“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– 3rd largest mobile phone market after China and IndiaPiggy 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
Dengue Fever Insurance Card – back sideInformation 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
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 forchildren, grand child, maid, driver, nany, nephew, employee, the orphanage, etc........
SMS ACTIVATION – for child
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 name2. 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 provinces3.000 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 inJava Island, Lampung and Medanin store method whereby the customercan buy Dengue Fever Insurance voucher at the cashier and activatethe 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 distribution2. Government initiated micro financing
synergy3. Sarana Tani4. 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