m-insurance innovations and regulatory considerations Presented to: Microinsurance Learning Session Livingstone, Zambia March 9-12, 2015 Experts in creating inclusive digital insurance markets Jeremy Leach Founder, Inclusivity Solutions
m-insurance innovations m-insurance regulatory considerations conclusions Agenda
M-INSURANCE, STARTED OFF SLOWLY BUT IS GROWING FAST >60% of the initiatives have been launched in Africa 5 Africa Asia Latin America 2 4 57 70 1 40 3 2006 Source: BFA, Author 21 12 8 2 8 3 6 9 11 15 2007 2008 2009 2010 22 26 30 2011 2012 2013 2014
M-INSURANCE COMES IN DIFFERENT FLAVOURS 1. Free 2. Premium 3. Freemium Airtime Loyalty Loyalty Mobile Money OTC Paid And further characterised by whether they are: Strategic m-insurance: with the support, brand and capabilities of the MNO Transactional m-insurance: primarily focused around payments or support
AFRICA HAS OVER 60% OF THE GLOBAL M-INSURANCE ~65 DEPLOYMENTS m-insurance initiatives launched in Africa by/with major MNO s with ~5 m-insurance sprinters Airtel Insurance (Ghana); unimobile (Ghana); Kopa Bima (Kenya); Bima Mkononi (Kenya); Padi 4 Life (Nigeria), Airtel-Metropolitan (Tanzania); Airtel Insurance (Zambia); NICO Insurance (Zambia) Tigo Family Care (Ghana), Tigo Kiiray (Senegal), Pona na Tigo Bima (Tanzania) yucover (Kenya) Farijika (Tanzania) Faraja, Comprehensive Community Based Rehabilitation, CHF Iliyoboreshwa (Tanzania); Vodacom Funeral Cover & Vodacom MPesa Funeral Cover, & Vodacom handset (SA) Prévoyance O (Ivory Coast), Assurancevie Orange Money (Madagascar) Sure 4 Life (Nigeria) TNM Moyo Cover (Malawi) Kenya: M-Kesho, Akiba Sure, Bima ya Jamii, Jiyenge Savings (M-Bima), MIBLI / Mifugo Maisha
A NUMBER OF STRATEGIC M-INSURANCE MODELS HAVE BEEN IDENTIFIED AS SPRINTERS SHOWING THE POTENTIAL FOR RAPID Many powered GROWTH. by international technical service providers EcoLife Zimbabwe reached 20% of the adult population in 7 months Telenor Talkshawk Pakistan reached 400,000 people in 2 months Tigo Bima Ghana reached almost 1m lives in 3 years Airtel Zambia reached an estimated 2m at launch Robi Bangladesh has reportedly hit 4m clients MTN Nigeria reportedly reached 1m clients in a year Loyalty Loyalty Freemium Loyalty Loyalty Voluntary Paid
AND WHAT NEW INNOVATIONS SHALL WE EXPECT?
m-insurance innovations m-insurance regulatory considerations conclusions
THE LAUNCH OF ECOLIFE ZIMBABWE Econet s Ecolife A promising start... Loyalty scheme product provided to subscribers for free Zimbabwe s largest MNO: 7 m subs. 7 October 2010 free embedded life insurance product launched to Econet subscribers on an opt in basis 31 March 2011 Trustco announces there are 1.6 million clients! (EcoNet claims there were only 1,2m) First Mutual Life Zimbabwe s largest insurer Trustco Namibia served as the tried and tested technical service partner Source: BFA - Cenfri, FinMark Trust Ecolife research funded by FinMark Trust.
..AND THEN ECOLIFE WAS CANCELLED DUE TO A FALL OUT BETWEEN ECOLIFE AND TRUSTCO, A TECHNICAL SERVICE PROVIDER An apocryphal story 1,6m people / 20% of the adult population were reached by EcoLife Zimbabwe in 7 months! 62% of those surveyed were not notified about its cancellation 63% Ruled out use of similar products in future 42% Dissatisfied with insurance 30% Better ways to protect against future problems than insurance Ultimately the failure potentially impedes the growth of the insurance market Source: BFA-Cenfri on behalf of FinMark Trust
IN ORDER TO UNDERSTAND THE RISKS OF M-INSURANCE WE NEED TO ASSESS THE RISK DRIVERS WHICH LEADS TO A RANGE OF INDICATIVE RECOMMENDATIONS Why should supervisors be concerned around m- insurance? Power imbalance between MNOs and insurance partners Multiple regulatory jurisdictions adds complexity MNO brand power Premium incidence who pays? Source: Leach & Ncube, 2014, Regulating m-insurance in Zimbabwe: managing risk while facilitating innovation. Prepared for FinMark Trust. Indicative recommendations around how to manage risk in m-insurance i. Define the m-insurance product ii. Clarify the policyholder iii. Define the nature of the legal relationship and the responsibilities pertaining to all parties involved iv. Determine whether premium incidence changes the risk profile v. