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The Mobile Insurance Win-Win-Win

Aissatou BarroRegional Francophone Director AfricaMicroEnsure

Nairobi, Kenya

The Mobile Insurance Win-Win-WinTELECOMSINSURANCE MARKETSMASS-MARKET CUSTOMERS

Todays Agenda

Introduction and Overview: Mobile Insurance in Africa MicroEnsure Experience Mobile Insurance Demand and Supply Mobile Insurance Case Studies Conclusion: Realizing the Potential of Microinsurance

Introduction and Overview:Mobile Insurance in Africa

Micro Insurance: Growth in Africa

Growth in Africa2010-2012: 200%

Outside SA: 17.2 Mlives covered

Coverage by Country

8 of 9 markets with >1m lives insured have done so with mobile micro insurance

Is low penetration a function of

low demand?

Source: www.mfw4a.org/insurance/microinsurance-landscaping.html

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Mobile Insurance: The Freemium Revolution

Mobile Insurance Freemium Model

Why are Telecoms Offering Free Insurance?

Mobile Insurance Market Presence

Why do Customers Love Mobile Insurance?

MicroEnsure Experience

MicroEnsure IntroductionMicroEnsure is the worlds first and largest company dedicated to serving the mass market with insurance.Fastest-growing insurance organisation in Africa: 11 million worldwide, 5.3 million in Africa 85% of our clients were never before insuredTrack record of innovation: Winner of three FT/IFC Sustainable Finance AwardsOne of Africas 20 Most Innovative Companies - 2012 Financial Technology Africa Magazine One of Five Development Innovations to Watch in 2013 US Council on Foreign RelationsNamed a GameChanger 500 Business 2014Shareholders: IFC, Omidyar Network, Telenor, Opportunity Bank, Sanlam, Axa

Concept DesignWhat risks do the poor face?How can they be protected from those risks in a sustainable way?What are the best delivery channels to serve the largest number of people?

Making it WorkDesigning suitable products/processesMaking the business case to distribution channels Reducing Operating Expense to make insurance affordable for the poorFull policy administrationTraining and client educationCustomer service & claims administration

As a microinsurance service provider, we do not fit within typical intermediary modelsConnecting Distributors and Underwriters

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MicroEnsure ServicesInsurance Project Management Business Case and Partnership StructureMicroinsurance Market ResearchValue Chain FacilitationInsurance Regulatory LiaisonLegal, Commercial and Service Level Agreement Content Product and Process Design Pricing and Actuarial AssessmentIn-Demand Product FeaturesAppropriate Benefit Levels, Terms and ConditionsBrand-Appropriate Marketing ContentRobust Training ContentOperational ExecutionFront-End Client Management PlatformCustomer CareClaims ManagementPolicy AdministrationMonitoring and Evaluation Key Performance Indicator (KPI) ManagementBusiness Growth and RetentionCustomer PerceptionFinancial Reporting and Premium ReconciliationClaims Status and Payment PerformanceRisk ManagementMicroEnsure does not bear the risk today, but we are considering underwriting in the future.

MicroEnsure builds products that a large aggregator promotes and then provides the information and services that enable a local underwriter to take the risk.

All our services are regulated via SLAs and policy wordings underwritten by local insurers; regulators see all our activities.

How Clients Contract MicroEnsure:

1. Technical service provider to telecom2. Administrator/BPO to insurer3. Consultant to insurer, telecom or broker4. Intermediary, broker or agent

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MicroEnsure FootprintMicro Health InsuranceTanzania: KNCU Primary Care CoverPhilippines: Triple 10Ghana: Credit Health for MFIsIndia: Rural, Cashless Inpatient Cover

Mobile Insurance: Life, Accident, HospitalZambia: AirtelBurkina Faso: AirtelGhana: Airtel, Tigo, MTNKenya: yuMobile, AirtelSenegal: TigoMalawi: TNMBangladesh: GrameenphoneMalaysia: DigiPakistan : Telenor

Agricultural Insurance for SmallholdersMalawi, Rwanda, Zambia, Ghana, Uganda, Kenya, Tanzania: Rainfall Index CoverCaribbean: Hurricane Index CoverPhilippines: Typhoon Index Cover

AMERICAS Caribbean AFRICA Zambia Malawi Rwanda Nigeria Ghana UgandaTanzania Kenya MozambiqueSenegal ASIA BangladeshPakistanIndia Philippines Malaysia

MicroEnsure Partners

MOBILEBANKINGINSURANCE

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How Does MicroEnsure Grow by 50,000/Day?Product Innovation for the Low-Income MarketWeather Index (2004)Enhanced Credit Cover (2008)Credit Health (2011)EduSave (2012)Decongestion (2013)Mobile Three for Free (2014)

Core Business Growth for Telecoms, Banks and Other DistributorsAchieve ARPU growth, churn reduction, liabilities and asset growth, etc

Fastest and Simplest Claims Process in the WorldPay claims in minutes in rural areas submitted on handwritten napkinsPaid 50,000 claims in past twelve months; 76% claims ratio in company history

Operations for Social and Customer ImpactNever exclude HIV, pre-existing conditions, or other common exclusions; we build products to pay out

Speed to MarketLargest group policy in African history (Zambia) 8 weeks start to finish

Systems Capability1.2 m new policies/hour, web-based, fully customizable for all classes of risk

