Microinsurance Product Pool

Transcription

1 Microinsurance Product Pool Overview and assessment of Allianz microinsurance products Allianz SE April 2015 public

2 Introduction This microinsurance product pool lists the microinsurance products of Allianz Group that currently provide insurance cover to low-income people in emerging markets and developing countries. Products launched since June 2013 which still have less than 1,000 inforce (active) policies are not included. Two non-microinsurance products are included at the end to show why some Allianz products are not considered microinsurance although they also serve low-income people. This initiative supports the Transparency value of our Allianz microinsurance values: Allianz Microinsurance Values 1 Passion Quality Fairness Transparency Information on each product is presented in three sections: e.g. product pool A. Product specifications Gives a high-level explanation how the product looks like (distribution, benefits, pricing) B. Product assessment 2 Matches the product against the Allianz microinsurance definition and assessment tool. C. Product brochures where available This includes 1. Knock-out criteria: Can we call this product micro?, and 2. Qualitative criteria: How well does the product fulfill our microinsurance values? 2 We will update this product pool every April and October as new microinsurance products are launched and existing products are modified or taken off market. We try to list products from the moment that over 1,000 inforce (active) policies are first reached until the last policy matures. However, there is no duty to update (see disclaimer). Contact Martin Hintz Microinsurance Allianz SE [email protected] Is this really the latest? See our microinsurance website for the most recent reports and publications 1) To learn more about the Allianz microinsurance values please see our latest microinsurance business updates. 2) The product assessment shows how well the products is intended to serve low-income families in compliance with our microinsurance values ( as planned ). It does not verify how products and distribution look on the ground ( as is ). Example: Allianz may have produced product brochures although for various logistical reasons they do not reach the insured. The assessment is also no indicator for actual business success. 2

3 Overview 1 Knock-out criteria: "Can we call it micro?" Qualitative criteria: "How well aligned with our microinsurance values?" A B C D new new # Country Company 1 2 Colombia 3 Colombia 4 Colombia 5 Ivory Coast 6 India 7 Indonesia 8 Ivory Coast 9 Indonesia 10 India 11 Malaysia West Africa & Egypt West Africa Allianz Africa Allianz Colombia Allianz Colombia Allianz Colombia Allianz Africa Bajaj Allianz Life Allianz Life Allianz Africa Allianz General Bajaj Allianz General Allianz General 14 Burkina Allianz Africa 15 India Product Name Mobile Term Life Family Term Life Home Business Life & Maternity Mobile Funeral Insurance principles Dev. Country or EM Low-income focus No subsidies >50% Strong Risk Mgmt Other benefits Customers involved - - Life Savings - - Credit Life Plus Funeral Insurance Voluntary Customer education Scratch- card PA Crop Index - - Motorcycle PA 2 Allianz Africa Credit Life - Allianz Africa Crop Index Bajaj Allianz General Burkina & Madagascar Savings- Life Cattle & Livestock 1) See our website for a full explanation of our assessment methodology 2) PA: Personal Accident Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success Product simplicity Low transaction costs Quality rank avg. c1-c7 Details on page

4 Overview 1 Knock-out criteria: "Can we call it micro?" Qualitative criteria: "How well aligned with our microinsurance values?" A B C D # Country Company Product Name Insurance principles Dev. Country or EM Low-income focus No subsidies >50% Strong Risk Mgmt Other benefits Customers involved Voluntary Customer education Product simplicity Low transaction costs Quality rank avg. c1-c7 Details on page 16 India 17 India Bajaj Allianz Life Bajaj Allianz General Group Term Life Personal Accident Phased out products since last update Oct 2014 # Country Company 1 India Bajaj Allianz General Product Name Knock-out criteria: "Can we call it micro?" Qualitative criteria: "How well aligned with our microinsurance values?" A B C D PA Plus - Quality rank avg. c1-c Reason for phase out Phased out for lack of scale Non-qualifying products due to failing on criteria A - D # Country Company Product Name Knock-out criteria: "Can we call it micro?" Qualitative criteria: "How well aligned with our microinsurance values?" A B C D Quality rank avg. c1-c7 Details on page 1 Ivory Coast Allianz Africa Mobile Savings not micro 53 2 Malaysia Allianz Life General Life & PA 2 not micro 57 Non-qualification means that a product has failed to meet any of the four basic criteria A D of the Allianz Group microinsurance definition, although they may still address needs of low-income people. Sample cases are shown here to better illustrate conditions under which this may happen. 1) See our website for a full explanation of our assessment methodology 2) PA: Personal Accident Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 4

5 1. Burkina & Madagascar: Mobile Term Life A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Airtel Mobil Assur Enhanced Mobile Term Life Company name Allianz Africa Country Burkina Faso and Madagascar Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Airtel telecommunication company, with MicroEnsure as service provider June sentence product description In its current first phase, the product provides free cover for (a) death due to all causes, (b) total permanent disability due to accident, and (c) a lump sum hospital cash benefit for inpatient stays of minimum 3 days. Sums insured are linked to airtime consumption ( the more you call the more cover you get ). Premiums are paid by Airtel as a loyalty scheme In a second phase (still to be launched), sums insured will double, a flat standard monthly fee to customers will be added, and customers will be able to enroll another family member (against extra premium). Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Sums insured depend on the previous month s airtime consumption Death due to all causes and Total Permanent Disability due to accident (values from Burkina Faso): Phase 1: XOF 75, ,000 (~ EUR 115 1,150) Phase 2: XOF 75,000 1,500,000 (~ EUR 115 2,300) Hospital cash lump sum, paid for every hospital stay of min. 3 days (values from Burkina Faso): Phase 1: XOF 5,000 25,000 (~ EUR ) Phase 2: XOF 5,000 50,000 (~ EUR ) Phase 1: free, starting from min. previous month s airtime consumption of XOF 1,000 (~ EUR 2.30) and max. sum insured reached if previous month s airtime consumption is XOF 10,000 or more (~ EUR 15) Phase 2: XOF 300 (~ EUR 0.45) for 1 person or XOF 1,000 (~ EUR 1.50) for 2 persons with no min. airtime and max. sum insured reached if previous month s airtime is min. XOF 10,000 (~ EUR 15) Phase 1: free Phase 2: XOF 4,800 (~ EUR 7.20), i.e. average XOF 400 per month (~ EUR 0.60) Other comments In phase 2, if customers don t choose at least the XOF 300 plan (i.e. 1 person), all coverage will stop Even in phase 2, benefits will continue to increase with the previous month s airtime consumption regardless of the flat membership fee In cooperation with MicroEnsure 5

