Microinsurance: Strategies for accelerating uptake Lemmy Manje OESAI Conference August 27, 2018
About FinProbity Solutions IDEAS TO ACTION
Navigation Business Case for Insurance Inclusivity State of Insurance Inclusivity in Africa Inclusive Insurance Business Strategies Lessons learned 01 02 03 04
The Business Case for Insurance Inclusivity
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
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
Microinsurance is not only about doing good. If done well, it is also good for the bottom line
Insurance Inclusivity in Africa State of the Market
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)
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)
Insurance penetration in Sub Sahara Africa by Country - 2017 Majority of African Countries have around 1% insurance penetration Source: Statista Portal
Microinsurance Coverage Source: http://worldmapofmicroinsurance.org/
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%
Inclusive Insurance Business Strategies
Inclusive Insurance drivers for accelerating uptake 05 06 01 Client value (Creating positive Customer experience) Innovation & Technology purpose and long-term thinking (BV&CV) Customer centricity 02 04 effective & efficient distribution Simple, accessible & affordable products 03
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 55,000 266,000 773,000 2009 2010 2011 2012 2013 2014 2015 2016 Source: Microinsurance Master Delivering 6700% growth in Microinsurance
Case 2: Funeral insurance Mapfre, Colombia Business case Source: Microinsurance Centre by Milliman Mapfre Colombia
Successful inclusive insurance schemes 18m Philippines 24m 14 countries +7m / year 56m 20 countries +18m in 2017 117m 33 countries 20 companies (incl Bima) Sources: Pioneer - Bima - Microensure Leapfrog Courtesy of Miicroinsurance Master
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
Microinsurance Performance:Combined Ratio Latin America 2014 & Africa 2015 200% 180% 160% 140% 120% 100% 80% 60% 77% 66% 72% 61% 62% 74% 92% 51% 85% 40% 35% 20% 0% 2014 2015 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
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
You have be passionate and crazy to drive microinsurance Lorenzo Chan, CEO Pioneer, Philipines DNA: passionate and insane
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
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
You ve got to start with the customer experience and work back to the product, not the other way around. Steve Jobs
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
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
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
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
Key lessons and recommendations
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
Thank you Lemmy Manje lemmy@finprobitysolutions.com