Mobile innovations in insurance Presentation to African Insurance Distribution & Bancassurance Conference Cape Town, SA 12 to 14 May 2013

Transcription

1 Mobile innovations in insurance Presentation to African Insurance Distribution & Bancassurance Conference Cape Town, SA 12 to 14 May 2013

2 Outline Setting the Scene innovations story in Kenya & lessons In Banking In Mobile phones The Insurance story UAP experience and lessons The next frontier

3

4 Setting the scene: Learning from others The change in Kenya s Banking Landscape the coming of Equity The Mobile phone revolution in Kenya and Safaricom s role

5 Banking: State of the Industry Late nineties/early 2000 s Main banks started mass closure of branches Closed many accounts that couldn t reach minimum balances Total numbers of Kenyans with bank accounts plummet Less than 1m with Bank Accounts by 2001 In the 21 st Century A Bank Account became a status symbol

6 Banking: The Case of Equity Bank Meanwhile a small struggling building society shows up No minimum balances No ATMs welcome to the bank Its name Equity means equalizing people Starts opening branches where the main banks were closing them Today; less than 10 years later Over 7.5million accounts Asset base of ZAR 25 Billion Profits ZAR 2.4B It is the largest bank in Kenya

7 The Mobile phone experience: Safaricom In 2000 Kenya had only one Mobile phone company Government owned Less than 30,000 subscribers Expensive lines Kes 250,000 (R 25,000) That company was called Safaricom Only one fixed line operator Less than 500,000 subscribers most of them businesses And occasionally worked A phone line was a status symbol And a government tool of control

8 Then Liberalisation and Safaricom Kencel the 1 st private network chose to satisfy the corporate market first To the disappointment of many with pent up demand Government brought in a strategic investor into Safaricom Safaricom chose the Retail market an instant hit with the masses! Numbers grew quickly - beyond forecasts and reforecasts Today has 70% of all lines and over 90% of all billings And Mpesa which transfers more money in a day than Western Union in a year 21 m users A phone line is now a necessity Innovations: mobile money Mpesa (USD 3b in deposits); Mobile bank accounts M-Shwari (1 million accounts in less than 6 months); mobile apps in almost anything

9 The impact: Equity and Safaricom Over 40% of Kenyans own a bank account From less than 10% 10 years ago > 70% of adult population 31 million mobile phone lines i.e. 78% penetration < 500,000 lines 11 years ago Mobile money and related services transformed financial services The two, Equity and Safaricom have had the greatest impact on Kenya s renaissance in the 21 st century Supported by: Political & economic liberalisation And infrastructure development

10 Why this success? Understanding Kenya Kenya largely an informal economy Of total work force Only 11% in formal employment 2.5m 39% in informal businesses SME s 39% in agriculture and pastoralism The rest fully unemployed Barclays, Stanchart, Standard Bank and yes.. Kencel were targeting only 11% Equity, Safaricom chose 89% of the market And more focus on 78% Informal does not mean micro Kenya s market requires a different not an informal approach And the mobile phone is the greatest tool to reach them

11 About Insurance As the Banking and Mobile revolution was happening The insurance industry remained untouched Insurance not a status symbol During the same time some companies collapsed Total penetration remained around 2.5% Insured population grew from 5% to 7% Compared with 40% for banks Or over 78% for Mobile phones But an unnecessary evil Taking away policyholder money & confidence Then the industry started questioning itself

12 Industry efforts In 2007 industry association did a major customer research the uninsured market Key findings Customers don t understand insurance Products have no relevance remember the 11% focus Or are not accessible (especially in informal or rural areas) And please pay claims! A battle to respond started But there is no Equity or Safaricom. yet! At UAP we are trying and a few others are but its hard to change old habits quickly enough

13 At UAP Insurance: We decided The two flagship experiments The next experiment To simplify insurance Expand our market to the informal market With relevant products Serve the uninsured market Easily understood Simple to roll out & administer And relevant distribution mechanisms That reaches customers at their convenience Reduces cost of distribution While holding onto the formal market products Kilimo Salama SalamaSure AIfyaImara (Health Insurance Product)

14 The Common denominators The Mobile Phone Amazing reach 16.2 m internet users 1m broadband users 2m formal sector employees multiple access The rest on mobile Cheaper & cheaper smart phones Amazing tech innovations The social media revolution Redefining how we live and connect And solve our problems

15

16 Kilimo Salama: Weather Index Insurance for small scale farmers 2012 Winner: Financial Times/IFC Sustainable Finance Awards for Technology in Sustainable Finance

17 What is weather index based insurance? Weather station measures conditions No farm visits = low admin costs Relation rainfall & crop growth using agronomic models Covers defined shared weather risks (drought, excess rain, frost, weather related disease) If weather station shows loss, then all insured farmers are paid, irrespective of on-farm loss Farmers encouraged to take care of their farm Quick disbursement of payouts Example Agronomic model

18 How does Kilimo Salama work? (continued)

19 19 How does Kilimo Salama work? (continued)

20 Claims Settlement Process

21 Marketing & Communication Communication Channels Field days Farmer group trainings Radio show Telephone helpline Focus group discussions

22 Success Highlights: What has Kilimo Salama Achieved Insured 200 farmers in first pilot in farmers in 2010; 23,000 in ,000 farmers in 2012 Projected 80,000 in 2013 Modest premiums on first pilot Premiums of over Kes 70 million (R 7m) in 2011

23 Key Challenges The Products Mix: Insurance Infrastructure: Basis risk: Defined as when a famers suffers loss and the index does not show that there is a payout. Marketing and Distribution: Striking a balance between Indemnity based and Weather Index Products- Not all weather risks can be transferred through index based solutions e.g. Fire and Hail. Insufficient weather data, number of automatic weather stations, Quality historical weather data Due to many farmers involved scaling up is only viable if registration and payouts are paperless. Distribution through Agro-vet shops; Insurance is not their core product Insurance registration process must be fast and convenient Regulatory approvals for alternative distribution channels Greatest success has come from use of aggregators.