6 1. Burkina & Madagascar: Mobile Term Life B. Product Assessment 1 Product: Airtel Mobil Assur Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B C D 1 2 Developing country or emerging market Great majority of insured people or assets from low-income segment No government subsidies of more than 50% Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) - None Burkina Faso and Madagascar are developing countries according to World Bank With its small sums insured and eligibility for pre-paid airtime customers only (instead of the generally better-off post-paid customers), it can be safely assumed that the great majority of insured is low-income No subsidies Of the three covered risks (death, accidental disability and hospitalization) at least death and hospitalization can be considered a high risk to most, especially for low income people to whom the sums insured are meaningful 3 End-customers involved in product development - No 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) Voluntary opt-in 5 Customer education and feedback mechanisms in place Giving the product away for free in its initial launch phase carries a strong learning by doing element, i.e. a form of customer education. Moreover, a 24h toll-free hotline is available for inquiries. 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Enrollment is straight forward through USSD with few questions asked, on the spot acceptance. Exclusions are minimal. Claim requirements are also reduced to an absolute and flexible minimum. 7 Strong measures to ensure low transaction costs Fully digital enrollment and (in phase 2) digital collection, plus simplified processes and documentation requirements allow for efficient, low-cost mass-scale administration Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 6

7 1. Burkina & Madagascar: Mobile Term Life C. Product Brochure Burkina Faso Madagascar 7

8 2. Colombia: Family Term Life A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Seguro de Vida (Life Insurance) Term Life Company name Allianz Colombia Country Colombia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Microfinance Institution (MFI) 1 July sentence product description Voluntary Group Term Life Insurance that provides life insurance cover to the group s members (and optional their partners) plus additional funeral cover to the insured group members and up to 4 freely chosen close relatives Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Death due to any cause of insured (i.e. group member and optional against additional premium the partner): COP 3mn to COP 15mn depending on chosen premium plan (~ USD 1,600 to 8,000) Funeral benefit to member and 4 freely chosen close relatives (which can include the partner): up to maximum COP 3mn (~ USD 1,600) for all premium plans. Benefit expires after 2 death cases Maximum sum assured per person: COP 30mn (~ USD 16,000), e.g. if a client has multiple policies of this product Minimum COP 9,960 per month (~ USD 5.50) for minimum benefits for single insured and 4 relatives Maximum COP 42,068 per month (~ USD 23.00) for maximum benefits for insured, partner and 4 relatives COP 122,880 (USD ~ 68.00) Other comments The product is only available to active clients of the MFI, i.e. those who have an active credit and/or savings account with that MFI 90 days waiting period for minor pre-existing conditions 180 days waiting period for major pre-existing conditions (e.g. cancer) and suicide 8

9 2. Colombia: Family Term Life B. Product Assessment 1 Product: Seguro de Vida Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B C D Developing country or emerging market Great majority of insured people or assets from low-income segment No government subsidies of more than 50% Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) Strong measures to ensure low transaction costs - None Colombia is an emerging market according to S&P and a developing country according to World Bank The MFI distributor targets low-income families, i.e. strata 1-3 of the 6-step Colombian socioeconomic stratification. This can also be seen by the low maximum loan amount of their micro-credit segment of COP 2.3mn (~ USD 1,300) No government subsidies The product protects several family members against death which is a significant risk. Coverage includes pre-existing conditions which allows for the inclusion of more vulnerable people (subject to waiting periods). Workshops were done by the MFI in selected branches to garner input for the product design, especially as previous life insurance offers had not found wide acceptance among customers Fully voluntary for existing customers of the MFI Simple brochures are provided, and because many customers are not fully literate - the bank s staff also gives verbal explanations. Customers receive insurance certificates, have access to a 24/7 hotline and to a special claim help desk Simple product without health declaration. Several plan options exist, so the distinction of which family member has what level of coverage takes time to understand. Certain waiting periods and exclusions exist. Monthly batch processing from MFI to insurer, sales are done complementary on top of other products (credit, savings). A claim help desk and a bank agent help desk achieve streamlining of the service processes Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 9

10 3. Colombia: Home Business A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Seguro de Hogar (Home insurance) Property Company name Allianz Colombia Country Colombia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Microfinance Institution (MFI) 1 July sentence product description Voluntary Group Property insurance that covers private homes, including those used for home-based business, against damage to the building and its content arising from various risks such as fire, lightening, flooding, windstorm, civil commotion etc. Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Costs of repair or replacement (but not improvement) of home and home content damages due to below risks are covered as follows for Plan 1/Plan 2 respectively A: Fire, lightening, explosion, windstorm (incl. related rains and floods), falling trees, falling aircraft and vehicle crashes: up to COP 20mn/15mn (~ USD 11,000/8,000) B: Water damage, flooding, avalanche and landslides: up to COP 5mn/3mn (~ USD 2,500/1,600) C: Violent strikes, civil commotion and malicious acts by 3rd parties: up to COP 10mn/7.5mn (~ USD 5,000/ 4,000) D: Actions to contain damage, actions of public authorities and debris removal: up to COP 2mn/1.5mn (~ USD 1,100/800) Max. sum insured from all risks per home over the entire life of the policy is COP 20mn (~ USD 11,000), i.e. should the accumulated damages exceed that amount, the excess is not covered and coverage will end Minimum (Plan 2): COP 4,995 (~ USD 2.75) per month Maximum (Plan 1): COP 6,660 (~ USD 3.60) per month COP 67,200 (~ USD 37.00) Other comments The product is only available to active clients of the MFI, i.e. those who have an active credit and/or savings account with that MFI Earthquake risk is not covered, as this is not considered important by customers and would significantly increase the premium A deductible of 10% applies to risks B and C above; risks A and D do not have a deductible 10

11 3. Colombia: Home Business B. Product Assessment 1 Product: Seguro de Hogar Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B C D Developing country or emerging market Great majority of insured people or assets from low-income segment No government subsidies of more than 50% Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) Strong measures to ensure low transaction costs - None Colombia is an emerging market according to S&P and a developing country according to World Bank The MFI distributor targets low-income families, i.e. strata 1-3 of the 6-step Colombian socioeconomic stratification. This can also be seen by the low maximum loan amount of their micro-credit segment of COP 2.3mn (~ USD 1,300) No government subsidies Several serious risks to home property are covered. The sums insured are high enough to allow microentrepreneurs to quickly get back on their feet and resume their home-run businesses after a claim. The product was developed based on strong customer demand to cater to the insurance needs of small entrepreneurs that borrow from the MFI and often run their business out of their private homes Fully voluntary for existing customers of the MFI Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success Simple brochures are provided, and because many customers are not fully literate - the bank s staff also gives verbal explanations. Customers receive insurance certificates, have access to a 24/7 hotline and to a special claim help desk For a property product, design and policy wording are kept relatively simple, with only 2 available coverage plans. Still, time is needed to explain the exact covered risks, the deductibles and the claim procedure. Monthly batch processing from MFI to insurer. No on-site claim inspection needed. A claim help desk and a bank agent help desk achieve streamlining of the service processes 11

