This article is part of Busara’s Tafakari 2025 yearbook. You can download the whole yearbook here.
It is common to think of an umbrella as a symbol for insurance. Just as a sturdy umbrella goes unnoticed on a sunny day, the potential for insurance often remains overshadowed by financial inclusion.
In rural Kenya, Amani embodies the balancing act many women demonstrate, especially in tough times like the COVID-19 pandemic. With her husband away, she deals with the dual responsibilities of farming and managing household chores while worrying about her children’s school fees and medical needs. Like that umbrella, Amani finds hope through a community of women who gather weekly to contribute to a savings group. In this supportive environment, they uplift one another and create a safety net for their families by pooling their resources. While this collective highlights how women can overcome adversity and recover from financial shocks, it does so at a significant burden without the support of formal insurance and robust risk management. The weight of financial insecurity rests on Amani’s shoulders alone.
The insurance sector has largely failed to meet the unique needs of women in low-income communities, like Amani. One could say that the sector has failed to impact Amani’s life. The result is that many women have minimal or no access to financial support during emergencies. In recent fieldwork, we found that the savings group approach promoted by non-governmental organizations (NGOs) does not offer adequate risk management or insurance. Instead, a widespread risk-sharing mechanism exists, offering assistance to members and their families primarily in the event of death or hospitalization and, in some cases, a happy event like the birth of a child.
Surprisingly, contributions are made out of pocket rather than from group funds. Group norms have created strong accountability and a sense of reciprocity among group members, encouraging unwavering commitment. Additionally, the emotiveness and urgency of these contributions, which occur after a loss, make this form of community risk-sharing infallible. It has a huge impact—and maybe that is why it is no wonder that formal funeral insurance does not stand a chance in these communities. Because death or illness is unpredictable, we found that when these events occur, some members have to forgo necessary household expenses to make their contributions, and many resort to taking out loans to honor their commitments. While this system is imperfect, it is a vital support system.
These savings groups represent much more than table banking: their impact comes from embodying trust, mutual support, and shared endurance. Members pool their resources, providing financial assistance in times of need while navigating life’s uncertainties together. This understanding brings us to an important point of contention. The prevailing mindset in the insurance industry tends to dismiss community-led initiatives as mere assistance, rather than recognizing their potential as viable insurance models or distribution channels for insurance. They think of impact as providing support in an acute moment of shock: one impact image meets another. This narrow view ignores the reality that informal systems embody the essence of insurance: pooling resources to protect against unforeseen events. Risk-sharing and mutual support within these groups provide security that resembles traditional insurance plans. These are not one-off moments; they are long processes through which community mechanisms built on reciprocity and social capital become impactful.
Moreover, these informal solutions offer a relatable and accessible entry point for women to engage with financial services. Community savings groups prioritize flexibility, social interaction, and shared responsibility, making them inviting environments for women who may feel intimidated by formal financial institutions. In these settings, women aren’t merely participants, but co-owners of their economic destinies. By lifting each other and forming support networks, they cultivate skills and build confidence in their financial decision-making abilities.
There is potential to improve these informal models by incorporating technology and risk assessment strategies. We can make these networks more adaptable to new challenges while keeping their foundational values of collaboration and support by using modern tools like blockchain, actuarial pricing, and index insurance. This starts with recognizing group assistance leveraging social networks as powerful insurance-like mechanisms in their own right. Acknowledging their effectiveness and considering them as alternative insurance models can lead to user-centric methods that honor African communities’ traditions (tailored to women’s needs) while improving their ability to tackle modern challenges.
Secondly, initiatives aimed at integrating informal community practices with formal insurance structures, such as building insurance mutuals, can bridge gaps—making insurance not just accessible but also more relevant to women’s lives. Relevance is an excellent way to be impactful.
The challenges faced by women in accessing formal insurance are multi-faceted. Most of us (not only low-income people) find ourselves overwhelmed by the complexities of navigating insurance, a situation worsened by difficult-to-understand information and inadequate financial literacy. Distrust of insurance companies, compounded by immediate financial constraints, often steers women toward informal solutions, which they perceive as more flexible and socially connected. Furthermore, societal norms and cultural expectations often frame insurance purchases as a man’s responsibility, discouraging women from considering or seeking coverage. Tackling these barriers requires concerted efforts to promote financial education, gender equity, and societal acceptance of women’s financial agency.
Recognizing and improving the existing community risk-sharing mechanism into a community-driven and member-owned insurance mutual could be an impactful game changer; it reverses formal insurance models by rolling over any leftover funds for future use, ensuring fast claims processing and simple products. In this model, clients are also owners, incentivized to reduce risks collectively, paving the way for a more resilient future built on mutual support and shared responsibility. By embracing community-led risk-sharing initiatives, we can protect women’s financial well-being and strengthen our communities. When women succeed, families are better prepared for challenges, children receive better education and healthcare, and communities become more resilient to financial, climate, and health issues. All of which fall under the impact so many development projects seek to achieve.
In this project, we are grappling with emerging questions such as: what is the role of men in promoting and facilitating this type of insurance for savings groups predominantly made up of women? How can this insurance be structured and protected from manipulation? How can the abilities of these groups to manage the insurance be strengthened? How can risks to the pooled fund be managed to prevent depletion?
As we work to make Amani’s umbrella central to financial inclusion approaches, my plea is to embrace the power of grassroots solutions. The community roots make them relevant—and allow us to ask if our work has correctly identified an approach’s relevance. The vibrancy of informal insurance practices exemplifies a shift in how we think of financial security. By championing these initiatives, we can redefine what insurance looks like, making it more accessible, relatable, relevant, and effective for women across diverse communities. More—dare I say it—impactful.
I am championing the inclusion of insurance mutuals in savings group methodologies. This would create a more inclusive future, starting with empowering women to grow and protect their money. This would ensure that asset protection is not a privilege for the few but a right for all.
