webinar slides on "managing partnerships in microinsurance

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WEBINAR ON

Managing PartnershipsIn Microinsurance

1 March 2012

Presenter:Kelly Rendek

Consultant

Presenter:Richard Leftley

CEO and PresidentMicroEnsure

Presenter:Jeremy Leach

Consultant

Moderator:Jasmin Suministrado

Knowledge OfficerMicroinsurance Innovation Facility

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Profile of participants

More than 350 registered participants

By Years in Microinsurance

By Region By Type of Organization

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WEBINAR ON


1 March 2012


Consultant




Consultant



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• Managing Partnerships Study: “good” partnerships have been identified as one of the key factors in the success of a microinsurance program:– What makes a “good” partnership? – How do we define success for a MI partnership? – What can we learn from the experiences of others to ensure

effective partnerships?• Study included analysis of 7 cases, covering a range of

countries, products and partnership structures:– South Africa: Old Mutual and Shoprite; Old Mutual Imbizo program– Philippines: Pioneer Life and Catholic Bishops Conference– Kenya: CIC and NHIF– India: ICICI Prudential and MRIL tea company– Peru: La Positiva and rural irrigation boards– Pakistan: AKAM and FMiA

+ Hollard Insurance, RBAP, MicroEnsure

Introduction

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The Partnership Lifecycle

Search

Termination

Design and Set Up

Assessment and Selection

Implementation

Maintenance

Evaluation

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• Identify a need or capacity gap within your own organisation for which you need a partner to have a successful MI program– For example:

• an insurer seeking an aggregator for distribution• an aggregator such as an MFI/mobile

operator/retailer seeking an insurer

• Identify potential partners to meet that need

SEARCH

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Another approach: • Identify needs of external organisations for which you can

provide a solution– For example, an organisation seeking growth opportunities for

which providing insurance might bring them more customers

• Evaluate what would be required from an insurer for a non-insurance entity to be interested in this opportunity– For example:

• Commissions or profit share or other financial compensation

• Risk mitigation for partner• Added value to existing business of partner• Meeting social or non-financial objectives of partner

SEARCH

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• Insurance addressing a need that an aggregator has.

This is where a partnership is most successful as both organizations have an alignment of interests.

• For example:

o The credit risk of a retailer / bank’s loan book affecting its credit rating, therefore requiring an insurer to take the risk off its balance sheet

o To incentivise spend / ARPU (average revenue per user) on its core product by for example linking insurance to use of airtime (M-insurance)

o Increased competition where insurance could allow an organization to differentiate itself

o Added brand benefits as insurance shows it ‘cares’ for its customers.

o To outsource the procurement / service requirements to an insurer such as on a disaster risk product

SEARCHExamples

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• Consider what problem the product will fix

for your partners and what will motivate them • Consider these companies in Ghana

SEARCHExamples

wanted to drive uptake of savings accounts and average balance

wanted to have clients “loyalty” from its subscribers measured by

increased ARPU and reduced churn

concerned about what will reduce its borrowers ability to repay loans;

death, funeral costs, market fires, emergency hospitalisation

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• Include objective criteria: – size, outreach, type of client base, systems capacity,

etc.

• Will the potential partner contribute sufficiently to growth of the program?

• Aligning interests and objectives is crucial

• Trust and commitment are the most important factors in maintaining a successful partnership

ASSESSMENT and SELECTION

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• Implementing health insurance in India– Complex partnership model

– Need to consider the economics across the value chain– McKinsey study showed that there were issues with how

health insurance was delivered in India– New model was designed focused on fixing service issues

for clients and ensuring all partners needs were addressed– This “new model” required critical mass of 50,000 people per

district– Partners chosen based on ability to deliver scale

ASSESSMENT and SELECTION Examples

Risk carrier

MFI

MicroEnsure Hospital network

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• Appendices include sample tools such as

assessment questionnaires, checklists,

partnership agreements and communication protocols• Checklists and other tools can be helpful at different

stages of the partnership, particularly at assessment and implementation stage, but also for evaluation

• Involving a third party to facilitate partner discussions can be more productive than self-assessment

ASSESSMENT and SELECTION

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• How does this partnership fit with our respective organisational

missions and long-term goals?• What is the purpose of the partnership? Do we have a common goal?• What is the current level of trust between our organisations? Is the level of

trust high enough to encourage risk-taking?• What are the risks to either organisation in this partnership?• Who provides leadership for the project? • How will the key roles or functions of the partnership be filled to ensure it is

successful? • Are there clear lines of accountability for the performance of the

partnership?• What is the financial participation/contribution of each partner? • What are the non-financial contributions of each partner? • Do all project members, including all levels of management, participate in

all critical decisions made in the partnership? • How will service to clients be maintained if the partnership is terminated?