12 4. Colombia: Life & Maternity A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Voy Seguro (I go safely) Term Life Company name Allianz Colombia Country Colombia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Microfinance Institution (MFI) 1 November sentence product description Voluntary Group Term Life Insurance that also provides maternity benefits to the insured or partner during pregnancy and after birth Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Death of the insured due to any cause: COP 4mn basic life benefit COP 600k for food basket COP 500k funeral assistance, i.e. total death benefits of COP 5.1mn (~ USD 2,800) Maternity benefits for insured or partner: COP 400k at 6 months into pregnancy and COP 200k after birth, i.e. total maternity benefits of COP 600k (~ USD 330) Maximum sum assured per person: COP 32mn (~ USD 18,000), e.g. if a client holds multiple policies of this product COP 4,990 per month (~ USD 2.75) One standard plan only; no other premium and benefit options COP 59,880 (~ USD 33.00) Other comments The product is only available to active micro-loan clients of the MFI (the MFI offers no savings services) The food basket and funeral assistance benefits are usually paid out as a cash lump sum together with the basic life insurance benefit 90 days waiting period for pregnancy and minor pre-existing conditions 180 days waiting period for major pre-existing conditions (e.g. cancer) and suicide 12

13 4. Colombia: Life & Maternity B. Product Assessment 1 Product: Voy Seguro Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B C D Developing country or emerging market Great majority of insured people or assets from low-income segment No government subsidies of more than 50% Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) Strong measures to ensure low transaction costs - None Overall ranking Colombia is an emerging market according to S&P and a developing country according to World Bank The MFI distributor targets low-income families, i.e. strata 1-3 of the 6-step Colombian socioeconomic stratification. This can also be seen by the low average loan amount of their borrowers of COP 2mn (~ USD 1,100) No government subsidies Death is a significant risk and coverage includes preexisting conditions (subject to waiting periods). Moreover, maternity expenses are a very frequent risk even if the related policy benefits are not high. Focus Group Discussions with the MFI customers have strongly influenced the product, for example that the larger part of the maternity benefits is already paid out at 6 months pregnancy. This allows the expectant mothers to prepare in time for the delivery and post-natal phase. Fully voluntary option that can be added to the MFIs credit offering Customers receive verbal explanations from the bank s staff. Brochures are not used as customers are often semiliterate. Customers receive insurance certificates, have access to a 24/7 hotline and to a special claim help desk Simple, easy to understand product design with only one available standard plan. No health declaration required. However, certain waiting periods and exclusions exist. Monthly batch processing from MFI to insurer, sales are done complementary on top of other products (credit, savings). A claim help desk and a bank agent help desk achieve streamlining of the service processes C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 13

14 5. Ivory Coast: Mobile Funeral A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Allianz Obsèques Term life insurance Company name Allianz Côte d Ivoire Assurance Vie Country Ivory Coast Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Telecommunication company 1 June sentence product description Voluntary group life insurance for mobile money account holders of the partnering telecommunication company; coverage includes protection against death due to all causes and total permanent disability Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Natural death or total permanent disability: FCFA 500,000 (~ USD 900) Accidental death: FCFA 1,000,000 (~ USD 1,800) Part of the death benefit (up to 100%) can be chosen as direct payment to a designated funeral home to cover funeral expenses (i.e. in kind benefit) FCFA 8,000 (~ USD 14) for yearly or FCFA700 (~ USD 1.3) for monthly payment; premiums are automatically deducted from mobile money account FCFA 8,400 (~ USD 15), based on the fact that most insured choose the monthly premium payment option Other comments Age limits are 21 to 65, with disability coverage expiring at age 61 Enrollment still happens by physical form filling at the telco s outlets, but premium payment is only possible through mobile money Multiple enrollments are not allowed 14

15 5. Ivory Coast: Mobile Funeral B. Product Assessment 1 Product: Allianz Obsèques Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B Developing country or emerging market Ivory Coast, after 10 years of civil war and a political crisis in 2011, is more still very much a developing country C Great majority of insured people or assets from low-income segment The vast majority of the population of Ivory Coast is low income and the low sums insured also only appeal to lowincome segments D No government subsidies of more than 50% No government subsidies Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development - None - No Death is a significant risk for low-income families in Ivory Coast. Optional direct payment of a part of the benefit to funeral homes helps to insure proper payout usage. The payout to annual premium ratio of 60 is decent 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) Fully voluntary. Moreover, the monthly premium payment option allows for cash-flow friendly payment 5 Customer education and feedback mechanisms in place Customers receive a physical insurance certificate, additional information via SMS and have access to a 8/5 hotline of the insurer 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Policy terms and exclusions are much simplified. No health underwriting and waiting period 7 Strong measures to ensure low transaction costs Premium collection through auto-debit from mobile money accounts is very efficient Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 15

16 5. Ivory Coast: Mobile Funeral C. Product Brochure Front 16

17 5. Ivory Coast: Mobile Funeral C. Product Brochure Back 17

18 6. India: Life Savings A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Sarve Shakti Suraksha (SSS) 5-year term life insurance with systematic savings incorporated Company name Bajaj Allianz Life Insurance Company Limited Country India Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Non-bank Microfinance Institutions (MFIs), Regional Rural Banks, Banking Correspondents, Customer Support Centers, Cooperatives Launch date: April 2008 Stop date: effective August 2013, this product has been closed for the issuance of new group policies, due to regulatory changes Last policies will mature in sentence product description A combination of term insurance and systematic savings benefits designed to provide risk protection as well as alternative savings opportunities The product term is 5 years Group or individual product Group Insurance Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Sum Insured: Minimum INR 2500 (~ USD 50), no limit on maximum coverage (Subject to underwriting limits) Risks covered: Natural and accidental death disability Minimum INR 500 (~ USD 10) per annum no limit on maximum premium INR 1,750 (~ USD 35) Other comments The product has won numerous awards, including the Skoch Award for Financial Inclusion 2011 &

19 6. India: Life Savings B. Product Assessment 1 Product: Sarve Shakti Suraksha (SSS) Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B Developing country or emerging market India is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment Majority of the premiums collected for this product are under INR 2,000 (~ USD 40) per year D No government subsidies of more than 50% All premiums are paid by the customer. There is no premium subsidy Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development - None - No SSS offers life coverage and a savings feature but claims and especially savings balances are relatively small, even for low-income Indians. Moreover, in case of RBBs outstanding loan balances are deducted first 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) It is a voluntary opt-in. In some cases premium amounts are also bundled with the loan installments to make the product affordable. However, there is no compulsion from the distribution partner s side at any point in time 5 Customer education and feedback mechanisms in place Allianz hotline printed on every brochure and policy document. A systematic Value for the Customer education initiative has been put in place, too 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Guaranteed issuance except where questions on the health declaration are marked as affirmative. Only exclusion: Suicide not covered in year 1 7 Strong measures to ensure low transaction costs The delivery channel fully integrates the product into existing business processes. Collection is often aligned with loan repayment. Other operational tasks are also outsourced Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 19

