The Mobile Insurance Win-Win-Win
Aissatou BarroRegional Francophone Director AfricaMicroEnsure
The Mobile Insurance Win-Win-WinTELECOMSINSURANCE MARKETSMASS-MARKET CUSTOMERS
Introduction and Overview: Mobile Insurance in Africa MicroEnsure Experience Mobile Insurance Demand and Supply Mobile Insurance Case Studies Conclusion: Realizing the Potential of Microinsurance
Introduction and Overview:Mobile Insurance in Africa
Micro Insurance: Growth in Africa
Growth in Africa2010-2012: 200%
Outside SA: 17.2 Mlives covered
Coverage by Country
8 of 9 markets with >1m lives insured have done so with mobile micro insurance
Is low penetration a function of
Mobile Insurance: The Freemium Revolution
Mobile Insurance Freemium Model
Why are Telecoms Offering Free Insurance?
Mobile Insurance Market Presence
Why do Customers Love Mobile Insurance?
MicroEnsure IntroductionMicroEnsure is the worlds first and largest company dedicated to serving the mass market with insurance.Fastest-growing insurance organisation in Africa: 11 million worldwide, 5.3 million in Africa 85% of our clients were never before insuredTrack record of innovation: Winner of three FT/IFC Sustainable Finance AwardsOne of Africas 20 Most Innovative Companies - 2012 Financial Technology Africa Magazine One of Five Development Innovations to Watch in 2013 US Council on Foreign RelationsNamed a GameChanger 500 Business 2014Shareholders: IFC, Omidyar Network, Telenor, Opportunity Bank, Sanlam, Axa
Concept DesignWhat risks do the poor face?How can they be protected from those risks in a sustainable way?What are the best delivery channels to serve the largest number of people?
Making it WorkDesigning suitable products/processesMaking the business case to distribution channels Reducing Operating Expense to make insurance affordable for the poorFull policy administrationTraining and client educationCustomer service & claims administration
As a microinsurance service provider, we do not fit within typical intermediary modelsConnecting Distributors and Underwriters
MicroEnsure ServicesInsurance Project Management Business Case and Partnership StructureMicroinsurance Market ResearchValue Chain FacilitationInsurance Regulatory LiaisonLegal, Commercial and Service Level Agreement Content Product and Process Design Pricing and Actuarial AssessmentIn-Demand Product FeaturesAppropriate Benefit Levels, Terms and ConditionsBrand-Appropriate Marketing ContentRobust Training ContentOperational ExecutionFront-End Client Management PlatformCustomer CareClaims ManagementPolicy AdministrationMonitoring and Evaluation Key Performance Indicator (KPI) ManagementBusiness Growth and RetentionCustomer PerceptionFinancial Reporting and Premium ReconciliationClaims Status and Payment PerformanceRisk ManagementMicroEnsure does not bear the risk today, but we are considering underwriting in the future.
MicroEnsure builds products that a large aggregator promotes and then provides the information and services that enable a local underwriter to take the risk.
All our services are regulated via SLAs and policy wordings underwritten by local insurers; regulators see all our activities.
How Clients Contract MicroEnsure:
1. Technical service provider to telecom2. Administrator/BPO to insurer3. Consultant to insurer, telecom or broker4. Intermediary, broker or agent
MicroEnsure FootprintMicro Health InsuranceTanzania: KNCU Primary Care CoverPhilippines: Triple 10Ghana: Credit Health for MFIsIndia: Rural, Cashless Inpatient Cover
Mobile Insurance: Life, Accident, HospitalZambia: AirtelBurkina Faso: AirtelGhana: Airtel, Tigo, MTNKenya: yuMobile, AirtelSenegal: TigoMalawi: TNMBangladesh: GrameenphoneMalaysia: DigiPakistan : Telenor
Agricultural Insurance for SmallholdersMalawi, Rwanda, Zambia, Ghana, Uganda, Kenya, Tanzania: Rainfall Index CoverCaribbean: Hurricane Index CoverPhilippines: Typhoon Index Cover
AMERICAS Caribbean AFRICA Zambia Malawi Rwanda Nigeria Ghana UgandaTanzania Kenya MozambiqueSenegal ASIA BangladeshPakistanIndia Philippines Malaysia
How Does MicroEnsure Grow by 50,000/Day?Product Innovation for the Low-Income MarketWeather Index (2004)Enhanced Credit Cover (2008)Credit Health (2011)EduSave (2012)Decongestion (2013)Mobile Three for Free (2014)
Core Business Growth for Telecoms, Banks and Other DistributorsAchieve ARPU growth, churn reduction, liabilities and asset growth, etc
Fastest and Simplest Claims Process in the WorldPay claims in minutes in rural areas submitted on handwritten napkinsPaid 50,000 claims in past twelve months; 76% claims ratio in company history
