www.microensure.com
Micro Insurance Matters
THE QUARTERLY NEWSLETTER OF MICROENSURE | APRIL 2010
UGANDA
MicroEnsure Secures Brokers License in
Uganda
As part of ongoing development in
Uganda, MicroEnsure has obtained its
brokerage license from the Uganda
Insurance Commission, becoming
in the process the first broker
dedicated to microinsurance in that
country. This will enable the use of
multiple underwriting companies as
MicroEnsure continues to develop and
implement an increasingly diverse
range of products.
Page 2
David Dorey appointed
Communications
Manager
a sophisticated back office processing
system that supports an efficient claims
process.
Throughout 2010 MicroEnsure will be
expanding its product range in Uganda to
provide Agricultural Insurance (covering
both crop and livestock) and Health
Insurance for low-income households.
MicroEnsure began operating in
Uganda in 2006 and provides a range of
products including Credit Life and Life
Insurance. The company offers training
for its partners and clients as well as
Page 3
Product Focus: Health
Page 4–6
M-insurance: The next
wave of mobile financial
services?
INSIGHT
MicroInsurance Innovation Facility
Receives Record Numbers of Innovation
Grant Applications
In December the Microinsurance
Innovation Facility launched its fourth
round of innovation grants and received
over 230 applications, its largest
number of responses to date.
A preliminary insight shows that health
was the most popular category with 90
proposals submitted worldwide. The
remaining applications were split evenly
between requests for capacity building
support and for non-health innovation
grants including consumer education,
life, agriculture and property insurance
projects. The majority of applications came from
India, which remains the geographic
epicenter of microinsurance, but there
was increased representation from other
countries, including The Philippines,
Mongolia, Ethiopia, Pakistan and
Francophone Africa.
The facility team, with the support
of external reviewers, has started to
analyse the proposals and will present
a shortlist to the Steering Committee
members in April. The Committee and
the team will then gather in Geneva in
May to finalize the selection.
Previous grantees have included
Calcutta Kids and the CARE Foundation
in India who are both key partners with
MicroEnsure in providing healthcare and
funeral insurance products to the poor.
Page 7
GREPALIFE and
Malayan Insurance
Expands Partnership
with MicroEnsure
Page 7
Microinsurance
regulatory framework
launches in the
Philippines
Page 8
Richard Leftley
comments in
The President’s
Column
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www.microensure.com | April 2010
APPOINTMENTS
New Country Manager in Ghana
Peter brings
more than
five years'
experience
in business
development,
logistics
and sales
management
to the role,
having worked
Peter Gross, Ghana
Country Manager
previously for
a top private
firm in the US. He holds a Bachelor’s
degree in Classics from Davidson
College, a Master’s degree in Theology
from Oxford University, and a Master’s
degree in Business Administration
from Emory University. He has a deep
commitment to ministry that is both
holistic and incarnational, having
lived in an economically-depressed
community in Atlanta, GA (USA) for
the past six years. Whilst in Atlanta,
he began a ministry on his street that
offered food, prayer and counselling to
neighbors trapped in drug addiction,
prostitution and other forms of
exploitation. He also served in a
neighborhood church, where he was
the first elder of an alternative ethnicity
in the church’s 85-year history. He
enjoys music, linguistics, and Trappist
ales.
Peter is happily married to Jessica,
a public health research analyst and
licensed nurse practitioner. Peter
and Jessica are looking forward to
working with MicroEnsure in Ghana
and helping to grow the outreach of the
organization.
Communications
Manager Appointed
David Dorey has been appointed as
the new Communications Manager for
MicroEnsure. David’s expertise lies
in new media, e-marketing and social
media and he will be working with
colleagues to review the company’s
current communications procedures.
David is currently reading for a degree
in Economics and Politics at Oxford
Brookes on a part-time basis having
previously worked as production
manager for Trinity Church in
Cheltenham.
David spent five weeks last summer
producing promotional material for the
company in Tanzania, the Philippines
and India and is looking forward to
using his creative skills to showcase
MicroEnsure’s work around the globe.
