatives serve as on-the-ground intermediaries, educating farmers and facilitating enrolment. The insurer designs the product and manages the risk, leveraging the agri-tech company’s expertise in data and the cooperatives’ deep community connections. While this model requires the partners to align their technology, local knowledge and distribution channels, it effectively combines innovation with grassroots outreach.
A rapidly evolving sector, poised for growth
The inclusive insurance sector is evolving rapidly, driven by technological advancements, innovative business models and increasing recognition of its importance in financial inclusion. Digital technology presents a major opportunity, with mobile-based platforms enabling easier enrolment, premium payments and claims processing, especially in remote areas. Public-private partnerships are also expanding, as governments, insurers and development organisations collaborate to create scalable and sustainable insurance solutions. Additionally, the use of big data and artificial intelligence is improving risk assessment and product customisation, making insurance more affordable and relevant to low-income populations. With growing interest from impact investors and social enterprises, the market is shifting toward more integrated and customer-centric solutions, ensuring that inclusive insurance becomes a key pillar of economic resilience for vulnerable communities worldwide.
We at e-MFP and MiN are proud of how this year’s European Microfinance Award has been designed, and we’re sure it will gather and present many examples of innovation in this critically important area of inclusive finance. We look forward to seeing what those organisations that are pioneering new approaches are doing, and to being able to showcase their work: We welcome them to this rigorous but extremely worthwhile Award process.
The EMA was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs – Directorate for Development Cooperation and Humanitarian Affairs. It is jointly organised by the Ministry, the European Microfinance Platform (e-MFP), and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank (EIB). Round 1 of the EMW2025 is open from March 12 to April 10, and is in English, Spanish and French. For details on eligibility and other requirements and timeline, click here. The EMA2025 winner will be announced at the Award ceremony on November 13, 2025, which takes place during European Microfinance Week, November 12 – 14, 2025.
Sam Mendelson is Financial Inclusion Specialist at e-MFP, and Matthew Genazzini and Asier Achutegui are Executive Director and Senior Manager respectively at the Microinsurance Network.
Image via e-MFP.
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