“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

A sample of Dengue Fever Insurance card (voucher prepaid card)

Dengue Fever Insurance Booklet

Front cover Back Cover

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

Thank you