20 7. Indonesia: Credit Life Plus A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Payung Keluarga (Family Umbrella) Company name Allianz Indonesia Country Indonesia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Term Life (attached to credit accounts), with riders Banks, MFIs 1 Sep 2006 for base product 27 Nov 2013 for riders 1-sentence product description Compulsory group credit life coverage (conventional or takaful) with flexible benefits and voluntary add-on riders Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Compulsory for base product (with benefit package pre-configured by MFI), and voluntary for add-on riders Mandatory base Product: Risk: Death of debtor and spouse (optional) Benefit: Outstanding loan balance, or original loan amount Additional funeral benefit of up to 2x original loan (optional) Loans: IDR 0 max. 200mn (~ USD 0-20,000) Voluntary riders (since Dec-2013): Personal Accident for accidental death and total or partial permanent disability, with benefits of up to IDR 25,000,000 (~ USD 2,500) - pro-rated for partial disability Home Insurance for fire; with relocation benefits up to IDR 5,000,000 (~ USD 500) and additional accidental death benefit of up to IDR 5,000,000 (~ USD 500) Hospital Cash; with daily lumpsum of up to IDR 250,000 (~ USD 25) from 1st day of hospitalization, for max. 180 days, and max. IDR 2,500,000 (~ USD 250) of surgery benefits Mandatory base Product: IDR 100 to 1mn (~ USD ), depending on loan amount, tenor & benefits Voluntary riders (annualized premium, coverage runs as long as loan): Personal Accident: IDR 8,000 20,000 (~ USD 0.8 2) Home Insurance: IDR 5,000 30,000 (~ USD 0.5 3) Hospital Cash: IDR 100, ,000 (~ USD 10 25) Base Product: IDR 12,000 (~ USD 1.3) Riders: n.a. Other comments Base product is modular, with theoretically 54 different benefit configurations for MFIs to choose from Additional resources MILK Doing the Math - Brief no 36 (Microinsurance Centre 2015) Case Study: Escaping the credit life gap (Allianz 2015) Case Study: How Allianz Indonesia reached over 1 million with microinsurance (Allianz 2013) 20

21 7. Indonesia: Credit Life Plus B. Product Assessment 1 Product: Payung Keluarga Ranking 2 Rationale / Comments A Insurance principles applied Applied B Developing country or emerging market Indonesia is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment 98% of insured loans are under IDR 5mn (~ USD 550). This serves as a reliable proxy for majority low income customers D No government subsidies of more than 50% No government subsidies Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) - None Death of a breadwinner is a significant risk to low-income families in Indonesia. Although most loans are covered for the outstanding balance only, 20% of them also carry some cash payout to the families. Voluntary riders add further flexibility to customers to manage various other risks. Extensive market research was done to understand the target market. Life risk was only the top4 identified customer risk. The voluntary hospital cash rider, though, addresses the top1 identified customer risk of sickness. The base credit life cover is compulsory for customers as per the MFIs benefit configuration. However, the additional riders can be taken by customers on voluntary basis. 5 Customer education and feedback mechanisms in place Brochures are provided by some MFIs. Other MFIs distribute member cards instead. MFI staff is also equipped with flip-charts to explain the product on the spot. Direct helpline and Allianz address are not provided, except for the rider products. No systematic feedback collection. 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Free coverage limit up to IDR 10mn (~ USD 1,100). Only 2 exclusions: Suicide and insurance related crime ( age limit 17-60) 7 Strong measures to ensure low transaction costs Product, distribution and collection are fully integrated with MFI micro loans, including for riders. Most of the data entry and claims handling is also outsourced to the MFIs Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 21

22 7. Indonesia: Credit Life Plus C. Product Brochure Compulory base product Member Card as alternative to brochure Front Back 22

23 7. Indonesia: Credit Life Plus C. Product Brochure Voluntary add-on riders 23

24 8. Ivory Coast: Funeral Insurance A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Assurance Obséques (Funeral Insurance) Funeral Insurance Company name Allianz Ivory Coast Country Ivory Coast Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Microfinance Institutions (MFIs) October sentence product description Payment of a lump sum in case of death due to any cause, with variable options (accidental death, education grant for children, family coverage); exact offering may vary per MFI Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Voluntary opt-in Death: lump sum from XOF 300,000 to 2,000,000 (~ USD 600 4,000), depending on selected benefit plan With some MFIs, spouse, children, and parents can be selectively added to coverage the death benefit is doubled in case of accidental death the insured can choose to have approx. 60% of the death benefit paid directly to an undertaker a supplementary education rider can be added, which provides additional XOF 250,000 to 500,000 for 4 to 6 months as school fees payment (depending upon chosen option) Premium range (min, max) From XOF 5,000 to 92,000 (~ USD ) per year An additional XOF 1,000 (~ USD 2) one time subscription fee is charged Avg. premium / year (annualize if necessary) Other comments None XOF 22,000 (~ USD 45) 24

25 8. Ivory Coast: Funeral Insurance B. Product Assessment 1 Product: Assurance Obséques Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B Developing country or emerging market Ivory Coast, after 10 years of civil war and a political crisis in 2011, is more still very much a developing country C Great majority of insured people or assets from low-income segment The customers of the MFI distribution partners are lowmedium segment, with at least 80% of the insured belonging to the 60% of population with the lowest incomes D No government subsidies of more than 50% Premiums are not subsidized 1 Significant contribution to risk management of end customers Funerals are a significant expense in Ivory Coast, and the product significantly contributes to covering these. Family and parents can be covered as well at very competitive pricing. The possibility to add an education rider gives further options to customize the product to customer needs. 2 End-customer receives other tangible benefits (e.g. discounts, lottery etc.) - No tangible other benefits. But with some MFIs the insured has the option that part of the payout is paid to the undertaker to ensure a proper funeral, no matter what 3 4 End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) - No customer studies 100% voluntary 5 Customer education and feedback mechanisms in place Simple language brochures are provided. Some MFIs also give Allianz contact details on their brochures. No service hotline and systematic collection of customer feedback. 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Simple base product, with simple add-on options (e.g. education rider), no medical selection 7 Strong measures to ensure low transaction costs The MFIs takes charge of distribution, subscription, data and premiums collection, and parts of the claims process. This significantly lowers costs Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 25

26 8. Ivory Coast: Funeral Insurance C. Product Brochure MFI1 Outside Inside 26

27 8. Ivory Coast: Funeral Insurance C. Product Brochure MFI2 Front Back 27

28 9. Indonesia: Scratch-Card Personal Accident A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Kartu ProteksiKU ( My Protection Card ) Personal Accident Company name Allianz General Indonesia Country Indonesia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) MFIs (Micro Finance Institutions) 2011 (for microinsurance channel: 1-Oct-2012) 1-sentence product description Personal Accident insurance in form of credit-card sized pre-paid voucher; instant activation and coverage confirmation via SMS Group or individual product Individual Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Voluntary opt-in Death caused by accident: IDR 25mn (~ USD 2,750) Total permanent disability caused by accident: maximum IDR 25mn (~ USD 2,750) depending on degree of physical disability Premium range (min, max) Avg. premium / year (annualize if necessary) All vouchers cost IDR 27,500 (~ USD 3.0) and are valid for one year IDR 27,500 per year (~ USD 3.00) Other comments The product is also sold through other channels, e.g. tied agents. However, this assessment focuses only on the microinsurance segment, i.e. distribution through MFIs. Business figures are only reported from this channel. 28

