Microinsurance: Strategies for accelerating uptake. Lemmy Manje OESAI Conference August 27, 2018

Transcription

1 Microinsurance: Strategies for accelerating uptake Lemmy Manje OESAI Conference August 27, 2018

2 About FinProbity Solutions IDEAS TO ACTION

3 Navigation Business Case for Insurance Inclusivity State of Insurance Inclusivity in Africa Inclusive Insurance Business Strategies Lessons learned

4 The Business Case for Insurance Inclusivity

5 Insurance for development: Why invest in insurance market development? Growth Resilience Insurance has the potential to contribute to country s economic growth and resilience Source: Mia Thom, Cenfri

6 Risk management Micro, Meso and Marco risk mitigation Protect assets Develop credit market Pro-active risk management Efficient public finances Improved resilience Access to services Productive risk taking Intermediation Long term low risk instruments (guarantees or diversification) Premium collection Maturity, liquidity and volatility of capital Skills development for valuation & allocation Capital mobilization and pooling Investment Source: Cenfri, Chamberlain, Camargo and Coetzee, 2017

7 Microinsurance is not only about doing good. If done well, it is also good for the bottom line

8 Insurance Inclusivity in Africa State of the Market

9 Insurance for development: Why invest in insurance market development? Most of African countries are unprepared for risks; they are in the least prepared quintile Source: Risk and Opportunity: Managing risk for development (World Bank, 2014)

10 Africa and Insurance Insurance market development curve Stage 1: Nascent Stage 2: Corporate and compulsory Stage 3: Early retail Stage 4: Diversified retail 15% Life insurance penetration (Premium/GDP) 0% % of adult population covered by insurance Ethiopia 0.04% Rwanda 0.08% Uganda 0.10% Tanzania 0.11% Zambia 0.35% Kenya 1.06% South Africa 10.9% Zimbabwe 2.20% Mauritius 4.10% Very few African countries are in the diversified retail and competition phase GDP per capita Source: Adapted from Webb (USAID, 2006), Lester (2009), OECD (date unknown), ASEA (2014), FinScope type surveys (range) and Dickinson (2000)

11 Insurance penetration in Sub Sahara Africa by Country Majority of African Countries have around 1% insurance penetration Source: Statista Portal

12 Microinsurance Coverage Source:

13 Microinsurance Coverage in Africa Latin America 2017 Africa 2015 South Africa Ghana Zambia Uganda Kenya Tanzania Rwanda Population coverage of microinsurance 8.2% 5.4% 64% 29.6% 22% 6.7% 6% 3.9% 1.2%

14 Inclusive Insurance Business Strategies

15 Inclusive Insurance drivers for accelerating uptake Client value (Creating positive Customer experience) Innovation & Technology purpose and long-term thinking (BV&CV) Customer centricity effective & efficient distribution Simple, accessible & affordable products 03

16 Case study 1: Pioneer, Philippines Premiums (USD) Enrolments $ 18,5 million 18 million $ 10,9 million 7.8 million $ 4 million $ 257,300 $ 1 million 55, , , Source: Microinsurance Master Delivering 6700% growth in Microinsurance

17 Case 2: Funeral insurance Mapfre, Colombia Business case Source: Microinsurance Centre by Milliman Mapfre Colombia

18 Successful inclusive insurance schemes 18m Philippines 24m 14 countries +7m / year 56m 20 countries +18m in m 33 countries 20 companies (incl Bima) Sources: Pioneer - Bima - Microensure Leapfrog Courtesy of Miicroinsurance Master

19 Evidence from impact studies Lower out-of-pocket expenses 15 5 Less burdensome risk coping 12 Higher investments and production 10 Access to health service 7 Utilisation of health services 14 3 Improved health 10 4 Source: The Magical Balance, Mc Cord and Churchill, 2013

20 Microinsurance Performance:Combined Ratio Latin America 2014 & Africa % 180% 160% 140% 120% 100% 80% 60% 77% 66% 72% 61% 62% 74% 92% 51% 85% 40% 35% 20% 0% Africa / Latin America Credit life 13 / 15 Term life 31 / 36 PA 21 / 11 Health 4 / 33 Property 9 / 24 Adapted from: Microinsurance Landscape studies Africa 2015 and Latin America 2014, Microinsurance Network

21 What type of investors are required for inclusive insurance? Does inclusive insurance have a positive impact on clients? What type of CEOs and Insurance professionals can drive inclusive insurance?? Investors with long-term investment perspective Evidence affirms yes Innovators with customer centricity DNA

22 You have be passionate and crazy to drive microinsurance Lorenzo Chan, CEO Pioneer, Philipines DNA: passionate and insane

23 We focus on getting numbers that matter; it is easy to attract a million clients and lose them over night Mandla Shezi, CEO Hollard International, South Africa

24 To stay innovative and really challenge how insurance has been sold in the past, it s important to look at things with fresh eyes, and I think that s been one of our key success factors. Gustaf Agartson, CEO Bima

25 You ve got to start with the customer experience and work back to the product, not the other way around. Steve Jobs

26 5 Pillars of Customer Centricity Customer-centric leadership & culture Customer focused operations Empowering people with tools and insights Customer experience design and delivery Customer value leading to business value

27 Game Changer: Design Thinking and Customer Centricity Design Thinking Lean Startup Empathize with the people you are designing for Define insights and opportunities Ideate with ideageneration techniques Prototype the idea to make it tangible and allow user testing Market Fit Problem space Solution space Source: When to apply Lean Startup and/or Design Thinking, Board of Innovation, 2017

28 Successful Inclusive Insurance distribution partnerships for accelerating uptake Customer loyalty 1 Thoroughly assess potential channels Screening 2 Help solve your distributor s problems: go 3 for win-win-win Understand and manage partnership risk Profitability of core business 4 Agree on targets and standards 5 Align incentives Risk transfer Co-ownership 6 7 Design your process starting from the client s perspective Support your distribution channels Competitive advantage 8 Communicate and monitor performance regularly Adapted from: training Managing microinsurance distribution, ILO s Impact Insurance Faciltiy

29 The ideal inclusive insurance growth path Bundled/Mandatory 01 Compulsory or free insurance bundled with products like seeds, credit or a mobile plan Upselling & cross- selling 02 Additional covers to a captive audience Voluntary 03 Voluntary update of insurance Source: Microinsurnce Master

30 Key lessons and recommendations

31 Mobile is not the ultimate solution Boardroom products do fail Microinsurance is not only about small premiums and sum assured Primary motivation of distribution is not selling insurance Do not put your eggs in one basket Investing in the right organizational structure, culture and people is critical Even with mandatory or embedded models, consumer education is critical Persistence is required; you need a long-term perspective Regulations and sound business principles can help avoid product or business failure

32 Thank you Lemmy Manje