OUR BUSINESS MODEL
To bring insurance effectively to the
poor, we see three tasks that need to
be accomplished:
The first task is carrying the risk.
We believe that existing insurance
and reinsurance companies are best
placed to do this but in some cases
no willing insurance carrier can be
found. MicroEnsure is pioneering the
use of cell captives which are special
underwriting vehicles used to carry
health insurance risk in Africa and
further afield.
The second task is that of the front
office – the sales platform. We partner
with those organisations that have
effective outreach to the poor such as
MFIs, NGOs, and retailers.
2
And the third task is the back office
– keeping track of the insured’s
details, premiums, and claims.
For this we have developed a very
sophisticated MIS system. This is the
key to keeping costs at a minimum.
The back office also provides product
development for the risk carrier,
training for the front office, as well
as financial education for the clients.
MicroEnsure derives revenue
from two sources; the first is
commission income when we work
as an insurance intermediary in
partnership with an insurance
company and a front office partner
such as a microfinance organisation.
The second revenue source is
generated by insurance companies
outsourcing their existing back office
operations to MicroEnsure.
Insurance Company
Reinsurance Company
Cell Captive
Risk
Carrier
Front
Office
Microfinance lender
NGOs/Faith-based
Retailers
Avon model
Back
Office
Product design/negotiation
Training/client education
Data capture/reporting
Claims servicing
www.microensure.com | April 2010
HEALTH
Product Focus: Health
Whilst the poor in the third world do
have access to public health facilities
in most countries, they often choose
to utilise low-cost private facilities
whenever possible because doctors
and drugs are generally in short
supply in the public system. The
private providers require that monies
be deposited upfront before treatment
begins, often leading to a delay and
subsequent deterioration in the
patient’s health as the family struggle
to sell assets, borrow money or make
risky choices in order to get the funds.
MicroEnsure has introduced a unique
in-patient cashless health insurance
product in conjunction with SHARE
Microfin, a leading Indian MFI,
United India Insurance Company and
Medicare TPA. After a successful
pilot distribution the product was
expanded to include Calcutta Kids, an
NGO working with slum dwellers, and
Church Southern India serving fishing
communities in Kerala. Throughout
2010 it will be expanded to Africa and
Asia.
Innovation is central to MicroEnsure’s
business model. Within India, the
TPA system has enabled providers
with MicroEnsure to sell and service
health insurance that costs US$10
a year for a family of four people
and provides a benefit of US$450 per
family on a floater basis. This system
allows flexible payment options for
families of different sizes and those
unable to afford to pay the premium in
a single lump sum. The product was
the first in India to cover maternity
and pre-existing illness from the first
day of coverage. The use of a slumbased NGO and religious group to sell
voluntary health insurance proved that
alternative channels other than MFI’s
exist to reach the poor.
MicroEnsure realised that in order to
provide similar products to its client
base in Africa and Asia it needed
to have TPA capability and its own
underwriting capacity. The experience
of this program led to MicroEnsure
purchasing a TPA for use in Africa
and Asia and the creation of the
world’s first “virtual Cell Captive”
where Hollard Insurance Company
provided MicroEnsure with access
to its underwriting capacity so that
MicroEnsure can design, price, sell and
pay claims globally for similar health
insurance products.
A consultation at the hospital in India
In the hospital, India
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www.microensure.com | April 2010
INDUSTRY OPINION: Jeremy Leach, Hollard Insurance Group
M-Insurance: The Next Wave of Mobile Financial Services?
Introduction
When will we see “m-insurance” join
the commonly used new dictionary
of commerce? The quantum leap of
mobiles into commercial usage has
given birth to various new words such
as m-commerce, m-payments and
the acronym mFSP, meaning mobile
Financial Services Providers. So the
question for the insurance industry
becomes: Is m-insurance close,
inevitable, possible and a good idea?
And probably more to the point: How
will it work?
The growth of the mobile phone market1
is one of the more remarkable stories in
recent times. The numbers are startling!