29 9. Indonesia: Scratch-Card Personal Accident B. Product Assessment 1 Product: Kartu Proteksiku Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B Developing country or emerging market Indonesia is an emerging market according to S&P and a developing country according to World Bank C D Great majority of insured people or assets from low-income segment No government subsidies of more than 50% No government subsidies Product is distributed through MFIs that focus on lowincome customers. As the product is voluntary, some insured may actually be better off, but the majority can still be considered low-income in the Indonesian context. 1 Significant contribution to risk management of end customers - Personal Accident sold to the general public, i.e. not to a special high risk group (e.g. construction workers), does not contribute significantly to risk management of lowincome people as the likelihood of a claim is very low 2 End-customer receives other tangible benefits (e.g. discounts, lottery etc.) The exceptionally high payout-to-premium ratio of 920/1 (USD 2,750 coverage for 3.00 premium) qualifies as a tangible other benefit. 3 4 End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) - No Fully voluntary 5 Customer education and feedback mechanisms in place Customer receives full policy wording as booklet and a handy insurance card to be put in wallet, including Allianz service number and address. 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Simple product format (voucher), automatic acceptance via SMS with no exclusions except age limit. Booklet with full policy wording is a bit lengthy. 7 Strong measures to ensure low transaction costs SMS activation and single premium payment minimize distribution and collection costs. Claim settlement is traditional. No integrated IT system. Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 29

30 9. Indonesia: Scratch-Card Personal Accident C. Policy Document Policy booklet (cover) Policy booklet (first inside page) 30

31 9. Indonesia: Scratch-Card Personal Accident C. Policy Document Insurance card (front) Insurance card (back) 31

32 10. India: Crop Index A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Weather Protect Index Insurance Company name BajajAllianz General Insurance Co. Ltd. Country India Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Banks March sentence product description This insurance is subsidized by the public Indian WBCIS scheme (Weather-Based Crop Insurance Scheme) and covers loan-taking smallholder farmers against adverse weather conditions through weather related index insurance. The more adverse the index, e.g. below-average rainfall, the higher the likely losses for the farmer and the higher the insurance payout. up to a maximum sum insured Group or individual product Individual Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Compulsory (tied to agricultural loans) Cover: Adverse behavior of a weather index (as a proxy for actual losses) with payouts starting from a pre-defined trigger point (strike) and proceeding in notional steps until a pre-defined exit point, at which the maximum sum insured would be paid Several weather indices can be used, e.g. rainfall (excess, deficit, dry spells), temperature (high/low), humidity, wind speed or any other measurable weather parameter The trigger, exit and sum insured depend on the location, season, crop, claim experience and business potential Sum insured is equal to the loan amount Avg. loan size is INR 15,000 30,000 (~ USD ) for food crops and INR 20, ,000 (~ USD 300 1,500) for cash crops Per hectare: INR 250 to 1,000 (~ USD 4 16) Per loan: 5-12% of loan for rainy season crop and 4-8% for winter season crop Around INR 1,700(~ USD 25) per loan for food crops and INR 5,000 (~ USD 80) per loan for cash crops Annualization is not applicable because coverage only runs 3.5 months Other comments This product carries public premium subsidies in the range of 30% 75% under the WBCIS scheme This assessment only relates to the portion of the portfolio where subsidies do not exceed 50% If subsidies exceed 50%, Allianz Group s microinsurance definition does not consider it as micro-insurance but rather as social protection schemes. It is excluded from microinsurance reporting The product is also available on voluntary basis. However, this option plays a marginal role 32

33 10. India: Crop Index B. Product Assessment 1 Product: Crop Index Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B Developing country or emerging market India is an emerging market according to S&P and a developing country according to World Bank C D Great majority of insured people or assets from low-income segment No government subsidies of more than 50% Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) Strong measures to ensure low transaction costs - None. - The government s weather index scheme, under which this products is brought to market, specifically targets lowincome smallholder farmers. Up to 50 percent subsidized by the Indian public authorities. Where subsidies exceed 50 percent, such business is excluded from reporting. Weather represents the single major source of risk for rainfed farming in India. The product significantly contributes to mitigate such risks (e.g. draught) and allows farmers continued access to agricultural credits. End customers are not directly involved but the Government involves representatives from the district authorities in finalizing the Index and negotiates with the insurance company to make the triggers farmer friendly. Mostly compulsory because tied to agricultural loans. A small number of non-loaning smallholder farmers also take the subsidized insurance on a voluntary basis. Each farmer receives a cover note with a BajajAllianz contact number on it. Moreover, BajajAllianz General puts a lot of effort into creating product awareness (farmer meetings, van campaign, marketing collaterals etc.) Only few exclusions apply, but the product details are still complex, especially the definition and measurement of the trigger and exit points. It is difficult for farmers to accurately predict their claim payouts, but the close involvement of banks helps to explain and process claim payouts. Enrollment data requirements are numerous and time consuming, but banks do help with enrollment since they already have most data at hand. Due to the index-based claim mechanism, farmers do not need to file claims. Claims are triggered automatically if the index strikes. Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 33

34 10. India: Crop Index C. Product Brochure 34

35 11. Malaysia: Motorcycle PA A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Motorcycle & Personal Acccident Motorcycle & Personal Accident Company name Allianz General Malaysia Country Malaysia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Postal Service 1 July sentence product description Motorcycle coverage for third-party liability and (optional) loss and damage to due to accident Personal Accident as semi-bundled extra offer Group or individual product Individual Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Motorcycle loss & damage: maximum current market value of motorcycle PA: Death due to accident: MYR 5,000 (~ USD 1,600) PA: Total permanent diability or dismemberment: MYR 5,000 (~ USD 1,600) PA: Bereavement benefit: MYR 500 (~ USD 160) for Motorcylce: n.a.; for PA: MYR 15 (~ USD 5) per year For Motorcycle: MYR 100 (~ USD 33) For PA: MYR 15 (~ USD 5) Other comments Motorcycle premiums vary per brand and engine volume Product is also marketed by tied agents at different premiums (excluded here) Third-party liability cover is a statutory requirement for motorcycles in Malaysia. Additional motorcycle cover and personal accident cover are voluntary 35

