a Profitable Product Design in Algeria,
Angola,Benin,Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d'Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea,Guinea-Bissau,Kenya, Lesotho, Liberia,Libya, Madagascar, Malawi, Mali, Mauritania,Mauritius,Morocco,Mozambique,Namibia, Niger, Nigeria, Rwanda, Sahrawi Arab Democratic Republic, São Tomé Principe, Senegal, Seychelles,Sierra Leone,Somalia,South Africa,South Sudan, Sudan, Swaziland, Tanzania, Togo,Tunisia, Uganda, Zambia, Zimbabwe
14 May 2013
Lloyd Campbell-Gibson
a Profitable Product Design in Diverse Continent
Profitable Product Development
a Analysing the landscape
What drives insurance demand
Designing for profitability
6
Agenda
Profitable Product Development
a 780mil people – more than half of working age
346mil earn USD1.25 to USD4 per day
60% in agricultural sector
270mil people are Muslim
475mil mobile phone subcribers
* Sub-Saharan Africa
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Analysing the landscape – a macro view*
Profitable Product Development
a USD 8.8bn in premiums*
More than half in Nigeria, Mauritius, Kenya, Angola and Namibia
2/3rds Non-life
So only USD 1.2bn in life premium written in 2011 in 42 other countries
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Analysing the landscape – a macro view
Growth opportunity or warning sign?
life USD
2.88 bn 33%
non-life USD
5.92 bn 67%
* 2011, excluding South Africa
Profitable Product Development
a
Burundi
Zimbabwe Cote d Ivoire
Ethiopia
Madagascar
Tanzania
Kenya
Ghana
Swaziland
Namibia
BotswanaMauritius
Cameroon
Nigeria
Congo
Angola
-5.0%
0.0%
5.0%
10.0%
15.0%
100 1000 10000
Real G
DP
gro
wth
, 2
00
0-1
1
Real GDP per capita, 2011 (logarithmic scale)
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Analysing the landscape – zooming in
*Source: Swiss Re Economic Research and Consulting
Profitable Product Development
a
13
Analysing the landscape – zooming in
Togo Cote d Ivoire
Ethiopia
Madagascar
Malawi
Tanzania
Kenya
ZambiaGhana
Botswana
Cameroon
Nigeria
CongoAngola
Gabon
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
100 1 000 10 000
SSA average
EM average
*Source: Swiss Re Economic Research and Consulting
life premiums as a % of GDP (2011)
Profitable Product Development
a
Economic growth and stability
Wealth and distribution of wealth
Culture and religion
Demography
Political stability and governance
Financial education and awareness
Tax and regulatory regime
Trust in the industry
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What drives insurance demand
TARGET TERRITORIES
DRC
Zambia
Angola
Profitable Product Development
a
3rd Biggest economy
Oil accounts for 80% of GDP, 1% of jobs
Poverty +unemployment high
95% non-life because infrastucture + compulsory insurance (eg 3rd party)
Number of new composite startups so expect penetration to improve
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Angola
Burundi
Zimbabwe Cote d Ivoire
Ethiopia
Madagascar
Tanzania
Kenya
Ghana
Swaziland
Namibia
BotswanaMauritius
Cameroon
Nigeria
Congo
Angola
-5.0%
0.0%
5.0%
10.0%
15.0%
100 1000 10000
Real G
DP
gro
wth
, 2
00
0-1
1
Real GDP per capita, 2011 (logarithmic scale)
Profitable Product Development
a Politically stable
More diversification of industry than Angola (Cocoa, mining)
Strong competition – 13 life companies. Real premium growth of 29%pa
Life/non-life close to 50/50.
Profitability poor because of high commission and high lapses
Big opportunities in Micro-insurance
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Ghana
16
Burundi
Zimbabwe Cote d Ivoire
Ethiopia
Madagascar
Tanzania
Kenya
Ghana
Swaziland
Namibia
BotswanaMauritius
Cameroon
Nigeria
Congo
Angola
-5.0%
0.0%
5.0%
10.0%
15.0%
100 1000 10000
Real G
DP
gro
wth
, 2
00
0-1
1
Real GDP per capita, 2011 (logarithmic scale)
Profitable Product Development
a Mature, developed but innovative financial markets (M-PESA)
Almost 50% of population have a bank account
More even distribution of wealth so low poverty levels
Long history of relatively stable economy (agriculture and tourism)
46 insurance companies!
35% life and 60% group risk
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Kenya
17
Burundi
Zimbabwe Cote d Ivoire
Ethiopia
Madagascar
Tanzania
Kenya
Ghana
Swaziland
Namibia
BotswanaMauritius
Cameroon
Nigeria
Congo
Angola
-5.0%
0.0%
5.0%
10.0%
15.0%
100 1000 10000
Real G
DP
gro
wth
, 2
00
0-1
1
Real GDP per capita, 2011 (logarithmic scale)
Profitable Product Development
a 2nd largest economy
7th largest population in the world
Uneven distribution of wealth, extreme poverty
Infrastructure poor
59 insurance companies
<40% life business but growing rapidly
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Nigeria
18
Burundi
Zimbabwe Cote d Ivoire
Ethiopia
Madagascar
Tanzania
Kenya
Ghana
Swaziland
Namibia
BotswanaMauritius
Cameroon
Nigeria
Congo
Angola
-5.0%
0.0%
5.0%
10.0%
15.0%
100 1000 10000
Real G
DP
gro
wth
, 2
00
0-1
1
Real GDP per capita, 2011 (logarithmic scale)
Profitable Product Development
a
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Summary
Angola Ghana Kenya Nigeria
Economic stability/growth
Average Good Good Average
Distribution of wealth
Poor Good Good Poor
Financial awareness
Poor Average Good Average
Profitable Product Development
a
Local knowledge or partner
Use existing research
Ask the people
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Designing for profitability – the insurance need
Medical indemnity
Hospital cash
Critical illness
Disability Death
Profitable Product Development
a
Key to success in a business where scale is important
Eliminate unnecessary hurdles to sales process
Find the "golden moment"
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Distribution S
ucce
ss r
ate
Distribution method
Embedded Compulsory Group Cold calling Advised
Profitable Product Development
a
Profit
Underwriting result
Premiums vs claims
Persistency
Expenses
Investment result
Asset allocation
Investment Return
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Profitability drivers
Profitable Product Development
a
Do your research (get into the detail)
Educate your target market
Stick to your strengths (but don’t be married to your structure)
Learn from mistakes in other territories
Pay valid claims
Review key profitability drivers regularly
26
Conclusion
Profitable Product Development
a Legal notice
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