Paper short abstract:

This paper explores the interaction of South Africa's microinsurance market institutions with informal risk management mechanisms and practices. These dynamics are analyzed through the figure of the broker who mediates between formal and informal spheres to sustain microinsurance operations.

Paper long abstract:

Over the past decade, microinsurance—formal insurance products designed specifically for low-income people—has taken off in South Africa. Of the nearly 62 million lives covered by microinsurance products in Africa, South Africa alone accounts for more than half. A closer look at these numbers reveals that the dominance of this market is fueled almost exclusively by the sale of funeral insurance, perhaps an unsurprising trend considering the immense cultural value many South Africans place on funerals. Moreover, insurance companies have achieved this impressive scale by working through intermediaries who are embedded within community-based institutions like burial societies and funeral parlors. The incursion of "insurance culture" into this sphere has thus resulted in an ecosystem in which formal and informal institutions are in fluid states of tension and cooperation. As this paper will demonstrate, intermediaries and mediators sustain this ecosystem by reconciling the different rationalities, institutions, bureaucracies etc. of the formal insurance system with those of the informal risk management sphere. They also help to produce and/or entrench existing power inequalities at different scales, complicating the notion that favorable risk outcomes are distributed equitably. Three types of brokers, who are respectively situated at different points along the formal-informal fault line, are considered in turn. An analysis attuned to the various social identities and positions embodied by these brokers helps to reveal the dislocations, ambiguities, and opportunities generated by the expansion of microinsurance markets into the low-income terrain.