36 11. Malaysia: Motorcycle PA B. Product Assessment 1 Product: Motorcycle & PA Ranking 2 Rationale / Comments A Insurance principles applied Applied B Developing country or emerging market Malaysia is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment Customer base of postal service is generally low-income, especially for insurance sales D 1 2 No government subsidies of more than 50% No government subsidies Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) - None Motorcycle coverage is comparable in importance to car coverage in developed markets. It is a statutory requirement in Malaysia. PA is sensible for motorcyclist as a high risk group 3 End-customers involved in product development - No 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) Several options to choose from: Third-Party liability only (a statutory requirement), comprehensive (TPL loss & damage) and on-top Personal Accident cover 5 Customer education and feedback mechanisms in place Brochures and policy documents are provided, including an Allianz customer service hotline. Coverage is widely used and well known in Malaysia. 6 Simple product specifications (e.g. pre-underwritten, few exclusions) - Motorcycle policy wording is quite lenghty, the same as for all other distribution channels (e.g. tied agents), and the same as for car insurance 7 Strong measures to ensure low transaction costs Distribution through low-cost Malaysian postal service allows somewhat lower distribution and operational costs (e.g. vis-à-vis tied agents) Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 36

37 11. Malaysia: Motorcycle PA C. Product Brochure Outside Personal Accident only. No brochure for Motorcycle component. 37

38 11. Malaysia: Motorcycle PA C. Product Brochure Inside Personal Accident only. No brochure for Motorcycle component. 38

39 12. West Africa & Egypt: Credit Life A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Assurance Décès Emprunteur (Life Insurance for Entrepreneurs) Term Life (attached to credit accounts) Company name Allianz Africa and local subsidiaries Country Cameroon, Burkina Faso, Egypt, Ivory Coast, Madagascar, Senegal Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Microfinance Institutions (MFIs) 13-Jan sentence product description In case of death of the loan taker due to all causes or in case of total permanent disability of the loan taker due to accident, Allianz repays 100% of the initial loan amount Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Compulsory Death of the loan taker due to all causes Death of spouse (as voluntary add-on, Senegal only) Total permanent disability of the loan taker due to accident (medically certified) Sum Insured: 100% of the initial loan amount from which: The MFI receives the outstanding loan balance The micro-entrepreneur s family receives the difference between the initial loan amount and the outstanding loan balance Avg. 0.6% of loan amount (depending on risk characteristics of the insured group) USD 3 per loan loans run for an average of 12 months with an avg. loan size USD 540 Other comments Developed and distributed in cooperation with Planet Guarantee (except Cameroon and Ivory Coast) 39

40 12. West Africa & Egypt: Credit Life B. Product Assessment 1 Product: Assurance Décès Emprunteur Ranking 2 A Insurance principles applied Applied Rationale / Comments B C D Developing country or emerging market Great majority of insured people or assets from low-income segment No government subsidies of more than 50% No government subsidies Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) Strong measures to ensure low transaction costs - None - - Burkina Faso, Cameroon, Egypt, Ivory Coast, Madagascar and Senegal are all developing countries according to World Bank The vast majority of insured are low income microentrepreneurs. This can be seen from their average loan size of USD 540 (data from Cameroon and Ivory Coast not included) Death is a significant risk and there is a direct payout to the family (after deduction of the loan balance). Coverage of HIV or diabetic entrepreneurs facilitates their access to credit. Accidental disability risk is less significant A market and demand study was done. Product design and education materials were pilot tested with microentrepreneurs The product is compulsory for the credits of all MFI partners The MFI s credit officers are trained to orally explain the product to their clients, but no local language material for the customer. Regular exchange on customer complaints between MFIs and the broker (Planet Guarantee) No pre-underwriting. Only 3 exclusions (suicide, radiation, war). No medical exclusions. Simplified disability definition and easy claims documentation The mandatory underwriting-free group insurance approach lowers transaction costs. Most processes are outsourced to the MFIs and the broker (Planet Guarantee) which operate on lower costs than Allianz Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 40

41 13. West Africa: Crop Index A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Assurance Récolte Sahel (Sahel Harvest Insurance) Index insurance Company name Allianz Africa and local subsidiaries Country Burkina Faso and Mali Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Microfinance Institutions (MFIs), banks, agricultural cooperatives and agro-dealer networks 1 June sentence product description Covers outstanding loans of smallholder farmers; claims are triggered automatically if the rainfall is insufficient for proper growth of the farmers crops (corn or cotton) Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Compulsory If evapotranspiration index 1 below 54 58% (depending on crop and region), i.e. total crop failure: Full coverage of outstanding loan amount If evapotranspiration index* between approx 65% and 54 58%, i.e. partial crop failure: Partial coverage of outstanding loan amount 10 12% of loan amount, depending on crop and region USD 27 per loan; avg. loan size is USD 235 (avg. loan duration: 3.5 months) Annualization not applicable because planting season only lasts 3.5 months Other comments Only sold in a 4-6 weeks sales window before planting season Expansion to more markets and crops types is planned 100% of the risk is reinsured by international reinsurance partners Developed and distributed in cooperation with Planet Guarantee Additional resources MILK Doing the Math Brief no 35 (Microinsurance Centre 2015) 1) Evapotranspiration is the sum of evaporation of water from plants and soil. This index is independently measured by third parties using satellite data. 41

42 13. West Africa: Crop Index B. Product Assessment 1 Product: Assurance Récolte Sahel Ranking 2 A Insurance principles applied Rationale / Comments Applied. The risk of insufficient rainfall in the insured areas is high. This is why the premium rate is also relatively high at around 10-12% B Developing country or emerging market Burkina Faso, Mali and Senegal are developing countries according to World Bank C Great majority of insured people or assets from low-income segment The vast majority of insured are low income farmers. This can be seen from their small farm sizes (avg. 1.3 ha) and their low avg. loan size of USD 235 D No government subsidies of more than 50% No government subsidies. However, an initial grant by AGRA (Alliance for a Green Revolution in Africa) helped with product development and piloting Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development - None Low rainfall is a great risk for farmers. Outstanding loans are hard to repay when harvests fail. The product addresses this and eases access to credit Extensive market and demand study before product development. Product and education materials were pilot tested with a small number of farmers. 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) - Although the product can be offered on a voluntary basis, virtually all current distribution partners have made coverage mandatory for their agro-loans 5 Customer education and feedback mechanisms in place Intensive training of distribution channels and their field representatives. Raising of awareness through posters, radio, film. However, no access to a hotline or systematic feedback mechanism 6 Simple product specifications (e.g. pre-underwritten, few exclusions) No underwriting and no exclusions. Conceptually, the index is straightforward. But the exact technical definition and measurement method is complex. The product therefore requires in-depth explanation 7 Strong measures to ensure low transaction costs The (mandatory) group insurance approach lowers transaction costs. The claims process is simplified by the index as it allows automatic triggering of claims. Reinsurance coverage is essential and needs to be administered Overall ranking ) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 42

43 13. West Africa: Crop Index C. Product Brochure Flyer examples 43

44 13. West Africa: Crop Index C. Product Brochure Inside Personal Accident only. No brochure for Motorcycle component. Product brochure from Mali 44