As at 11:31am on the 13 January 2010,
the GSMA reported that there were
over four billion (4,133,185,526) mobile
connections2, increasing by thousands
every few minutes. These mobile
phones are increasingly reaching
consumers who have had limited – or
no – easy access to services before. Now
with an estimated 60% of the unbanked
in Southern Africa having mobile phones
(cf FinScope surveys) the possibilities
are virtually unlimited.
The advent of mobile operator-led
‘mobile money’ has dramatically
increased the interaction of the mobile
and financial services, with McKinsey
estimating that it would “generate US$5
billion in direct revenues and US$2.5
billion in indirect revenues per year to
mobile operators”3.
Drivers of M-Insurance
In theory, the role of cell phones in
insurance is strong as it should provide
the following benefits:
will be on “micro” insurance / insurance
for the low income market, as most users
of mobile phones in developing countries
fall into this category.
See Figure 1
Lowering the cost of collections,
especially where ‘mobile money’ has
been offered by the telco4;
Providing a potentially “free” form of
distribution using the telco platform;
Improving persistency of premium
payment, through SMS reminders;
Empowering the consumers to manage
their insurance in a cost effective and
accessible manner;
Although these drivers seem strong,
understanding how to engage with the
consumer effectively is vital to success.
Customer Touch Points
One way of looking at the role of cell
phones in financial services is to
consider the customer touch points
- namely how cell phones interact
with consumers. This includes (a)
how consumers are acquired / how
consumers purchase a service, (b) how
one remains in contact with consumers,
(c) how consumers transact, and (d)
how can one cross-sell other products
to consumers (see Figure 1). Through
understanding these “touch points”
one can then understand better what is
required to take advantage of this new
wave to democratize access to financial
services and, in this case, insurance.
As the focus will be on developing
countries, it will of course mean that it
a.Customer acquisition
Using mobiles as a means to acquire
the consumer is one of the least utilized
approaches in m-insurance. This is partly
due to the fact that many telcos have
seen their role to be as a “pipe” where
companies use their services rather than
partnering with other companies, with
some exceptions. Three exceptions are:
the US and Africa.
4 Whilst airtime is also a possible form of
2 In fact, this is global GSM and 3GSM
currency, the challenges are (a) cost in that
Mobile Connections so understates the total
the telco often takes a large chunk of the
i. South Africa: Take It Eezi5 / Hollard
partnership: In this case, Take It Eezi,
a prepaid airtime vending company
with 17,000 agents, uses the menu
on a cell phone as a means to sell
funeral insurance products. Whilst it
in its early days, the potential for this
sales mechanism is high especially in
markets where there is limited formal
infrastructure;
market.
airtime, (b) it is also VAT-able and (c) potential
3 See www.gsma.org’s mobile money for
ii.Namibia: Trustco / Leo partnership6.
regulatory challenges by the bank regulator
the unbanked programme Quarterly Update,
who may not be so supportive of what is
March 2009
currently considered “barter”.
So where does the future of the
insurance industry feature in this
modern marketing phenomenon? How
1 Also known as cell phones, particularly in
4
soon will we be referring to m-insurance
with the same familiarity as we talk
about m-payments and m-commerce?
5 See www.takeiteezi.co.za
6 See http://www.tgi.na/index.php/trustcomobile.html
www.microensure.com | April 2010
Figure 1: Customer Touch Points Adapted from Leach, 2006
CUSTOMER ACQUISITION
Objective: New sales, capture client information, embedded “free benefits”
Challenges: Disclosure, trust
Examples: Take it Eezi/Holland (South Africa), Leo/Trustco (Namibia),
Zong/Hollard (Pakistan)
CUSTOMER CONTACT
CROSS-SELLING
Objective: Balances, statements, payment
reminders
Objectives: Product upgrades/downgrades,
new products
Challenges: Cost of SMS (although
coming down)
Challenges: Disclosure, NTU rates
Examples: “Please call me”, SMS
advertisements
Examples: Many but includes PEP & Hollard
Direct Solutions (Southern Africa)
TRANSACTIONS
Objective: (a) Collect premiums (e-cash or real cash, airtime), (b) pay claims
Challenges: Regulatory (vs e-cash), frictional costs from Telcos
Examples: Cover2Go (SA), Mobile money (M-PESA, MTN Mobile Money,
ZAIN’s ZAP)
Trustco developed an embedded funeral
product that provides a certain amount
of funeral cover for each rand of airtime
spent. This is certainly a good product
for an insurer which has a group policy
with a telco to cover all clients – the
challenge remains making the client
base fully aware of the benefits. It
should also provide a useful base of
clients which can be cross-sold clients
to.
