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Why most low-income workers remain uninsured

Dubai - Less than half of migrant workers surveyed view life insurance as an important investment

Mobile channels and remittance houses in the UAE have been identified by a study as optimal touch-points to reach a majority of low-income unbanked migrant population.
The study funded by the United Nations and commissioned by Democrance, finds that some 71 per cent of respondents prefer receiving insurance information through mobile channels, and well over a half would purchase insurance on their mobile phones.
"Respondents who send money home through remittance houses select providers based on pricing, accessibility and rewards, with insurance deemed an interesting incentive to use a particular remittance house brand," the study revealed.
Less than half of migrant workers who took part in a survey viewed life insurance as an important investment, yet 79 per cent remained uninsured for reasons including lack of knowledge, inaccessibility and pricing.
The study examined key concerns, remittance habits and attitudes to insurance among low-income migrant workers in the UAE in a bid to develop optimal solutions tailored to the needs of this population segment. Findings were based on focus groups and survey responses from 762 workers in the UAE - Indian (49 per cent) and Filipino (51 per cent) nationals - who earn a monthly income of up to Dh4,000 and remit money at least once every two months.
"Microinsurance is a vital tool to help lift entire populations out of poverty. Yet, barriers to access often seem insurmountable for low-income migrant workers, many of whom are the sole breadwinners of their households and would greatly benefit from products that can address very real existential fears," said Michele Grosso, co-founder and CEO at Democrance.
The study, entitled 'Lifestyle and Attitude of Workers within the Low-Income Group in the UAE', found that job loss, and with it the worry about being able to support families back home, was the most frequently cited concern among the study participants, with 35 per cent identifying it as their number one worry, followed by stagnant salaries (19 per cent) and health issues (13 per cent).
The second part of the Democrance study explored channels to make insurance more accessible, with a focus on two touchpoints that connect unbanked populations with commercial transactions - traditional remittance houses and mobile phones.
"Financial inclusion is not just about affordability, but also about having access to the lower-income market and understanding its needs. This is where a collaboration between insurers and remittance houses can achieve wider reach of the uninsured, while offering increased differentiating value for both industries as well as cost savings through optimised distribution," said Grosso.
Currently, in Abu Dhabi and Dubai, mandatory health insurance coverage is provided to workers by employers. While there are no current laws mandating employer sponsored health insurance in other emirates, regulators are considering the introduction of a mandatory employee health insurance scheme.
According to the GCC Insurance Report from Alpen Capital, the insurance sector in the UAE and Oman are expected to grow at the fastest annualised average pace of 12.1 per cent, followed by Saudi Arabia at 10.5 per cent.
The UAE will continue to be the largest insurance market in the region with a market size expanding to Dh66.4 billion by 2021, with Saudi Arabia coming in a close second at $16.4 billion.
Growth of premiums in UAE will be driven by large project developments ahead of Expo 2020, pricing revisions and new opportunities such as property insurance, according to Siraj Bhavnagarwalla, managing director of Alpen Capital (ME).
- issacjohn@khaleejtimes.com