TECHNOLOGY AND
INNOVATION AT THE
SERVICE OF LIFE
INSURANCE
CUSTOMERS
African Insurance Organization
2013 Life Seminar
Outline of the presentation
2
Development of life Insurance in Africa
• Inventory
• Synoptic view of the development indicators of the sector
• The density of Life Insurance
• Average premium per inhabitant
• Obstacles to development
• What to do to attract populations?
• Innovation
• Technology
Innovation at the service of Life insurance
• Products innovation
• Distribution channels innovation:
• Characteristics of an emerging distribution channel
• Some emerging channels with high potential
Outline of the presentation
3
Technology at the service of Life insurance
• Why technology?
• The rise of technology in Africa
• Break down barriers and transcend remoteness
• Bring added value to the customer
• Technological solutions to improve the "Customer" service and therefore boost growth
• Internet
• Wireless telephony (Mobile Insurance)
Outline of the presentation
4
Focus on Mobile Insurance: a growth with high
potential
• Overview on Mobile Insurance
• The advantages and potential of Mobile Insurances atouts et potentialités du
Mobile Insurance
• Possible implementation schemes of Mobile Insurance
• Vulnerableness and weaknesses of the system
• Role of supervisory authorities: government support
Conclusion
Development of Life insurance in Africa:
Inventory
5

Synoptic view of development indicators of life insurance in Africa (2012)
Prim e s vie e n
m illions de USD
Pé né tration
Prim e /Ha e n USD
Bé nin
21
0,27%
2,22
Burk ina
28
0,26%
1,61
Cam e roun
80
0,29%
3,91
8
0,06%
2,01
187
0,74%
9,07
Gabon
31
0,18%
19,41
M ali
11
0,10%
0,64
7
0,11%
0,45
43
0,30%
3,26
1
0,01%
0,11
31
0,78%
4,94
449
0,30%
3,25
44 787
11,60%
882
Nam ibie
674
5,50%
337
Ile M aurice
442
4,00%
285
M aroc
930
1,00%
29
Ke nya
436
1,00%
10
Egypte
785
0,30%
9
Nige ria
404
0,20%
3
46 298
2,50%
47
4 764
0,33%
5,01
Pays
Congo
Côte d'Ivoire
Nige r
Sé né gal
Tchad
Togo
Total CIM A
Afrique du Sud
Total Afrique
Total Afrique Hors Afrique du Sud
Development of Life insurance in Africa:
Inventory
6
Life insurance density very low figures for almost all countries
• The insurance density measures the average premium per capita in a given
population or in a specific geographical area
• Generally according to the table shown in the previous slide, the density of
life insurance in Africa (excluding South Africa) is very low :
• only 5 USD / ha on average (excluding South Africa)
• world average of 373 USD per capita
• Unbalanced situation relative to each country
• less than half a dollar per capita for selected countries in the CIMA
• Asia average : 230 USD/ha
• Latin America average: 120 USD/ha
Development of Life insurance in Africa:
Inventory
7
Penetration of life insurance
• The penetration of life insurance is the share of life insurance premiums in
GDP for each country.
• Like life insurance density, we note that the penetration of life insurance in
Africa (excluding South Africa) is very low amounting to 0.33% against the
world average of 6 60%
• This incorporated rate of penetration hides considerable heterogeneity
among African countries.
• Indeed, five African countries have a penetration rate which is
greater than or equal to 1%.
• Almost all countries of the CIMA have a penetration rate below the
average in Africa (excluding South Africa).
• Egypt although being the third largest on the continent after South Africa
still has a penetration rate below the average in Africa (excluding South
Africa)
Development of Life insurance in Africa:
Inventory
8
What are the lessons learned from these statistics?
• Important challenges to facilitate access of African populations to a
minimum level of social protection
• Our strategy, generally based on the population having a bank
account, is ineffective
• Much of the population have no life insurance contract or distrust it
• However, the potential growth of life insurance in Africa is enormous.
• So what are the obstacles to the development of the sector?
Development of Life insurance in Africa:
Inventory
9
So what are the obstacles to the development of the sector?
• unsuitable products
• Inadequate distribution channels compared to the large target
• Campaigns poorly targeted and expensive
• Premiums too expensive
• Rigid premiums collection system or inadequate
• Lack of interactive contacts with policyholders
• Possibility to extend erformances settlement deadlines, creating
snags in the accounts of the Insurer
• Malfunctioning after sales services
• Religious and cultural barriers
Development of Life insurance in Africa:
Inventory
10
What should be done to attract people?
