Car Wash Sundays: A communal approach to health insurance

The car wash ends with about 15million shillings raised and a relieved family that could afford to take their daughter, Rita, to India for medical treatment. This was the only option for her single mother to raise funds to treat her after using up what little savings she had and selling off her house. Unfortunately, this situation is all too common in Kampala: a family going to friends and family when their heal this in jeopardy and their finances aren’t able to support them. Every Sunday it seems we hear about yet another Kampala car wash organized to help a family.It’s a wonder there aren’t only spotless cars in the city of Seven hills!

The problem is, we can’t all have a car wash or bake sale anytime a loved one falls sick. The public is generous but the public also gets tired and will move on. So where does that leave the most vulnerable among us? Those who live in small communities and whose peers earn about $2 a day.

According to the most recent Finscopesurvey, while the average Ugandan showed an appreciation for savings and credit, only 2% actually reported having formal insurance cover as a means of risk management. The main reasons given for not using formal insurance oropting for informal mechanisms for insurance, insurance is spoken of in a manner akin to a tax with people often wanting the option to get their money back when the event they insured red against doesn’t happen. With only about0.8% of the population accessing health insurance, mostly through their employer and only about 400,000 drivers with mandatory 3rd party motor insurance, the idea of protecting oneself against the negative consequences of life using formal insurance is barely on the radar in Uganda.

Early next year, FSD Uganda will publish the results of the very latest survey data. But no one expects that a significant shift in attitudes to insurance will have taken place. Uganda is by no means unique across sub-Saharan Africa, with very little insurance cover in countries like Zambia and even the leader in most categories of financial inclusion in East Africa, Kenya.

People, especially those considered to be low income (earning less than $2 a day) choose to rely instead on their social network, with the idea that when someone is in need, the rest of the community will rally to help and when I or my family suffer, people will return the favor. This indicates that much like the rest of informal financial management strategies, people think of insurance at a communal level. Could it be that from the supply side, we can tailor micro insurance products that address communities? If people think of themselves as part of a collective,could they collectively pay premiums to cover each other in the event of people being ill?

With the advent of bancassurance in Uganda, and coupled with agency banking, financial service providers will now be able to offer insurance services to a far broader segment of the population. But the issue remains:will Ugandan’s take up insurance? The inherent mistrust of formal insurance and the historic use of informal mechanisms mean that simply providing access to services will not cause a systemic change. Insurance providers will need to understand what the average Ugandan demands and create new and innovative products which they want to use.

What we can learn from the recent spate of car wash fundraisers is that people have no recourse but to rely on the kindness of strangers but this is not anyway to plan for our health. As people tend to think of it informally and communally,this may be the way to get them on board with the idea of formal financial insurance before people can adopt them as individuals.

Joel Muhumuza
Former Partner Support Specialist

FSD Uganda

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