24 UAP Salamasure

25 What is Salamasure? Salamasure is a mobile phone driven Personal Accident Insurance Cover Provided by UAP Insurance Winner: 2012 African Distribution Innovator of the Year Award

26 Scope of Salamasure Cover Accidental death No Age limit Permanent disability as per the continental scale Cost of Artificial Limb Medical expenses arising from the accident Last Expense

27 Salamasure Cover Benefits Standard Loss of Life & Permanent Disability Kshs100,000; Funeral & Appliances Kshs10,000, Medical Kshs50,000 (Kshs. 200) Silver Loss of Life & Permanent Disability Kshs200,000; Funeral & Appliances Kshs10,000, Medical Kshs50,000 (Kshs. 250) Gold Loss of Life & Permanent Disability Kshs500,000; Funeral & Appliances Kshs10,000, Medical Kshs50,000 (Kshs. 400)

28 Unique features of Salamasure It s a mobile phone driven PA Product Flexible choice of benefits Claims notification and settlement through the mobile phone Convenient premium payment mode through the mobile phone There are no forms to fill when applying Clients are identified by their ID,PP,BC number, Cell phone number and a unique Policy number Flexible monthly premium payment period

29 Salamasure USSD code version Accessing Cover Cover Details Dial *827# from your Safaricom line View Cover Options Register & Purchase Policy Report a Claim View Account Confirmation of cover is via a text message Upon cover purchase the insured is requested to register a beneficiary Insured can change his/her cover options / beneficiaries via the phone

30 Salamasure Renewing Cover A renewal notice is sent to the insured via a text message The insured will either make a direct payment or change their cover option and make the new payment A text message with the cover extension confirmation will be sent to the insured

31 Salamasure Reporting a Claim 1. Select the option Report a claim 2. Enter ID Number & Date of Accident Dial *827# 3. Claim is validated, Claim number is generated & sent to the insured 4. A UAP representative will contact the insured

32 Salamasure User Experience Over 233,000 visitors hit the portal in 4 months. Enrolled customers over 23,000 Over 3,000 paid up 1,100 active month on month customers And this is only a pilot!

33 Salamasure UAP Pays the 1 st claimant (In hat)

34 Salamasure 1 st Claimant and his wife

35 SALAMASURE Activation Pictorials

36 Salamasure Market Activations

37 Salamasure Market activations

38 Salamasure Mall Activations

39 Salamasure Street Activations

40 UAP Credit Services Flexible payment options

41 Lessons from Salamasure USSD technology cumbersome Time limit Separate steps cost money Limited information space Response: Development of UAP Android Application Response: Enable group registrations through the internet under one sim card Extra mobile money payments step leads to dropped sales Response: Integration of the Application with a payment gateway (with M-Banking interface) to eliminate extra payment steps Response: Include Auto renewal payment on Mpesa platform Customer hesitation Response: Aggressive consumer Education program Response: Develop Loyalty program for customer retention Only one product on channel Response: Inclusion of additional products that are even more relevant to the consumer e.g. AfyaImara (health insurance product). Other products in the pipeline

42 The next frontier Inclusion of our Medical insurance products: AfyaImara AfyaImara AfyaImara Junior AfyaImara Seniors AfyaImara County

43 AfyaImara mobile app/online How it works Customers select their cover plan of choice either on the Android mobile app or on the UAP website They enter their details (Name, Age, Dependents, etc) Premium is calculated Payment is made

44 Member is on cover!!!

45 UAP App: More than a Distribution Channel

46 Building the volumes Social media activations Retail outlet distribution - Partnership with Uchumi Supermarkets & National Oil Call / information centre support Marketing combine digital & normal Consumer education

47

48 About UAP

49 ABOUT UAP Over 80 years in the Kenyan market Currently in 5 countries: Geographic distribution continues to grow in line with vision to be a Pan-African financial services provider

50 About UAP Insurance Over 80 years in the Kenyan market Financial strength Top three in volumes Biggest balance sheet Consistently top in profitability Credit Rating AA- highest in EA Insurer of the Year Kenya 2012 African Distribution Innovator of the Year 2012 Winner IFC/FT Technology in Sustainable Finance 2012 FiRe Award winner 10 Consecutive Years

51 UAP Philosophy Our Vision Africa s Revolutionary financial services company Our Mission Enhance quality of life by delivering peace of mind and financial freedom through an exceptionally motivated team that delivers what customers want when and where they want it! Our Values We build lifelong relationships We do what we say, and say what we do We are a pleasure to deal with We are passionate about our work, and it shows!

52 Thank You

53 UAP, Bishops Garden Towers, Bishops Road, PO Box , Nairobi, Kenya. Tel , Fax ,