Two main ideas to use in the context of
this presentation
• Innovate
• Integrating innovation with the strategic vision
(Where are we going? Towards what target?)
• Integrating innovation operational strategy
• Leveraging technological advances
• Internet
• Wireless Telephony
Innovation at the service of Life insurance
11
Innovation in Products
• Flexibility and simplicity
• Customer need-oriented products with high added value for the
customer
• Affordable premiums adjusted to income volatility of major part of
the population
• Simple compensation processes and devoid of dilatory requirements
• Exclusion clauses without administrative nuisance
exclusions unrelated to the situation of the policyholder)
(excessive
• Avoid complex, undecipherable policy languages which are finally
injurious to the good comprehension of contracts by the majority
Innovation at the service of Life insurance
12
Distribution channels
distribution channel
innovation
:
Characteristics
of
an
emerging
• He is in touch with a great number of customers, especially poor
• He has a kind of interaction with his customers in the framework of his real
activity
• A pre-existing financial or contractual relation makes easier the
processing of data
• He has a trust relation with his customers (fame and quality of the service in
his traditional business field
• Life insurance contributes to the growth of his main business and to keep his
clientele
• He can show profits by giving out life insurance
• He has back-office services capable to inform and even to follow up claims to
the Insurer
Innovation at the service of Life
insurance
13
Distribution
channels
emerging channels
Innovation
:
• Wireless telephony networks
• Cooperatives
• Water or power distribution national companies
• The Post Office
• Food distribution channels
• Central purchase
purchase bodies….
departments
or
farming
products
Technology at the service of life insurance:
why?
14
Rise of technology in Africa
• In all African countries, access to information technologies rises at
a very high speed.
• Subscriptions to wireless telephony in Africa have risen in an
impressive way.
• The fall of internet connections prices and the rising availability of
3G networks or more, should considerably improve access to the
internet in the years to come.
• Considered as such, technology is more and more considered as an
effective means to push away the obstacles to the development of
life insurance and prompt the growth of this sector
• How can technology contribute to this development ?
Technology at the service of life insurance: why?
15
Blow up barriers
• Transcend distances
• Reduce administrative costs
• Improve the effectiveness of back-office services
Technology at the service of life insurance: why?
16
Transcend distances
• Characteristics of potential customers capable to assure the emergence
of the sector
•
Customers spread all over the territory
• Difficult to reach due to the insufficiency of physical communication
means
• No valid geographical addresses
• Postal addresses not operational
• Generally, 90% of them don’t have a bank account
• They live in non-urban areas or
• Work in informal sector
Technology at the service of life insurance: why?
17
Transcenr distances
• Unefficiency
of
distribution
communication means of insurers
structures
and
• Current distribution structures oriented towards
customers having a bank account
• Structures with limited logistic and operational
effectiveness
• Insufficient territorial meshing
• Communication Actions not reaching the targeted
population
Technology at the service of life insurance: why?
18
transcend distances
• Technological solutions transcend distances :
• Brings the insurer closer to his clientele thanks to the
modern communication means (mobile telephony, internet,
…)
• Shortens deadlines of statements and compensation for
damages thanks to the use of adapted technological
supports (call centres, sms, e-mails, electronic wallet, USSD
Code…)
• Possibility to create targeted and regular communication
actions with the electronic contact with customers
Technology at the service of life insurance: why?
19
Reduce administrative costs
•
The traditional management of an insurance portfolio includes :
•Long and expensive process of verification of compensation
requests,
•A management of complex data including the comparison of
several
files
from
miscellaneous
sources
(manual,
intermediary, bank…)
•And a system of management of subscriptions (payment/redeposit) not always effective
•
This practice includes important operational costs as well as time
and staff
Technology at the service of life insurance: why?
20
Reduce administrative costs
• When this classical model of insurance is reproduced at a micro level, keep a
good relation Operating expenses/received premiums becomes difficult
because of the reduction ration of tasks.
• when 40% up to 50% of the premium of a micro insured is swallowed up in
the administrative and aquisition charges, the capacity of the Insurer to pay
quickly for damages reduces significantly.
• The added value of such a contract for the customer declines inevitably.
