1 MICROINSURANCE BUSINESS MODELS FOR AFRICA LEARNING SESSIONS MARCH 2015 LIVINGSTONE MLIFE EXPERIENCE IN PRODUCT DISTRIBUTION Presented by AGNES CHAKONTA,
2 OUTLINE Introduction. Madison s experience with different Channels of Distribution. Under each channel discussions will center on Achievements Challenges Lessons learnt Conclusion
3 OVERVIEW OF MICROINSURANCE Formal microinsurance began in Madison s interest began with a request from an MFI. MFIs support insurance for protection of the loans under Partner Agent Model. Death and illness were the two primary risks that were covered. The range of microfinance products have remained narrow Concept of micro insurance still not widely appreciated. Informal or unregistered insurance activities still there.
4 DISTRIBUTION CHANNELS Channels of distribution! Phase 1 : Agent Partner Model - successful! Phase 2 : Direct distribution - complete failure! Phase 3 : Bancassurance - successful! Phase 4 : Affinity Groupings - successful! Phase 5 : Mobile platform New
5 AGENT PARTNER MODEL Product : Credit Life Policies Distribution strategy phase 1: Partnerships with MFI S. Premium range: Monthly minimum = Less than 1USD Sum assured : Wide range for both Sum assured and Premium!
6 EXPERIENCE Over 30,000 lives are covered annually Growing premiums and minimal claims. Success factors :Embedded and Compulsory Products, Agent earning additional income, their exposure is covered. Challenges : demand for higher commissions. No interactions with the client, low levels of product knowledge and Insurance benefits.
7 Phase 2 Distribution strategy phase 2: Direct sales i.e. one to one selling by agents through micro enterprise associations Product: Family funeral cover Selling points at Major Markets. Premium range: Monthly minimum = US $ 2 Sum assured minimum: = US $ 1,300 Project failed to generate the targeted interest and volumes.
8 Phase 2 RESULTS Only 735 lives covered PROJECTED ACTUAL 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Premium received Claims paid Product performance Aug Dec 2014 [ZMW]
9 Phase2 Sales Outlet Sales enforcement customer relations, Consumer education Aggregation Marketeers association RESULT Costly; i.e running an office, Agent retainer, Poor sales performance due to low enrollment Failed goal alignment; Lack of Trust within association;
10 REASONS FOR FAILURE Failure to market Madison Life as a company and brand; Lack of Aggregation. Project proved costly ; Lack of electronic premium collection mechanism Lack of Education /product Knowledge; Informal Protection Schemes are still working well.
11 !! PHASE 3 & 4 A combination of Partner Agent model and direct selling - Dignity Family Insurance Plan. Enterprise association Dignity Micro - Entrepreneurs Banks and MFIs Taxi and Bus Associations Workers Unions Ubuntu Dignity Dignity Low-wage earners Drivers Low-wage earners e.g. Casual workers, Teachers, Civil Servants etc.
12 PHASE 3& 4 RESULTS - 1 Performance: Policyholders and lives covered- Feb-Sept 2014(cumulative) Number of olicyholders and lives covered Policyholders Lives covered Policyholders Lives covered Policyholders Feb-April 2014 May -June 2014 July-Sept 2014 Mutende-Marketeer association (Mandevu) Mutende- Marketeer association (Chilenje) Lives covered Ubuntu (Stanbic Bank) , Dignity- Workers Union (UNZA) Dignity- Workers Union (Local authorities) , Dignity- Bus & Taxi association , Dignity- Bus & Taxi association (Pan African Building Society) , Dignity- ZAFWIB
13 HOW AND WHY HAS THIS MODEL SUCCEEDED To a greater extent the product has been accepted by the intended market and generated interest and volumes. Voluntary, Simple Product with minimal underwriting. Product knowledge and education being provided at point of sale. Support from the various Aggregators Cash back Sweetner
14 Phase 5 MOBILE PLATFORM THE NEXT PHASE Mobile distribution Product: Another Brand of Family funeral cover Through mobile and in partnership with payment Solution agents,various Aggregators Target Market : Informal Sector Premium range: Monthly minimum = US $ 3 Sum assured : = family package
15 LESSONS LEARNT! Start with Achieving Client Confidence;! Understand the culture and environment;! Align the mode of distribution to Customer.! Aggregator should be able to woo large numbers; have the necessary capabilities able to collect premiums and/or settle claims using cheap means! Education of the clients is key;! Always work with simplified products;! Add APPROPRIATE sweeteners
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