The Insurance Industry and SDGs

October 7, 2021



An important discussion topic at the 43rd Organisation of Eastern and Southern Africa Insurers (OESAI) Conference was titled, “Decade of action: Industry response to SDGs and Opportunities for new product development in insurance/reinsurance”.

The paper was presented by Mrs Linet Macharia; Regional Insurance Specialist in the Insurance & Risk Finance Unit (UNDP).

A major highlight of the conversation was that insurance is a powerful tool for economic growth and development as it helps to end poverty in all its forms.

In fact, insurance plays a critical role in supporting economic activity. In addition, a sound insurance mechanism makes a critical contribution to the sustainability and growth of the national economy.

Combined with savings, loans, payments and remittances, insurance can build financial health, and help businesses grow and innovate.

Alongside risk reduction measures, it can promote more sustainable farming, housing and living conditions.

As a result, the insurance industry matters in the attainment of Sustainable Development Goals (SDGs).

Discussions during the OESAI Conference covered the following SDGs and there was emphasis on the need for insurance players to develop products that are aligned to the respective SDGs;

λ SDG Number 1 — No poverty

Insurance provides economic protection in the event of shocks as it prevents people from falling into poverty and escape the poverty trap. Financially vulnerable people often work in high-risk jobs or low-salary occupations and are often one disaster away from poverty. For them, an illness, death, an accident, a fire or a natural disaster is much more damaging, compared to a counterpart who has enough savings or a stable income to buffer the sudden expenditure.

Insurance can alleviate this by providing a contractually enforceable pay-out when such an event happens — the key advantage of formal insurance over informal insurance.

For instance, agriculture insur-ance can help tide farmers through crop failures.

When used in conjunction with other tools such as savings, loans, and income generation, insurance can build financial health and resilience.

  • SDG Number 2 – Zero Hunger

Insurance provides food security, improved nutrition through agriculture insurance. It should be highlighted that insurance can support risk management in the food production value chain, thereby being a key component of measures to achieve food security.

The UN World Food Programme notes that smallholder farmers produce most of the world’s food but tend to be food insecure themselves.

Agricultural insurance can help smallholder farmers build resilience against losses from adverse events, while also strengthening access to credit and incentiv-ising investment.

λSDG Number 3 — Good Health & Well-Being

Insurance provides social protection through products such as medical aid.

Health insurance lowers, or even removes, financial barriers to obtaining healthcare.

Insured households are less likely to incur devas-tating out-of-pocket health expenditures, whereby insurance also prevents poverty (SDG 1) and hunger (SDG 2).

It is generally accepted that compulsory, pooled prepaid schemes are the most effective way forward for ensuring low-income households have access to health-care.

  • SDG Number 5 – Gender Equality

Insurance helps to achieve gender equality given that it empowers women. Insurers can support gender equality by offering products and business models that con-sider gender differences, thereby increasing uptake of insurance by women and strength-ening women’s ability to participate in the labour force.

Insurers can also ensure the availability of health insurance that covers sexual- and reproductive-health services (SDG 3).

In countries where there are stark gaps in personal freedoms, insurers can design distribution models that are more accessible for women.

  • SDG Number 8 – Decent Work and Economic Growth

SDG 8 is the only that explicitly mentions insurance. As a private risk transfer tool, insurance provides an option for those without the privilege of formal jobs and social security benefits.

In a sense, insurance catches segments that fall between cracks in social protection systems, such as gig economy workers, domestic helpers and construction workers.

It is more impactful when used together with savings, loans and remittances.

In developing economies where SMEs play a key role as economic drivers, insurance is instrumental for increasing business resilience, spurring business investments and, thereby, contributing to enterprise growth.

λ         SDG Number 13 — Climate Action

Insurance mitigates the effect of climate change and its impact. Developing and emerging countries, as well as lower-income communities, are most exposed to and suffer the most damages from climate risk. Furthermore, they have less resources available to repair and rebuild their lives after a catastrophic event.

The insurance sector is thus well-placed to contribute expertise to national or global initiatives and help devise new climate risk solutions.

Overall, policymakers, supervisors and the insurance industry need to arrive at a joint vision on how insurance can be used to support development goals.

This also means devel-oping solutions that consider national policy priorities and market realities, which vary signifi-cantly between countries. Insurance supervisors are well placed to act as a bridge between stakeholders as they have a balance of technical, market and policy understanding.

Supervi-sors such as the Insurance and Pensions Commission of Zimbabwe (IPEC) can support policymakers in identifying where insurance can be most impactful in their respective policy areas, and crucially, in a manner that is cognisant of both the potential and limits of insurance.

Batanai Matsika is the Head of Research at Morgan & Co, and Founder of He can be reached on +263 78 358 4745 or /



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