• Technological solutions and the automation of the subsequent tasks allow :
• The reduction of administrative tasks,
• To shorten the deadlines of reaction of the Insurer
• Contribute to the mastery of operating costs.
Technology at the service of life
insurance: why?
21
• Limitation of breaks in the channel of
claims handling
• Set up of relevant performance indicators
for each collaborator
Improve
the
effectiveness of backoffice services
• Give objectives to the collaborators on a
quantifiable and measurable level of service
• Contribute to « customers »satisfaction
• Increase the rate of maintaining of a regular
clientele
post repurchase or post
preformance
Technology at the service of life
insurance: why?
22
• Quick updating of contracts in case of
request from policyholder
Improve
the
effectiveness of backoffice services
• Relation almost premanent with the person
insured or the policyholder
• Easy implementation of programs for
developing consumer loyalty allowing to
fight against the loss of consumers
Technology at the service of life insurance: why?
23
Bring an added value to the consumer
• Permanent contact with Insurer allowing to reassure some
customers about the availability of their savings or about the
reality of the underwriting
• Access to insurance services for poor populations having no social
protection
• Decrease of premiums or management loading created by
economies of scale of the insurer in the framework of acquisition
and management of contracts
• Gain of time for the payment of premiums in the framwork of
certain solutions of mobile money
• Instant confirmation of transactions
• Quick payment of claims
Technological solutions capable to improve
“customers” service therefore to boost growth
24
Internet
Mobile telephony
Internet at the service of Life insurance
25
Internet :
Obtaining
estimates or
quotations on line
Internet :
declaration of
claims on line
• Subscription
via
brokerage specialised
websites
or
concerned
companies
• Access to brokerage
specialised websites
or
life
insurance
companies
• Declaration on line
• Online payment via
bank cards numbers
• Comply
with
a
quotation procedure,
obtain an estimate
as
well
as
the
conditions
of
subscription
Internet : Online
subscription
• Not much devloped
in Africa
• Reserved to
customers
skilled
• Transmission
of
claims documents on
line
• Electronic
management
claims files
of
Internet at the service of Life insurance
26
Internet :
Communication tools
for the Insurer
• Communicate
about
the
competitive
advantages
of
products
on
“mass
audience”websites (information website,
tourism website, search engine,…)
• Exchange with the potential policyholder on
great exchange and share websites
(Facebook, Youtube,…)
Mobile telephony at the service of life insurance
27
Focus on insurance through mobile telephony
or Mobile Insurance (MI)
• Overview on MFS (Mobile Financial Services)
• Advantages of Mobile Insurance
• Possible schemes of Mobile Insurance implementation
• Vulnérability and weaknesses of Mobile Insurance
• Role of regulation authorities to frame Mobile Insurance
overview on MFS(Mobile Financial Services):
Africa invents financial services via mobile telephony
28
Mobile networks in Africa: Explosion
• 2nd world market after ASIA with almost 700 million users
• 1st world market in annual growth (+20% per annum)
• Relating to the forecasts handled by the operators, the rate of equipment
might reach almost 100% by 2020
• Africa is from now on considered as the emerging continent in the sector of
telephony
• Any digital strategy in Africa oriented to the general public shall grant a great
importance to mobile telephony
• Benefiting from these successes, the operators of mobile telephony set
up several services operating on mobiles phones
overview on MFS(Mobile Financial Services):
Africa invents mobile financial services
29
Mobile Banking : starting point
• In 2007, in Kenya, the national mobile telephony operator SAFARICOM launched
M-PESA (« M » stands for mobile and “PESA” means money in swahili)
• This revolutionary service allows to the most outmoded of mobile phones to send
money through sms to another mobile phone
• Total Success
• End 2008, 5 million users of M-PESA
• End 2010: more than 10 million users of M-PESA
• Several services are henceforth sold in Africa via mobile phones and Mobile
Banking :
• Money transfer
• Airtime or telephone credit purchase
• Payment of bills
• Subscription and payment of insurance premiums : Mobile Insurance
Focus on Mobile Insurance
30
Advantages of Mobile Insurance (MI) :
Potential Level
• Tool exploitable not only for the population having a bank
account but also for the population having no bank account
• Opportunities to reach the unbanked sector
• Informal Sector
• Farming Sector
• Sector of craftsmen
• Sector of transporters and related activities
• Democratize the access to microinsurance products
Focus on Mobile Insurance
31
Advantages of Mobile Insurance (MI) : management level
Improve the efficiency of operational processes
• Premiums dividable even into weekly or daily periods
• Payment and collection of premiums 24h/24h, 7days/7days
• Instant confirmation of the payment of the premium, hence more trust
• No physical moving
• Efficient management of micro payments
• Automation of data typing
• Reduction of papers
• Declaration and payment of repurchase or capital fallen due at a distance
henceforth, gain of time
Focus on Mobile Insurance
32
Advantages of Mobile Insurance (MI) : Communication level
• Mobile networks operators control a number of channels of communication
which can help in promoting, selling, and facilitating the subscription to
insurance or microinsurance products.