and SMSs have been readily used
from marketers, to credit providers
and insurers reminding clients about
their next instalment, to health
insurers reminding clients about taking
medication (health insurers have
found this particularly beneficial in
ensuring clients adhere to taking the
required doses and thus prevent further
ailments).
iii. Hollard Direct Solutions “Please call
me” adverts: in this case, an advert for
an insurance product has been placed
on the ubiquitous “Please call me” text
messages. This allows the client to
either SMS a Hollard number or send a
“please call me” message so that a call
centre agent can call them. Whilst this
is pretty “low tech”, it is effective and
relatively cheap.
Hollard – PEP Stores: In the last
2 years, Hollard has sold 500,000
policies to South Africa cash-based
retailer, PEP stores. However, one of
the key components of making this a
success this has been using SMSs as
a reminder that the premium must be
paid. This has had a dramatic impact
on persistency levels where the majority
of customers must come in person to
settle their premium.8
b. Customer contact
c. Transactions
Many industries have found that cell
phones provide an excellent means to
remain in contact with their clients7
So far, transactions in the “m” world,
has mainly been around clients of
mobile money who use their cell
phones to initiate money transfers
7 Just one of many is http://www.foneworx.
co.za/
8 An option to use a debit order is also
available.
(both domestic, and more recently,
international). I understand that in
Kenya, this has increasingly been used
to pay for third party utilities, including
insurers and airlines, to pay for goods.
M-Pesa & MTN Mobile Money: The
telco’s Mobile Money deployments are
increasingly focusing on bill payments.
With access to bank accounts low in
developing countries (eg at 23%9 in
Kenya where M-Pesa was launched),
the growth of mobile money will be a key
component of ensuring cost effective
premium collection.
d. Cross-selling
The opportunity around using cell
phones to cross-sell insurance products
to your existing base is a strong one.
Access to a client’s cell phone is a
powerful way to stay in touch and as
smart and web-enabled phones filter
into the broader market, there will
be opportunity to use this interface to
allow clients to manage their products
– whether buying up / buying down (i.e.
amending one’s insurance cover), and
9 FinAccess 2009
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www.microensure.com | April 2010
INDUSTRY OPINION cont.
the regulators, as one will also need
to simplify the terms to ensure clients
understand it as well as meeting the
limited space needed on a cell phone.
also buying alternative products. Whilst
SMS messaging has been used already
to market products, it is a matter of time
before providers use this model more
effectively.
Challenges and next steps
Whilst there is significant potential
for m-insurance to expand beyond its
existing stage of development, there are
a range of challenges, which include:
Activating the client - market
acceptance: A significant challenge in
using the telco as a base for voluntary
client acquisition, will be to ‘activate’
the client. i.e. to enable the client to
demand the product. Whilst telcos are
often seen as a trusted brand, it is the
reliance on airtime resellers who may
not be seen in the same light that may
be a problem;
Distribution skills: One of the most
significant challenges is ensuring that
marketing material is suitable and
understandable, that there is adequate
training for those marketing the
products (as likely to be on a non-advice
model), and that those who buy the
product are adequately informed. One
could say that Hollard has learnt the
hard way with its various retailers!
Regulation: It is noticeable that
countries such as Kenya do not allow
e-contracts, in that paper-based proof
of sales is required. This significantly
increases costs as there will be a need
for “feet on the ground” and minimizes
the benefit of the cell phone. Further,
the issue of acceptable disclosure will
be a challenge for both insurers and
6
Customer protection and intrusion:
There is growing concern about the
intrusion of service providers into the life
of the client. With the growing advent
of consumer protection rules, this
could make it more difficult for service
providers to market to the clients. Smart
ways of getting client’s permission would
therefore be needed.