45 14. Burkina Faso: Savings-Life A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Assurance Super Compte Epargne (Super Savings Account Insurance) Term Life (attached to savings accounts) Company name Allianz Burkina Faso Country Burkina Faso Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Post Office 2002 (also see Other comments below) 1-sentence product description Voluntary annual term life insurance attached to postal savings accourts, with premiums deducted from annual interest earned Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Voluntary opt-in Death of Savings Account holder: lump sum of XOF 50,000 (~ USD 100) Premium range (min, max) XOF 1,000 per year (~ USD 2) Premium is deducted from annual interest payment on the postal savings account Avg. premium / year (annualize if necessary) XOF 1,000 (~ USD 2) Other comments Product was newly classified in 2013 as Microinsurance according to Allianz Microinsurance Definition, although it has already been running since 2002 Product automatically renews for another year if it is not cancelled by the insured 45

46 14. Burkina Faso: Savings-Life B. Product Assessment 1 Product: Assurance Super Compte Epargne Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B C D Developing country or emerging market Great majority of insured people or assets from low-income segment No government subsidies of more than 50% Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Burkina Faso is a developing country according to World Bank Customer base of postal service is generally low-income, especially for insurance sales Premiums are not subsidized Funerals are a significant expense in Burkina Faso, and the product contributes to covering these. However, the premium-to-benefit ratio of 1:50 is relatively low and the benefit of XOF 50,000 (~ USD 100) may just cover a fraction of the actual post-mortem expenses of the family. - No tangible other benefits. - No. 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) 100% voluntary, but automatic renewal process may lead to customers forgetting about their coverage. 5 6 Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) - Product is just verbally explained by bank staff and the enrollment form contains the coverage conditions. No brochure, service hotline and systematic collection of customer feedback given. Extremely simple product with just one benefit and premium option; no medical selection 7 Strong measures to ensure low transaction costs Very convenient premium payment through automatic deduction from interest earned on the savings account. This minimizes collection costs. Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 46

47 15. India: Cattle & Livestock A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Cattle & Livestock Insurance Policy Livestock insurance Company name BajajAllianz General Insurance Country India Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Banks, MFI, Co-ops Dairies, Credit Co-operative Societies, Business Correspondents Apr sentence product description Coverage for cattle and other livestock (e.g. sheep and goats) against the risk of death due to multiple causes additional disability option to insure failure to produce milk or to reproduce due to certain illnesses Group or individual product Mostly group (85%), but individual purchase also possible (15%) Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Mostly compulsory, but voluntary purchase is also possible Death: Agreed Sum Assured, i.e. generally market value of cow, on average INR 30,000-40,000 (~ USD ) Disability: Percentage of Sum Assured n.a INR 800-1,200 (~ USD 16-24) Other comments The product is often tied to bank loans for cattle for low-income farmers where the loans themselves carry low interest rates due to government subsidies 47

48 15. India: Cattle & Livestock B. Product Assessment 1 Product: Cattle/Livestock insurance Ranking 2 Rationale / Comments A Insurance principles applied Applied B Developing country or emerging market India is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment The great majority of coverage is tied to governmentsubsidized loans for low-income farmers D No government subsidies of more than 50% No government subsidies for insurance premiums. However, interest rates on the underlying loans (if any) are mostly subsidized 1 2 Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) - None Cows are a crucial income source for millions of low-income Indian farmers. Death or disability to produce/reproduce can cause severe financial stress 3 End-customers involved in product development - No in earlier days there was committee before privatization 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) The product can be purchased individually. The disability rider is also optional. However, when tied to bank loans, the product is compulsory 5 Customer education and feedback mechanisms in place Limited customer information provided, but still awareness is very high 6 Simple product specifications (e.g. pre-underwritten, few exclusions) - The policy wording is quite long and technical. No product difference is made for low-income customers vis-à-vis large scale farmers (although most claims get paid as benefit to low-income people) 7 Strong measures to ensure low transaction costs Ear tags are used to reduce fraud and associated costs. Distribution mainly through banks also reduces distribution and operational costs Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 48

49 16. India: Group Term Life A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Group Term Life Pure Risk Insurance coverage for a period of one year Company name Bajaj Allianz Life Insurance Company Limited Country India Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Non-bank Microfinance Institutions (MFIs) Not available 1-sentence product description An insurance product designed to provide risk protection against natural death to the end customer Other benefits include an accidental death & disability rider Group or individual product Group Insurance Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Compulsory Sum Insured: Minimum INR 1,000 (~ USD 20), no limit on maximum coverage Risks covered: Natural and accidental death Disability rider is optional (but rarely implemented in microfinance context) MFIs deduct the outstanding loan balance (if any) from the sum insured Depending on the group, underwriting rate is set by the company s underwriter Varies based on group demographics INR 100 (~ USD 2) Other comments The product is distributed through various channels, most of which do not focus on low-income people. However, this assessment is on the MFI-segment only 49

50 16. India: Group Term Life B. Product Assessment 1 Product: Group Term Life Ranking 2 Rationale / Comments A Insurance principles applied Fully applied B Developing country or emerging market India is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment All loan customers of MFIs are enrolled in the scheme. The great majority of MFI customers are low to very low income D No government subsidies of more than 50% All premiums are paid by the customer. There is no premium subsidy Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development - None - No The product covers natural and accidental death. Disability is rarely offered. The sum insured allows for outstanding loan balances (if any) to be paid off. The difference is paid to the beneficiaries, but is often only a small amount 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) - In the context of an MFI opting for this product, it is compulsory. This applies to both the group lending and individual lending models 5 Customer education and feedback mechanisms in place Customers receive insurance certificates of insurance with Allianz name and address. No service line and systematic feedback collection in place 6 Simple product specifications (e.g. pre-underwritten, few exclusions) Simplified product design and easy to explain. The only exclusion is suicide not being covered in year 1. It is covered for repurchases from year 2 on 7 Strong measures to ensure low transaction costs Distribution and collection is outsourced to the MFI for lower costs. The MFIs also forward certificates of insurance & assist with claims Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 50

51 17. India: Personal Accident A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Janata Personal Accident Personal Accident Company name BajajAllianz General Insurance Company Limited Country India Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Banks, MFIs, Business Correspondents 1 April sentence product description Yearly renewable voluntary personal accident insurance that covers accidental death and disability Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in Death or severe dismemberment/total permanent disability due to accident: sum insured min INR 25,000 50,000 (~ USD 500 1,000) Disability is defined as a) severe dismemberment or b) total and permanent inability to pursue any kind of work c) loss of hearing (this cover only available in Business Correspondent channel) Partial dismemberment (loss of 1 eye or 1 hand or foot): 50% of sum insured INR (~ USD ) per year INR 40 (~ USD 0.8) Other comments The product is often voted for by annual general assemblies of cooperatives. On positive vote, the policy gets extended for another year and cover is then mandatory for all members. 51

