How the working poor can have access to insurance with only an SMS A case study of Dengue Fever Insurance in Indonesia
Why Dengue Fever insurance 410 people diagnosed with dengue fever everyday in Indonesia 4 person will die from dengue fever everyday The worst hit area is in West Jawa and Jakarta; 68 people everyday diagnosed with dengue fever
Medical Treatment 5-7days for treatment Cost of treatment around USD 300-400 (10% of salary) GDP: USD 3,900 Average savings: only 30% have savings plan (Citibank Financial Quotient Survey 2009) Poor are eligible for free medical treatment- but need proof for entitlement
Usual way of getting insurance.. Go to agent or insurance company Fill up proposal form Pay premium Wait for policy documents
Usual way to claim. After incident. Go to insurers office Fill up claim form Bring along documents Wait for verification Insurers send payment
How insurance products distributed in Indonesia. Intermediaries Concentration in bigger cities Not attractive to sell-premium/commission small Direct High acquisition cost Manpower E-commerce Limited internet access Poor and middle class computer usage
Conventional Product Health insurance Too complicated A lot of policy and claims administration Personal Accident Need a lot of administration Accessibility Complicated Selection against insurers
Solution on Product: Easy to understand (customer friendly) Affordable premium (USD 5 and USD 1) Simple to activate No complicated claims procedure Parametric claims condition Immediate obtain funds to pay for medical treatment
Solution on Distribution Channel Using existing network Penetration: 7 out of 10 people in Indonesia have hand phone 3 rd largest mobile phone market after China and India Piggy back on penetration of mobile phone services Low distribution cost Can be activated anywhere
Dengue Fever Insurance: How it works? Activation of Cover: Purchase card SMS to activate Receive confirmation from ACA via SMS Claims: Confirmation from doctor with blood test results Proof of Identity Money will be immediately wired to Insured
A sample of Dengue Fever Insurance card (voucher prepaid card)
Dengue Fever Insurance Booklet Front cover Back Cover
Dengue Fever Insurance Card back side Information on how to send SMS ACTIVATION and SMS CLAIM NO. PIN
SMS ACTIVATION for adult ACA(space)insured s ID number #insured s Name# #PIN Number#Address Send to 9779 (Telkomsel, Indosat, XL) or 0877 588 70000 (lainnya) Example: ACA 9540354057704003#Robert Rich#1234567890123456 #Happy Street No. 1, Jakarta
SMS ACTIVATION for child ACA(space)parent s ID number #child s Name# #PIN Number#Address Send to 9779 (Telkomsel, Indosat, XL) or 0877 588 70000 (lainnya) Voucher can be handed over to others as a gift for children, grand child, maid, driver, nany, nephew, employee, the orphanage, etc...
SMS REPLY - ACTIVATION Dear customer, your Dengue Fever Ins. - Robert Rich PIN 1234567890123456 - will valid from at 12.00 on15.mar.2011 up to 11.59 am 15.Mar.2011
SMS CLAIM 1. ACA (spasi) CLAIM#PIN No. #insured s name 2. Send to: 9779 (Telkomsel, Indosat, XL) 0877 588 70000 (lainnya) Example: ACA CLAIM#1234567890123456#robert rich You can use others mobile phone to send SMS CLAIM
SMS REPLY - CLAIM Dear customer, we have received the claim report of Robert Rich. Our claim officer will soon call you back (Hotline ACA 021 31999100).
Distribution channel Micro Finance (Vision Fund) Presentation to the wives of the fishermen (the working poor) who live at the slum area at Marunda, North Jakarta 20 January 2011
Distribution channel - Retail The Indonesian Post Office = 3.500 outlets in all provinces 3.000 vouchers sold in 3 months Socialization at Post Office Jl. Kesenian, Jakarta
Distribution channel - Retail Indomaret = The largest convenience store in Indonesia with 5.082 shops mostly in Java Island, Lampung and Medan in store method whereby the customer can buy Dengue Fever Insurance voucher at the cashier and activate the insurance by sending SMS
Next step... Other products Catastrophe cover Other channels Cross-selling Mobile internet Blackberry Social Media
Future Alternative Distribution Strategy Focus on 4 main areas: 1. SMS/Mobile activation distribution 2. Government initiated micro financing synergy 3. Sarana Tani 4. Private funded micro financing initiatives
SMS/Mobile Activation Similar to Dengue Fever Insurance Extend to other products Fire Insurance Accident and Hospitalization classes
Government initiated micro financing synergy Growth of micro-financing in Indonesia Government initiative with World Bank Provide micro insurance as a form of risk transfer mechanism Focus on Small and Medium Sized Industries Marketed through the support structure of the micro-financing model
Sarana Tani Credit given to farmers by Sarana Tani (Salim Group) For purchase of fertilizer and seeds Credit paid from harvest sold back to Sarana Tani Insurance to cover for credit default due to crop failure
Private funded micro financing initiatives Approached by investors from USA and Europe who are actively involved in micro financing Need micro insurance for risk transfer of insurable risk Looking for cost effective insurance activation and claims settlement Parametric insurance
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