Across the globe, new forms of microinsurance, such as pay-as-you-go insurance, are changing how people protect their valuable assets. A glance at foreign markets shows that countries like Kenya, India, and Indonesia are seeing strong growth in flexible microinsurance models. As a result, millions of people now have access to affordable, short-term cover that suits their income and lifestyle. 

If the signs are to be believed, what can South Africans learn from these global trends, and could this shape the future of our own insurance landscape? 

In this discussion, we will touch on: 

• The Rise of Microinsurance 

• The Reality Behind the Success 

• What This Could Mean For South Africa 

The Rise of Microinsurance 

Traditionally, formal financial and insurance markets tend to offer broad, complex, and more expensive policies that are not accessible to the informal sector. In a bid to serve low-income individuals and households, there has been a rise in microinsurance models. 

These models vary in how they function, but generally the goal is to offer policies that are affordable through low premiums and are simple to understand and manage, with straightforward terms and conditions to reduce disputes. 

Additionally, the distribution mechanisms are tailored to reach low-income populations, often through community-based networks. 

Let’s take a closer look at some of the models that make insurance more accessible to people who might otherwise go without it: 

• Kenya: Insurers like Bima and M-TIBA have partnered with mobile networks to offer health and life cover for about R10 a week. 

• India: Paytm Insurance lets users insure their phones or trips directly through digital apps, often within minutes. 

• Indonesia: Micro motor insurance allows drivers to buy short-term cover for a single journey or for a few days at a time. 

The Reality Behind the Success 

The key to the success of microinsurance models such as pay-as-you-go insurance lies in their flexibility. The fact is that many people in emerging markets have irregular incomes. As a result, paying premiums in small bursts rather than through long-term contracts makes more sense for their financial circumstances. 

The system also tends to rely on digital platforms, specifically smartphones. This makes it much easier for people in informal markets, both urban and rural, to activate, pause, or renew their cover instantly. 

In short, the success lies in the thoughtful simplification of the products, the ease of use, and the financial affordability and flexibility of the model. 

Its insurance designed for real life, not the other way around. 

What This Could Mean For South Africa 

If we draw our gaze homewards, it is easy to see how this could work in South Africa. We already have a strong digital banking and mobile payment infrastructure, which means the potential for microinsurance models such as pay-as-you-go is huge. 

Imagine being able to: 

• Buy a week of car insurance when you borrow a friend’s vehicle. 

• Activate home contents cover only while you are away for the holidays. 

• Pause your insurance when you are not using your car for months at a time. 

For many households, this could make short-term protection more attainable and help narrow the insurance gap in a country where many people are still uninsured or underinsured. 

Feeling Informed? 

This brief review of microinsurance abroad shows that there’s potential for flexibility and accessibility to coexist with reliability. While South Africa’s regulatory framework and insurer infrastructure will need to evolve before this becomes mainstream, it’s clear that a shift toward modular, mobile-first insurance could help redefine how we think about cover in the years ahead – especially as it could include those who have been excluded from the conversation until now. 

If you’d like to compare car and home insurance quotes to find the best rates and cover, take a few minutes to use the AA Insurance Supermarket, where you can find up to 10 quotes from reputable insurance companies. If you’re looking for more practical advice, budget-friendly ideas, and planning tools, then please take a few minutes to explore the rest of AA Inform.