52 17. India: Personal Accident B. Product Assessment 1 Product: Janata Personal Accident Ranking 2 Rationale / Comments A Insurance principles applied Applied B Developing country or emerging market India is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment Distribution partners focus on low-income households. This can also be seen from the low average premiums of INR 30 (~ USD 0.6) per year D No government subsidies of more than 50% No government subsidies Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) - None - No Death or disability due to accident is rare among the general population. However, especially the distribution through Business Correspondents now carries the product to rural areas, where accident risk among agricultural population is higher than usual (e.g. snake bites) Voluntary opt-in 5 Customer education and feedback mechanisms in place - Currently all information to customers is oral. No brochures etc. Policy documents are in English which most customers do not understand 6 Simple product specifications (e.g. pre-underwritten, few exclusions) - The product is pre-underwritten. However, multiple exclusions exist. Policy wording is not simplified 7 Strong measures to ensure low transaction costs Collection is handled by the distribution partner. New enrollments and collection data are processed every 15 days as a simple batch processes Overall ranking C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 52

53 Non-Qualifying 1 1. Ivory Coast: Mobile Savings A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) Allianz Epargne Pure savings plan (no risk element) Company name Allianz Côte d Ivoire Assurance Vie Country Ivory Coast Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) Telecommunication company 1st June sentence product description Mobile savings plan with regular contributions for min. 3 years with 85% investment earnings on the net premium credited to the account value (example: 10% investment total return on net premiums 8,5% credited to account) Group or individual product Group Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Voluntary opt-in At the end of the savings plan s term, or in case of prior death or total permanent disability, the account value accumulated until this date will be returned in full to the account holder Benefits: terminable annuities chosen by the insured Max. 30% of the account value can be withdrawn every year (except in year 1) at no penalty; total withdraw is possible after two years at 5% surrender fee Premiums are minimum FCFA 3,000 (~ USD 5) per month Premiums can also be paid quarterly, semi-annually or annually Premiums are automatically deducted from mobile money account Premiums are subject to an administration fee of 6.6%, the net of which will be invested with annual results credited 85% to the account FCFA 40,000 (~ USD 70), based on the fact that most policyholders choose the monthly premium payment option Other comments Minimum age limit is 21; no maximum age limit Enrollment still happens by physical form filling at the telco s outlets, but premium payment is only possible through mobile money 1) Non-qualification means that a product has failed to meet any of the four basic criteria A D of the Allianz Group microinsurance definition, although they may still address needs of low-income people. Sample cases are shown here to better illustrate conditions under which this may happen. 53

54 Non-Qualifying 1 1. Ivory Coast: Mobile Savings B. Product Assessment 1 Product: Allianz Epargne Ranking 2 A Insurance principles applied B Developing country or emerging market Rationale / Comments This product is a pure savings product without any risk coverage in it. Therefore it cannot be considered a (micro)insurance product. Knock-Out. Ivory Coast, after 10 years of civil war and a political crisis in 2011, is more still very much a developing country C Great majority of insured people or assets from low-income segment The vast majority of the population of Ivory Coast is low income. Moreover, the low sums insured only appeal to low-income segments D No government subsidies of more than 50% No government subsidies Significant contribution to risk management of end customers End-customer receives other tangible benefits (e.g. discounts, lottery etc.) End-customers involved in product development Voluntary opt-in (), voluntary opt-out () or compulsory (-) Customer education and feedback mechanisms in place Simple product specifications (e.g. pre-underwritten, few exclusions) Strong measures to ensure low transaction costs Overall ranking 3 not micro Note: Product is not considered micro due to failure on criterion A 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 54

55 Non-Qualifying 1 1. Ivory Coast: Mobile Savings C. Product Brochure Front 55

56 Non-Qualifying 1 1. Ivory Coast: Mobile Savings C. Product Brochure Back 56

57 Non-Qualifying 1 2. Malaysia: Life & Pers. Accident A. Product Specifications Product name (generic or marketing name) Product type (e.g. term life, endowment, motorcycle) 1AZAM plan (AZAM = Akhiri Zaman Miskin, i.e. the End of the Poverty Era) Group Life & Group Personal Accident Company name Allianz Life Insurance & Allianz General Insurance (bundled) Country Malaysia Distribution partner type (e.g. MFIs, banks, coops, retailers) Launch date (and stop date if any) National Welfare Foundation Malaysia (Government agency) Launch: 1-Jan-2011; End: 31-Dec-2011 (after government subsidies stopped) 1-sentence product description Government sponsored life insurance program for 100,000 households classified as very poor by the government. Group or individual product Group insurance Voluntary opt-in, opt-out or compulsory Covered risks & benefits / sum insured Premium range (min, max) Avg. premium / year (annualize if necessary) Automatic enrollment by the National Welfare Foundation Malaysia Natural death: Insured MYR 15,000 (~ USD 4,700) Spouse MYR 1,000 (~ USD 320) Child MYR 500 (~ USD 160) Accidental death: Insured MYR 25,000 (~ USD 8,000) Spouse MYR 11,000 (~ USD 3,500) Child MYR 5,500 (~ USD 1,750) MYR 120 (~ USD 37) flat for insured, spouse and 2 children MYR 120 (~ USD 37) Premium paid by the National Welfare Foundation Malaysia Other comments Natural death cover is provided by Allianz Life Insurance Accidental death cover is provided by Allianz General Insurance 1) Non-qualification means that a product has failed to meet any of the four basic criteria A D of the Allianz Group microinsurance definition, although they may still address needs of low-income people. Sample cases are shown here to better illustrate conditions under which this may happen. 57

58 Non-Qualifying 1 2. Malaysia: Life & Pers. Accident B. Product Assessment 1 Product: 1AZAM plan Ranking 2 Rationale / Comments A Insurance principles applied Applied B Developing country or emerging market Malaysia is an emerging market according to S&P and a developing country according to World Bank C Great majority of insured people or assets from low-income segment Yes, 100% of insured are very poor according to government definition D No government subsidies of more than 50% Premium 100% subsidized by Malaysian government in Knock-Out. Discontinued because government support discontinued in Significant contribution to risk management of end customers 2 End-customer receives other tangible benefits (e.g. discounts, lottery etc.) 3 End-customers involved in product development 4 Voluntary opt-in (), voluntary opt-out () or compulsory (-) 5 Customer education and feedback mechanisms in place 6 Simple product specifications (e.g. pre-underwritten, few exclusions) 7 Strong measures to ensure low transaction costs Overall ranking 3 not micro Note: Product is not considered micro due to failure on criterion D C. Product Brochure: not available 1) See our website for a full explanation of our assessment methodology 2) For knock-out criteria A-D: or ; for criteria 1 7: - (0), (1) or (2) 3) Average of criteria 1 7. Minimum 0.0, maximum 2.0. Note: A high ranking is only an indicator for compliance with Allianz microinsurance values, not an indicator for actual business success 58

59 Disclaimer These assessments are subject to the disclaimer provided below. Cautionary Note Regarding Forward-Looking Statements The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group s core business and core markets, (ii) performance of financial markets, including emerging markets, and including market volatility, liquidity and credit events (iii) the frequency and severity of insured loss events, including from natural catastrophes and including the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures, and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. No duty to update. The company assumes no obligation to update any information contained herein. 59