How can financial services that target ‘last-mile’ communities, such as parametric insurance, be more customer-centric and empowering in their design, deployment, and distribution?

This was the central question during a discussion at the 27th Consumer Empowerment and Market Conduct (CEMC) and 10th Inclusive Green Finance Working Group meetings on 4-7 March in Fiji, co-hosted by the Alliance for Financial Inclusion and the Reserve Bank of Fiji.

Participants in the working group came from across Asia and the Pacific, Latin America, Africa, and the Middle East.

There was a general interest in the UN Capital Development Fund’s work on digital finance and climate and disaster risk insurance in the Pacific region under the Pacific Insurance and Climate Adaptation Programme (PICAP) and Pacific Digital Economy Programme.

UNCDF was represented on the panel by Krishnan Narasimhan, the Lead Specialist (Climate Risk Insurance) and Programme Manager for PICAP, who highlighted the three A’s that are vital for customer empowerment and centricity: Access, Affordability and Awareness.

Take for example the parametric insurance product currently offering coverage for a range of perils in Fiji, Tonga, Samoa Vanuatu, and Papua New Guinea, including high windspeed, excessive rainfall, droughts, and earthquakes, for farmers, fishers and MSMEs.

PICAP has worked with an ecosystem of public and private sector partners in the Pacific to encourage uptake of the product through awareness and educational initiatives that promote sound financial decision-making.

According to Mr Narasimhan, the products have been refined and additional ones have been launched based on customer and partner feedback, since the first windspeed cover was introduced in Fiji in 2021.

“In the first year of launch, although 1390 households had subscribed, many hadn’t received the payout as there were no tropical cyclones and they questioned why they should even be paying the premium,” he said.

“That took us back to the drawing board and with this valuable customer feedback, we added a rainfall component to this product in 2022. Come March 2023, there were heavy rainfall events in Fiji and Vanuatu, and over 1000 households received payouts ranging from $250 to $750 through mobile wallets.”

Today, 17,963 households are covered under multiple parametric schemes in the aforementioned Pacific countries, and the Programme is planning to expand in Solomon Islands, Kiribati and Tuvalu this year.

To further empower insurance beneficiaries, all stages of product development have a financial literacy component embedded within in it, in addition mechanisms for regular customer interaction – for instance, through partnerships with cooperatives and agriculture agencies.

Demand side surveys inform product development, and insurance payouts are made according to the convenience of the consumer through mobile wallets or internet banking.

“This approach flips the whole thing around from developing products in the boardroom to doing it in the field, side-by-side with the people we are trying to uplift,” Mr Narasimhan said.

“Then, you're not only answering the question of customer centricity, but you're also getting valuable behavioural insights - why and when people need to access insurance and how will they continue to access and use the products.”

The three ‘A’s’ have been vital to UNCDF’s work in the region from the time of the Pacific Financial Inclusion Programme which helped over 2.2 million low-income Pacific Islanders gain access to formal financial services.

Some other UNCDF-supported initiatives singled-out for customer centricity and empowerment at the working group meetings included:
💸Ave Pa'anga Pau – Tonga’s most popular remittances product
📲M-PAiSA mobile money platform in Fiji and M-Selen in Solomon Islands
💰YouSave Lomobile pension scheme in Solomon Islands

“All of them are customer centric. They have not been snatched from somewhere and these were developed and are being used in the region and refined based on customer feedback,” Mr Narasimhan added.

UNCDF was represented in two further sessions during the meetings.

Olivia Vakaosooso, UNCDF Pacific’s Digital Financial Literacy Associate, spoke on a panel titled ‘Reserve Bank of Fiji: Our Inclusive Green Finance Transformation,’ while Mr Narasimhan was a presenter in a technical session on ‘Parametric Insurance for resilient and inclusive MSMEs and MFIs.’