AB Consultants: mitigating risks for people on low incomes
In the third of a series looking at how the people and organisations that IIED is working with are successfully creating change, we profile AB Consultants, a small Kenyan consulting company that champions insurance for people on low incomes.
Sector: Financial services
Number of employees: 1-10
AB Consultants is a consulting firm set up by two women determined to promote inclusive insurance as a tool for alleviating poverty.
Their work involves educating people about risk and designing inclusive insurance products that increase the financial resilience of people on low incomes – particularly in the informal sector.
As part of IIED’s 50th birthday celebrations, we are showcasing some of the many organisations we are working with around the world on issues ranging from climate resilience to energy access
AB Consultants was founded in Kenya by Barbara Chesire-Chabbaga and Anne Kamau in 2014. Both women had worked for large insurance companies but were frustrated by the constraints of big organisations and the difficulties of innovating and reaching out to low-income consumers.
“I remember thinking I'd rather be out there, working with more communities, more companies, and possibly even at country level, rather than being constrained within one company crunching numbers for motor vehicle or fire insurance. When I decided to leave, all I could think was, how can I work at industry level?" – Barbara Chesire-Chabbaga
The two partners apply their financial skills in insurance pricing and actuarial analysis to develop products for people on low incomes. They’re passionate about promoting inclusive insurance and creating a bigger insurance market across Africa.
They estimate that less than 5% of Kenyans have any form of private insurance. People on low incomes are especially unlikely to have access to insurance to protect them from risk, making them highly vulnerable to falling into poverty when hit by unexpected events such as climate impacts or illness.
"The low-income households in Kenya, and Africa generally, they're exposed to so many risks. They're mostly only one risk away from going back into the vicious cycle of poverty, and yet they are not consuming this solution because they don't understand it" – Barbara Chesire-Chabbaga
Today, AB Consultants advises the insurance industry on how to design and offer appropriate and accessible insurance to low-income households – particularly microinsurance.
Microinsurance is designed to protect people on low incomes, particularly small-scale farmers and informal workers. The risks these groups face are not large in financial terms, but risk impacts can be catastrophic because these groups have no fall-back in the event of an event occurring. This client group is frequently ignored by mainstream commercial and social insurance schemes; it's also a market that is hard to reach.
AB Consultants has now led inclusive insurance projects in Kenya, Tanzania, Rwanda, Ethiopia, Ghana, Zambia and Mozambique. They offer grassroots-level market research, a human-centred design approach to product development, help with strategy formulation and actuarial advice. They also deliver training for financial firms, and work with data providers and financial regulators and have developed partnerships with a range of international NGOs.
They are also exploring digital solutions: they have set up a digital platform called 'CoverApp’, which enables users to buy insurance via mobile phone. CoverApp makes the purchase process completely paperless and delivers the policy document to the user instantly via email.
Risk education for resilience: ResilientME!
Barbara and Anne see consumer education as a powerful tool to help people on low incomes manage risk.
They have developed a card game called ResilientME! to help people think about everyday risks. The players are dealt cards, with each card representing a life event – good or bad. The players must make decisions about how they will deal with that event, whether it is a big wedding or a drought.
Anne Kamau says they wanted to leverage the idea of 'gamification' to get people to learn about financial decision making in a way that is fun and engaging. She says: "When we were in lower primary school, we played games and we got to understand the concepts – and we are leveraging the same to get people to understand insurance. People have fun while learning a very complex subject."
Addressing the impacts of human-wildlife conflict
AB Consultants and IIED are working together to develop and implement an innovative microinsurance product that will offer protection to low-income households from damage caused by human-wildlife conflict (HWC), primarily from elephants.
In many African countries, HWC results in crop losses, property damage, injuries and even deaths. Such impacts can have devastating consequences for the livelihoods and financial security of small-holder farmers and other low-income households. They also create hostility toward wildlife.
"Working with a small but highly motivated and skilled company like AB Consultants as a driver and broker has been instrumental in building a relationship with the government of Kenya to explore the potential of handing over their human-wildlife compensation scheme to a much larger set of insurance companies in a way that benefits wildlife and rural people in Kenya" – IIED chief economist Paul Steele
Government compensation schemes for HWC have proved complex and unreliable. AB Consultants did research with local communities and community-based organisations and then began discussing their proposed solution with the insurance industry.
They gained support from some of Africa's largest insurance companies, reinsurance companies and brokers. And Kenya's government is exploring whether it could hand over its wildlife compensation scheme to the private insurance sector to manage.