• Leverage these
companies
communication
channels
of
mobile
telephony
• Profit from the expertise of mobile telephony companies in communication
• SMS tools to communicate with customers
• USSD Session to allow customers to access the platform of data on
their contract, interactive menus
• Profit from communication campaigns of mobile telephony companies
during events having a national range (Miss election, foot,..)
Focus on Mobile Insurance
33
Advantages
of Mobile
(distribution level)
Insurance
(MI)
:
• Enjoy the great territorial network of distribution networks with
mobile companies:
• Agencies specific to mobile companies
• Independent dealers spread out on the country
• Mini shops
• Retailers having cars or walking
Focus on Mobile Insurance
34
Advantages of Mobile Insurance (MI) : Fame level
• Enjoy the fame of the mobile operator :
• Good brand image of most phone operators to their customers,
• which increases vis-à-vis the target audience the credibility of
insurance offer
• Many customers gifts (tombola , other high reward)
technological advances in the industry reinforce that credibility
and
Focus on Mobile Insurance
35
Possible implementation schemes of Mobile Insurance
• Contract underwriting in an agency via a POS chip and payment of premiums
via the mobile phone of the customer from his email account (Mobile Money)
• Subscription by USSD code from the Mobile phone of the customer and
payment of premiums through the same mobile phone from his email account
• Subscription by USSD code and payment of premiums by "Airtime"
• In the framework of the loyalty program, automatic subscription by mobile
operator on behalf of the owner of the phone chip in case of consumption of
phone credit reaching a certain limit
• This practice increases the likelihood that the customer makes the
purchase of the insurance product by himself especially when faced
with a claim or set where performance requires a minimum of
premiums paid
Focus on Mobile Insurance
36
Vulnerability and weaknesses of Mobile
Insurance
• Requirement of a written contract in most of our settlements :
• Obstacle to a total development of Mobile Insurance
• Mobile money account of the Insurer not ciphered according to the
code of insurances
• Multitude of arbitration clauses to insert in the contracts making
the pre loading of the entirety of general conditions impossible in
the interfaces of Mobile Phone
• Limited number of the letters of message texts or SMSs
• limited duration of an USSD session (about 2 or 3
minutes)
Focus on Mobile Insurance
37
Vulnerability and weaknesses of Mobile
Insurance
• Great number of intermediaries involved in the distribution of
mobile telephony services
• All these intermediraires don’t comple necessarly with the
requirements of the CIMA Code
• Customers not sufficiently protected or informed in some
situations when there is the need to have a co-speaker in the
branch of mobile telephony during a contract
• Limited legal range of contracts totally soft
Focus on Mobile Insurance
38
Role of supervising authorities : support the development of Mobile
Insurance while organizing it
• Make simple the laws about contracts in the framework of Mobile Insurance
• Allow for the specificity of operators of mobile telephony in the laws about
intermediaries
• Recognize virtual accounts mobile money accounts in the balance sheets of
insurance companies
Conclusion
39
Come back to the fundamentals of our job: the law of great numbers and
consequences
•Reorganize life insurance starting from the basis of the incomes pyramid
•
Because in africa, it is at the basis of the incomes pyramid that we can
find a high number of people and therefore the poorest people
•
With an adapted pricing, we life insurers may make fortune thanks to a
statisctics law we all know : the law of great numbers
•Taking advantage of the basis of the pyramid, so millions of Africans obviously
means:
•
Innovative products
•
Emerging distribution channels
•
Operational processes including the internet and mobile technology
as a key factor of the satisfaction of the customer therefore of growth.
Thank you
40
Avec vous de A à Z.