WEBINAR ON

New Frontiers in Microinsurance Distribution

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Presenter:Brandon Mathews

Head of Emerging Consumer Zurich Financial Services

Presenter:Anja Smith

DirectorCenter for Financial Regulation and

Inclusion (CENFRI)

Presenter:Pranav Prashad

Microinsurance OfficerMicroinsurance Innovation Facility

Guest Presenter:Peter Gross General

ManagerMicroEnsure, Ghana

Moderator:Jasmin Suministrado

Knowledge OfficerMicroinsurance Innovation Facility

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Webinar Attendee Profile

More than 400 registered

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Distribution establishes the Client/Business relationship

Customer Distribution moment Customer

Insurer

Distribution moment is where customer

and insurer reach an understanding.

Claims moment fulfils that

understanding

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Done right, distribution improves economic value

Customer

The customer is confident that the risk has transferred.

Customer

InsurerDistribution moment.

Claim moment

The insurer is confident that it knows the risk that it has accepted.

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Both Customer and Insurer benefit from a “good” sale

Customer Clear Straight-Customer

Insurer

Clear plain

language

Attractive offering

Straight-forward

transaction

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Examples shown today improve the transaction

further

Customer Expand Customer

InsurerReduce

CostIncrease

Effectiveness

Expand Access & Outreach

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MI Network organizes work on adjacent key topics

Customer

ImpactFinancial Education

Consumer Protection

Health

Social Protection

Climate Change

Agriculture

Customer

InsurerDistribution of Insurance to Customers

Capacity Building

Data Analysis

Performance Indicators

Regulation

Technology

Actuarial

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More work is needed

If you have a GREAT IDEA, please contact the Microinsurance Innovation Facility.

If you work for a GREAT ORGANIZATION,If you work for a GREAT ORGANIZATION,contact Veronique at the Microinsurance Network.- Annual membership for your organization: €500- € 10,000 donation will provide annual seed

funding for a working group.

If you have a GREAT DESIRE and EXPERIENCE to contribute, please get involved with the Network Working Groups.

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Exploring new channels and moving beyond sales

Anja Smith

anja@cenfri.org+27 21 918 4390

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Why alternative distribution?

• Characteristics:

– Scale through concentration

– Presence of infrastructure footprint

– Transaction platform

– Standalone voluntary products

– Trusted brand– Trusted brand

• What it is not:

– MFI-based distribution with a specific focus on credit risks, bancassurance

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Case 1: Hollard/Pep (South Africa)

• Channel: cash-based low-income clothing retailer committed to ensuring value to clients

• Product: Individual & family funeral

• Off-the-shelf distribution

• Take-up: 215k policies (2009)• Take-up: 215k policies (2009)

• Servicing & claims: Premium collection & initial client info collection – Pep; full client registration, on-going service & claims management by TPA

• Key issue: Repeated product changes to make it work, ensuring value to clients top of mind

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Case 2: Hollard/Take-it-Eezi (South Africa)

• Channel: Third-party bill payment provider operating through network of informal vendors. Use GPSRS technology to facilitate sales of cellular airtime, electricity and insurance.

• Product: Individual and family • Product: Individual and family funeral insurance cover

• Take-up: Low levels of take-up with 1,800 in-force policies (2009)

• Servicing & claims: Vendor does client registration, premium collection. TPA does claims management,

• Key issue: Lack of trusted brand

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Case 3: Mapfre/Codensa(Colombia)

• Channel: Codensa - largest electricity company in Colombia, around 2m customers in Bogota

• Multiple distribution channels using Codensa’sbill payment system to collect premiums: out-bound call centre, face-to-face sales and mail shots

• Product: Life, PA, funeral, home and vehicle • Product: Life, PA, funeral, home and vehicle insurance

• Take-up: Significant take-up – at least 300k policies sold (2008)

• Servicing & claims: Product administration & servicing shared, Codensa call centre handles claims, Mapfre manages operational side of claims

• Key issue: Innovative use of client information, layered sales approach

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Case 4: Colseguros/Carrefour

(Colombia)

• Channel: International French supermarket chain, Carrefour

• Product:

– “ PA rounding off” – premium & cover based on small change at payment point

– More complex insurance sold by insurance desk in-store (PA, medical assistance, desk in-store (PA, medical assistance, household content, life cover in the form of monthly payments and life cover in the form of educational support to child dependants)

• Take-up: PA round-off - sold 2.9m policies in 2009

• Servicing & claims: Premium collection & registration– Carrefour; servicing & claims –Colseguros

• Key issue: Product developed to fit clients’ pockets

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Case 5: Mapfre/Casas Bahia (Brazil)

• Channel: Credit-based appliance and furniture retailer

• Product: Life, unemployment & PA insurance

– Additional policy benefits: lottery ticket, pharmaceutical discountsticket, pharmaceutical discounts

• Sold by in-store Casas Bahia agents/staff

• Take-up: Significant

• Servicing & claims: Joint policy servicing & administration by Casas Bahia & Mapfre

• Key issue: Premium payment, after-sales support through Casas Bahia agents (one point of interaction only)

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(Some) key issues

• Innovative use of client information

• Need for layered sales approach

• Model success (also by intermediary) requires significant investment:

– Funds (some cases)

– Time and patience– Time and patience

• Distribution innovation not sufficiently client-centric

– Partner commitment to value matters

– Distributors as “one-stop shops”?