Conclusion
M-Insurance offers great potential to
enable insurers to both enhance their
efficiency and also access the microinsurance market in smart ways. Whilst
challenges do remain, the roll out of
mobile money is likely to be the launch
pad that shifts this from a promise into
a reality.
About the author
Jeremy Leach is Principal and Divisional
Director: Personal Financial Services
of the Hollard Insurance Group. Hollard
is a South African based international
insurance group and is one of the
leading players in retail / brandassurance with over R3bn in revenues
from its retail partners in, and generates
over R1,1bn in the low income market in
South Africa alone. Hollard is pleased
to partner with MicroEnsure, a specialist
micro-insurance intermediary and
underwriter, which will dramatically
increase their ability to serve the low
income market internationally.
www.microensure.com | April 2010
PARTNERSHIPS
GREPALIFE and Malayan Insurance Expands Partnership
with MicroEnsure
MicroEnsure Philippines, Great
Pacific Life Assurance Corporation
(GREPALIFE) and Malayan Insurance
Company (MICO) joined parties in
a Memorandum of Agreement in
March in Iloilo City. The MOA outlined
the strategic relationship between
the parties involved and as well as
the launching of two new insurance
products.
of death due to accident and costs less
than US$23 per year.
A second initiative being launched
by MicroEnsure is the Bahay Asenso
Insurance Cover (EZ Fire with Personal
Accident) underwritten by MICO. It
operates on a first loss basis and is
available to home owners and tenants.
Approved in January 2010, the Group
Life Insurance with Funeral Benefit
and Personal Accident is a double
indemnity product underwritten by
GREPALIFE. It provides cover in cases
PHILIPPINES
Microinsurance Regulatory Framework Launches in the
Philippines
The Department of Finance and
the Insurance Commission formally
launched the Regulatory Framework
for Microinsurance on January 29,
2010 at the Philippine International
Convention Center in Manila.
The framework covers the provision of
insurance, insurance-like and other
activities (as may be defined by the
concerned regulatory bodies) that
provide the risk protection needs of
the poor supplied by the private sector.
It will create public awareness of the
importance of providing appropriate
risk protection for the poor through
microinsurance. The framework
identifies and promotes a system by
which the rights and privileges of the
poor will be protected and promptly
acted upon.
The framework was drafted by a
technical working group formed by the
Dept. of Finance and has undergone
a series of regional consultation
nationwide in 2009. MicroEnsure
attended two of these consultations,
one in Iloilo and one in Cebu. The
framework was approved by members
of the Steering Committee which
consisted of representatives from
the Dept. of Finance, Insurance
Commission, Bangko Sentral ng
PIlipinas, Securities and Exchange
Commission, Cooperative Development
Authority, National Anti-Poverty
Commission and Philippine Health
Insurance Corp. in a meeting held on
December 11, 2009.
Month. The Presidential Proclamation
1212 declared January to be
Microinsurance Month and appointed
the Insurance Commission and Dept.
of Finance as the lead agencies.
In support of the government initiative,
Asian Development Bank (ADB) and
German Technical Cooperation (GTZ)
are providing technical assistance
that focuses on the establishment
of the appropriate policy and
regulatory environment; building
capacities of both regulators and
providers in regulating and providing
microinsurance services; product
development and financial literacy
for both providers and clients for
microinsurance.
This event marked the culmination of
the observance of the Microinsurance
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www.microensure.com | April 2010
THE PRESIDENT’S COLUMN
The year so far...
It has been
an interesting
start to 2010. Our
partnership with
Hollard to create a
virtual cell captive
has provided
a platform to
increase our
impact on the
lives of the poor. For the first time
MicroEnsure now has the capability
to design, price and authorize claims
arising from a range of products around
the world. The initial focus has been to
start channelling much of our original
business to this facility because we
then know that we have the authority
to settle claims and can guarantee a
faster claims turn around and more
transparent claims decisions for our MFI
partners. The second phase will focus
on bringing products to market which
are currently unavailable. For example,
later this year we will use the facility to
start selling health insurance in East
Africa in partnership with the Anglican
Church.