Sample Assessment Questions

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Insurer Assessment Checklist—RBAP/MABS

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• Pre Contract Process – after deciding to work together

but prior to project implementation

• Provides foundation for formal or informal agreement, if decide to go ahead with partnership

• but partnership may not actually proceed past this stage

• Goal is is to have a collaborative dialogue with partner that develops trust, understanding and commitment

• Can use assessment questionnaire or checklist to guide discussions

• This stage may include an initial MoU or Non-disclosure agreement to capture the intended collaboration, which will be formalised in a contract at the end of the process

DESIGN and SET UP

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Design and Set Up

1. Decide partnership structure

2. Develop appropriate incentive structure for all partners

3. Create joint business case

Implementation

4. Clearly define roles and responsibilities

5. Finalise business plan

6. Agree on regular communications

7. Develop systems integration and reporting requirements

8. Formalise in final contract/legal document

IMPLEMENTATION

Need not be exhaustive,But should be REALISTIC

And done in COLLABORATION

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• Effective communication is a key factor

• Negotiating product features – Collaborative approach to product development, even

if insurance risk borne by only one party• Retaining commitment

– Recognise learning, even when financial progress is incremental

– Flexibility and collaboration is key to managing challenges

MAINTENANCE

FormalInformal

Top-down

Bottom-up

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• When to evaluate if change is required? – Agreed timeframes for review– Sudden external change (eg, regulatory)– Unilateral action from one partner– Experience significantly varies from business

plan/expectations

• Internal evaluation– Can use assessment questionnaire throughout

partnership cycle

• External evaluation– Have third party perform independent evaluation

EVALUATION

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• Cyclical process– easier at the beginning when everyone is excited about the

new venture– harder and more challenging later on, as issues arise and

need to be solved– for ongoing partnerships, it becomes a continuous cycle

• Trust and commitment develop through solving the various challenges together– a necessary part of the process for a sustainable partnership

Summary of the Lifecycle

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• Whilst it remains early days, the partnership faced many challenges:– Risk appetite differed between the organizations. As Hollard took

the insurance risk whilst MicroEnsure did the pricing, there was misalignment of risk. This is now being restructured.

– Lack of clarity around the role as it was the first of its kind for both organizations; it was Hollard’s first multi-national microinsurance partner.

– Distribution partnerships took much longer to take off than expected so less exciting for the owners of the P&L

– No or limited overlap in countries, so communication

was tricky

Case 1: Hollard - Microensure

2008: International partnership

re-insurer for MicroEnsure through a cell captive

arrangement

international microinsurance ‘underwriting manager’ across

health, weather index insurance, life and non-life products

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• Partnership has remained strong, despite challenges because of:– Long term view of the market where both parties are committed to

getting it right for their customers and have ‘patient capital’;– Strong focus on relationship management at multiple levels of the

organisation, including a well functioning JV Board.• Key is also buy in at operational level

– Joint decision making – Alignment of financial incentives– Common vision of the market

Case 2: Hollard - PEP

2006: Start of partnershipNow have sold 500,000 funeral

insurance productsrisk carrier for

funeral insurance product

large South African cash-based retailer focused on low-income market acting as distribution

channel

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• Clear understanding of the problem that the distribution partner has, and how insurance is going to help fix it

• Understanding of the value partners bring and how this is to be recognized and recompensed

• Complete alignment of vision and interest• No one single factor that leads to success, but need to avoid

many different possible pitfalls• Collaboration: each partner contributes strengths but also

compromises when necessary

KEY SUCCESS FACTORS

IT’S LIKE “MARRIAGE”!

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webinar slides on "managing partnerships in microinsurance

Economy & Finance