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Microinsurance for social inclusion: MAPFRE na Favela was born

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Interview with Fátima Lima, Sustainability Director of MAPFRE Brazil.

MAPFRE na Favela is a practical example of how sustainability is integrated into MAPFRE’s strategy and business model.

Fátima LimaMAPFRE na Favela is the embodiment of a purpose and objective of MAPFRE’s Sustainability Plan: promoting access to insurance for lower-income segments of the population. It is a business with a social impact that offers protection and care to people.

The MAPFRE na Favela project has just been launched, which is an initiative that uses microinsurance to improve social inclusion. What does microinsurance consist of? How can microinsurance contribute to sustainable development and improve the economy of vulnerable environments? 

Microinsurance is insurance targeted at the low-income population and tailored to their needs, both in terms of distribution and the coverage and services offered. They are characterized by offering limited but sufficient coverages aimed at protecting life, assets, and family and, in this way, promoting financial stability and economic inclusion of this segment of the population. The nature of microinsurance is to offer insurance that meets a social demand or need.

Companies are beginning to worry about having a positive social impact, and, in this scenario, microinsurance is the main product with this focus, which reinforces the social function of insurance.

The ability to access insurance products and services can make the difference between individuals or families achieving the goal of social mobility or remaining in conditions of economic vulnerability. This explains the importance of the social aspect in developing the microinsurance product, which can cover different areas: health, life, crop, climatic parameters, and automobiles.

One of the most important aspects of this project is that there has been preliminary work done in research and listening to the needs of the local population. Q. What were the main needs identified by the team? 

The big difference of MAPFRE na Favela has been to get in touch with the favela ecosystem to understand the local needs, and in this way learn and integrate these specific demands into its business model. Listening to the client is one of the main steps in the product development process and that is what we have done.

One of the first steps was to get a close look at the lives of people living in the favela to identify their basic needs, and then to develop insurance products that would have a perceived value to this significant part of the population.

In addition to generating a positive social impact, the objective was to promote access to insurance for an excluded population (one of the phrases we heard the most during the project construction process was: “Insurance is not for me”), rescuing the social function of insurance (protection and security).

The project focuses on favela entrepreneurs, who generally work informally and must solve very complex problems every day to bring home an income. So we decided to accept the Brazilian tax identification number to register the three products.

What is the expected impact of this project on the target population? How can this project help reduce social and gender inequalities?

We expect this project to have a major social impact. With MAPFRE na Favela, we are empowering people and bringing financial and insurance education to an important ecosystem in Brazil.

According to data from the 2022 Demographic Census, released by IBGE (Brazilian Institute of Geography and Statistics), Brazil has more than 13,000 favelas and urban communities where about 16 million people live, representing 8% of the Brazilian population. According to Data Favela 2023, Brazilians living in these communities generate about 200 billion reais per year and about 5.2 million entrepreneurs (small business owners) live in the mapped favelas.

Agreements have also been signed with G10 Favelas and Vivenda da Criança, which are local social organizations. What is this collaboration? What role will they play in implementing the project? 

G10 Favelas and Vivenda da Criança are NGOs that will work in promoting and raising awareness of insurance products for a self-contract model within the favelas.

G10 Favelas brings together leaders and entrepreneurs with a social impact in the favelas of Brazil, who transform the donations they receive into essential goods and actions to combat poverty, hunger, and inequality in the communities of Paraisópolis and Ciudad Ademar. And Vivenda da Criança is a nonprofit organization that works with the most disadvantaged in the Parelheiros region.

The idea is to leverage the experience and penetration of these institutions in their respective communities to facilitate access by MAPFRE na Favela among micro-entrepreneurs, who are the main clients of these products.

Based on the needs of the entrepreneurs of the favelas, three products have been developed to promote accessibility to insurance. What are the differences between them? 

Product design is the result of in-depth research and aims to help favela entrepreneurs and their business model.

MAPFRE Meu Bem Protegido offers protection and assistance for goods and products essential to entrepreneurship; MAPFRE Meu Trampooffers workplace protection, and MAPFRE Minha Vida Funeral insurance aimed at well-being.

Could this project be applied in other areas? What lessons could be useful in other contexts?  

Of course it can. MAPFRE na Favela’s products have been designed with the most vulnerable groups in society in mind, which seek protection for their assets but are not backed by any insurance company.

This is a project that is constantly evolving, in which we are identifying other groups with the same purpose, including our business partners: insurance brokers. We have already carried out an assessment to validate all the business model hypotheses to define a scale model and, consequently, the expansion of the project.

One of the key aspects when someone takes out an insurance policy is transparency: understanding what the service consists of and what the contract entails. What is MAPFRE doing to develop a simpler model that addresses the needs of its clients and takes into account the diversity of profiles (age, disability, education, resources, etc.)? 

This was one of the challenges we had to overcome. During the first quarter of 2024, the focus was on developing a simpler and easier contracting and sales model, using user-friendly technology to meet the demands identified in the first pilot.

To this end, the teams worked with the objective of providing the possibility of marketing these products in an agile and digital way. As this is a new form of contracting insurance products, this system had to be created from scratch to respond to the specific demands and characteristics of this target audience.

One of the first challenges was that for this population there is no separation between legal entities and individuals. So, to help small entrepreneurs, we decided to accept only the Brazilian tax identification document for registration in all products. Here the person is the company itself.

Finally, at a general level, how does MAPFRE integrate sustainability into the company’s culture and business strategy? 

MAPFRE na Favela is a practical example that shows how sustainability is integrated into our strategy and business model.

Sustainability is one of our four strategic pillars, which define and guide our operations in the market.

We are a company that is aware of global challenges, committed to people and the planet, and that works to leave a positive footprint on society.

MAPFRE na Favela has brought together a squad of more than 30 people from different areas, working together to achieve the common objective of delivering something that really made sense. with the hands-on experimentation of building out a project of this magnitude, these employees are the true ambassadors of sustainability and what it means to integrate ESG criteria into the business, contributing to disseminating the culture of sustainability in the company.