The Hollard facility has also opened up
new business model for MicroEnsure.
We are in the process of starting
operations in Rwanda and Mozambique
using a “franchise model” which sees
the MFI enter data into our IT system
over the web. A local insurer then issues
the policy and reinsures the risk back
to the facility. MicroEnsure does not
need to open an office in Rwanda or
Mozambique and we get our commission
paid from the facility back to our head
office. This franchise model can be
used in countries where the size of
the microfinance market would not
support a micro insurance intermediary.
It will also allow MicroEnsure to
open operations in a great number of
countries in the years ahead without
having to establish a local entity, leading
to a faster ramp up of operations.
In order to fully utilize the opportunities
that the Hollard facility provides us, we
have been working hard to identify a
suitable Third Party Administrator (TPA)
so that we can sell cashless health
insurance in Africa and Asia later this
year - news to follow soon on this.
Our IT team is also working to develop
a “bridge” to allow our systems to
interface with a range of m-payments
systems. We will be starting some
pilot tests later in 2010 in partnership
with a couple of leading mobile phone
companies.
Whilst all of this progress is great to
see, I am still perplexed about the slow
rate of growth we are experiencing and
it seems to me that a trend is emerging,
not just in MicroEnsure but with other
operators as well. If I add up all of the
borrowers that our partner MFI’s have
and assume we can sell insurance to
them, then MicroEnsure would exceed
its 2012 target by 200%. The issue for us
is not forming partnerships with large
MFI’s then, it is actually ramping up
activities across our partners’ branch
networks. I have my own views about
why working with MFI’s is so slow and
I will not share those here, but it is
increasingly clear to me that whilst the
MFI’s are the low hanging fruit, they are
unlikely to be the path to scale. If we are
to reach our full potential in relation to
scale then we will have to start to work
with other distribution partners such as
religious groups, international NGO’s,
mobile phone companies, multi-level
marketers and other retailers. I think
it is time we started rethinking the
idea that micro insurance is sold only
through micro credit organizations.
MICROENSURE WAS PREVIOUSLY THE MICRO INSURANCE AGENCY
GLOBAL OPERATIONS OFFICE:
MicroEnsure · First Floor · Parker Court · Knapp Lane ·
Cheltenham · GL50 3QJ · UK
EDITORIAL CONTACT: david.dorey@microensure.com
FT SUSTAINABLE BANKING AWARDS 2009
WINNER
MicroEnsure, UK
Achievement in Basic Needs Financing
BANGLADESH · MicroEnsure · Telephone +44 1242 526 836 · info@microensure.com
GHANA · MicroEnsure · Telephone +233 21 760 671 · robert.dzogbenuku@microensure.com
INDIA · Micro Insurance Services Pvt Ltd · Telephone +91 44 4269 4294 · vyasa.krishna@microensure.com
INDONESIA · MicroEnsure · Telephone +62 813 2817 9885 · tjandra.irawan@microensure.com
Kenya · MicroEnsure · Telephone +254 733 850 058 · moses.banda@microensure.com
MALAWI · MicroEnsure · Telephone +44 1242 526 836 · info@microensure.com
MOZAMBIQUE · MicroEnsure · Telephone +44 1242 526 836 · info@microensure.com
PHILIPPINES · MicroEnsure · Telephone +63 33 320 1472 · william.martirez@microensure.com
RWANDA · MicroEnsure · Telephone +44 1242 526 836 · info@microensure.com
TANZANIA · MicroEnsure · Telephone +255 22 213 6001 · neema.komba@microensure.com
UGANDA · MicroEnsure · Telephone +256 414 237 433 · edgar.muzahura@microensure.com
USA, HEAD OFFICE · MicroEnsure · Telephone +1 630 687 1950 · info@microensure.com
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