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Enabling alternative distribution through

technologytechnology

Pranav Prashad

prashad@ilo.org

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How to enable insurance sales in a multiproduct environment?

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Rural Retail : providing outreach

Multiproduct purchases• Customer spends time in the outlets which can be utilised for insurance awareness and conversion

Present in villages catering to multiple customer needs• Need to train in-shop assistants for insurance• Haryali Kisan Bazar with ICICI PrudentialHDFC Ergo20

Multi-pronged delivery model

Technology enabled Distribution

2.Hand heldmachines 3.Mobile Phones

4.Smart Cards /Biometrics

Technology Innovations

Scratch Cards

Handhelds, Mobile phones

Smart cards, PoS

Low ticket premium collectionIdentificationPolicy confirmation

5.PoS system

1.Scratch cards

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1. Card based premium: Max Vijay

Characteristics:• Various denominations• Premium flexibility• Easy top ups

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1. Insurance sales at retailers: corner stores

Max Vijay…• Retailer involvement…great for outreach• Create traffic and awareness of availability• Reinforce by in-shop publicity• Explain insurance through posters• Minimise shopkeeper interaction

Lessons from Telecom/FMCG• Starter packs…co. call centre activates• Ideal for top ups…more than 1st time sales

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2. Hand Held Technology Platform

•Enhanced Reach and accessibility

•On the Spot policy and claims processing

•Storage of various programs on same devise

•Reduce fraud in the system

•MIS and Data Management

•Reduce Transaction time and timely disbursement of money

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2. Insurance sales stands inside retail outlets:

Bradesco

Certificate

•Instant issue upon sale

•Policy number printed…can be used •printed…can be used for claims

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ADMINISTRATION•On line enrolment• On line Authorisation• On line bills processing• Electronic transfer of Payment

CUSTOMER ENGAGEMENT• SMS sent when request received• SMS sent when authorization processed• Direct promotional messages on customers’ mobile phones• Policy updates and reminders

3. Mobile phone technology for enrolment and claims

of Paymentto Service Providers

• Policy updates and reminders

• Refreshers• Reminders• Updates• Product clarifications or modifications

Huge reduction in travelling costs and time for training

FIELD PERSONNEL ENGAGEMENT

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4. Smart Cards4. Smart Cards: “Suitcase based”

enrolment station: RSBY

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5. Technology based distribution: Rural POSs

• Instant delivery of policy certificate• Awareness creation• Trust factor…run by local population • Multiple services under one roof

ICICI LombardMax New York Life3i Infotec, Comat

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Reaching closer through direct contact: Farmers’ meetings and Van Campaigns

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MicroEnsure –Mobile Insurance

Mi-Life Insurance: distributed

by MTN Ghana

Life insurance sold via Mobile Money

Policy bought, managed, claimed on phone

Distributed by dedicated agents in MTN stores

Undercuts other life insurance prices by 50-90%

Mi-Life InsuranceDial Number or Select Option1. Manage my

Insurance2. Claims3. Customer

Support4. Authorised

Agent

GHC 1 = USD 0.70

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Life insurance sold to Tigo subscribers

Free to subscribers, cover based on airtime

Distributed by dedicated agents in Tigo stores

SMS sent to customer once per month

Tigo Family Care

Insurance: distributed by

Tigo Ghana

MicroEnsure –Mobile Insurance

GHC 1 = USD 0.70

Thank you for using Tigo! Based on your Tigo usage in December, your free life insurance is XXX cedis for January. Use more Tigo, get more insurance!

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Product & Process Features • Products drive core

goals of distribution partner, not insurer

• Policy covers 2 lives

• Platform taps into

Challenges • Technology – a blessing or a curse?

• Complexity of partnerships and economics

2011 Results • Products growing by

more than 4,500 new lives insured per day

•Will double the number of

MicroEnsure –Mobile Insurance

Product & Process Features

• Platform taps into basic customer behaviour issues, not only demand for insurance

• Client education essential in spite of potential for scale

Challenges

• Diminishing returns on a free product?

• Low loss ratios on embedded product

• Fraud likely to grow but will scale mitigate impact?

2011 Results

number of Ghanaians insured in 2011

•More than 90% of clients are new to insurance

• 2011 FT/IFC Award

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Wrap-up

• « Alternative Distribution » for the Insurance Industry isactually the primary place where customers shop.

• These channels will reach higher segments in addition to the « target segment» but remain vital to reach this segment.

• Developing the right propositions typically requires • Developing the right propositions typically requires reiteration… and partners committed to value will more often get it right.

• Focusing on this segment requires fundamental innovation to create better access and value.

• The segment also presents opportunity for new market entry and rapid growth along with international recognition.

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