12 Years Experience in the Low-Income Market200 products launched in 30 countries across Africa and Asia

Example: Paying Claims at SpeedLoss IncurredFirst Claim ReportClaim Documents ReceivedClaim PaidMicroEnsureTypical Claims Experience1-2 Days3-5 Days1-2 Hours10-15 Days40-45 Days72 HoursPolicy terms arent clear, report has to be made in person at insurer officeClaimants go through many rounds of document review with insurer; insurer keeps asking for additional documents Clock only starts when ALL documents received; claims processed through multiple departmentsCustomer knows exactly what cover she has, with no fine print, and claims are reported easily via phone A proactive customer service process and clear directions on document/s required allows for faster claims submissionMicroEnsure performs most claims analysis before final document receipt, earns payment authority from insurer50-70 Days from Loss to Payment4-7 Days from Loss to PaymentCommunity Impact Claimant Frustration

Mobile Insurance -Demand and Supply

Do Low-Income People Want Insurance?Low-Income Sector:Sell core household goods or toolsRemove children from schoolChange or add jobs, increasing riskMove from city back to villageTake on high-interest debt

Middle/Upper Income Sector:Use savings or liquidate investmentsRaise money from communityWork an extra (temporary) jobUse employer coverageTake on low-interest debt

The poor face more risk than any other population; they may not know about insurance, but they live with a persistency and variety of risks on a daily basis

The poor have many insurance policies today: assets, informal loans, various savings spots, community-based coping strategies

The job of micro insurers is to offer more efficient risk mitigation tools, which are simple, accessible, valuable and reliable

Assessing Demand for InsuranceBarriers to insurance uptake in Africa:

Our Value Proposition:

Mobile Insurance Demand: Anecdotes from the FieldA chief of a rural village hired a coach to bring his people to sign up for insuranceCustomer in Ghana: I was suffering but maybe God knew, and thats why God brought us this Tigo insuranceM-Insurance in multiple African countries has more than doubled the insured population in the country within 12 months, compared 40 years of typical insurance via 20 companiesTelecom: Insurance will be core for us, like ringtones.Microfinance Bank: Our customers use loans and savings to cope with risk; banking is really just expensive insurance.

Demand is not the problem

Supply-Side ConsiderationsCore Problem:

How do you offer insurance to people that face more risk andcant afford to pay the same premium?

Solution:

Reduce ComplexityReduce ExpensesReach Scale QuicklyThe cost of delivery and operations puts many micro insurance products outside mass market reach.

Supply-Side ConsiderationsRevenue per policy is lower, but microinsurance creates markets for current and future growth opportunities.Reducing OpEx:

PricingProduct DesignTrainingMarketingPolicy AdministrationLoss AdjustmentUnderwritingReinsurancePolicy ReportingClaims ProcessingNo Excess Costs

Supply A Problem of Perspective?Insurers are used to winning business with relationships; Telecoms are used to sophisticated business casesInsurers think in hundreds or thousands of customers; Telecoms think in hundreds of thousands of customersInsurers usually launch 2 or 3 new products per year; Telecoms usually launch 100+ new products per yearInsurers see the low-income market as difficult to serve; Telecoms see the low-income market as ideal to serveInsurers are worried about fraud and anti-selection; Telecoms are worried about talk radio and competition

Mobile Insurance Three Case Studies

Example 1 Tigo Ghana/Tanzania

Lives Assured Tigo Free, Paid, and Rest of Ghana94% of clients can explain the product42% of Ghanaian public aware of product60% eventually bought an upsell product

Example 2 Airtel Burkina/Ghana/NigeriaFree life, accident and hospital cash insurance if you top up $2/mo

Top up more, earn more insurance

Hospital cash covers inpatient care at any hospital for any reason: no exclusions

Launched January 2014, 3 countries so far

Dozens of claims paid, average 70 minutes

Claims ratios stable; fraud is kept low

Free Product Impact 2014 Data

Increased ARPU and decreased churn leads to an excellent return for the MNOWhile financial inclusion & insurance penetration skyrocket as claims are paid

Insurance Launched

Mobile Insurance Innovations in 2014

Largest group insurance policy in African history

Launched 11 February 2014, project started 9 Dec 2013; 8 weeks from pitch to launch

2.2 million insured on 1 March 2014

Mobile Insurance Innovations in 2014

Mobile Insurance Innovations in 2014

Fastest-growing opt-in insurance product in history

30,000 sign-ups per day

No Exclusions, No Age Requirements

Compare:

67 years of insurance in Pakistan = 7 million policies

7 Months of our product = 2,000,000 policies

Mobile Insurance Innovations in 2014

1 million subscribers purchased in 9 monthsDemonstrated demand for insuranceBut: product features were a problemComplicated purchase process, 12-page brochureSubscribers not aware of cover amountConstant 3111 messages led to critical Facebook group with 8,000 members6-month waiting period led to loss ratio of only 0.9% And partnership value wasnt shared equallyTrustco charged $1.11 per user per month for insurance product 25% of African telecom revenueTrustco & EcoNet went to court July 2011EcoLife canceled by EcoNet in February 2012

Example 3 Ecolife Zimbabwe

Conclusion:Realizing the Potential of MobileInsurance

How is the Chief Marketing Officers annual bonus determined?Step 1 Whats in it for the Telecom?Tip 1: This is not traditional affinity insurance - its placing insurance at the front of a product as a marketing tool.Tip 2: This is not a mobile money product at first.

Test operations for scale, or find scalable partners:Step 2 Dive into the DetailsCan we serve 5 million customers in each of these stages? If we cant, who can?Can technology help us to do any of these things faster and cheaper?

Step 3 Plan for Staged GrowthMaintain client value by connecting to business intelligence or analyst departments in telecom: conduct market research, analyze loss ratios, and make revisions where necessary

MicroEnsure Bridging the Gap

aissatou.barro@microensure.comRegional Francophone Director, Africa+254 788178906

@microensure