Operations for Social and Customer ImpactNever exclude HIV, pre-existing conditions, or other common exclusions; we build products to pay out
Speed to MarketLargest group policy in African history (Zambia) 8 weeks start to finish
Systems Capability1.2 m new policies/hour, web-based, fully customizable for all classes of risk
12 Years Experience in the Low-Income Market200 products launched in 30 countries across Africa and Asia
Example: Paying Claims at SpeedLoss IncurredFirst Claim ReportClaim Documents ReceivedClaim PaidMicroEnsureTypical Claims Experience1-2 Days3-5 Days1-2 Hours10-15 Days40-45 Days72 HoursPolicy terms arent clear, report has to be made in person at insurer officeClaimants go through many rounds of document review with insurer; insurer keeps asking for additional documents Clock only starts when ALL documents received; claims processed through multiple departmentsCustomer knows exactly what cover she has, with no fine print, and claims are reported easily via phone A proactive customer service process and clear directions on document/s required allows for faster claims submissionMicroEnsure performs most claims analysis before final document receipt, earns payment authority from insurer50-70 Days from Loss to Payment4-7 Days from Loss to PaymentCommunity Impact Claimant Frustration
Mobile Insurance -Demand and Supply
Do Low-Income People Want Insurance?Low-Income Sector:Sell core household goods or toolsRemove children from schoolChange or add jobs, increasing riskMove from city back to villageTake on high-interest debt
Middle/Upper Income Sector:Use savings or liquidate investmentsRaise money from communityWork an extra (temporary) jobUse employer coverageTake on low-interest debt
The poor face more risk than any other population; they may not know about insurance, but they live with a persistency and variety of risks on a daily basis
The poor have many insurance policies today: assets, informal loans, various savings spots, community-based coping strategies
The job of micro insurers is to offer more efficient risk mitigation tools, which are simple, accessible, valuable and reliable
Assessing Demand for InsuranceBarriers to insurance uptake in Africa:
Our Value Proposition:
Mobile Insurance Demand: Anecdotes from the FieldA chief of a rural village hired a coach to bring his people to sign up for insuranceCustomer in Ghana: I was suffering but maybe God knew, and thats why God brought us this Tigo insuranceM-Insurance in multiple African countries has more than doubled the insured population in the country within 12 months, compared 40 years of typical insurance via 20 companiesTelecom: Insurance will be core for us, like ringtones.Microfinance Bank: Our customers use loans and savings to cope with risk; banking is really just expensive insurance.
Demand is not the problem
Supply-Side ConsiderationsCore Problem:
How do you offer insurance to people that face more risk andcant afford to pay the same premium?
Reduce ComplexityReduce ExpensesReach Scale QuicklyThe cost of delivery and operations puts many micro insurance products outside mass market reach.
Supply-Side ConsiderationsRevenue per policy is lower, but microinsurance creates markets for current and future growth opportunities.Reducing OpEx:
PricingProduct DesignTrainingMarketingPolicy AdministrationLoss AdjustmentUnderwritingReinsurancePolicy ReportingClaims ProcessingNo Excess Costs
Supply A Problem of Perspective?Insurers are used to winning business with relationships; Telecoms are used to sophisticated business casesInsurers think in hundreds or thousands of customers; Telecoms think in hundreds of thousands of customersInsurers usually launch 2 or 3 new products per year; Telecoms usually launch 100+ new products per yearInsurers see the low-income market as difficult to serve; Telecoms see the low-income market as ideal to serveInsurers are worried about fraud and anti-selection; Telecoms are worried about talk radio and competition
Mobile Insurance Three Case Studies
Example 1 Tigo Ghana/Tanzania
Lives Assured Tigo Free, Paid, and Rest of Ghana94% of clients can explain the product42% of Ghanaian public aware of product60% eventually bought an upsell product
Example 2 Airtel Burkina/Ghana/NigeriaFree life, accident and hospital cash insurance if you top up $2/mo
Top up more, earn more insurance
Hospital cash covers inpatient care at any hospital for any reason: no exclusions
Launched January 2014, 3 countries so far
Dozens of claims paid, average 70 minutes
Claims ratios stable; fraud is kept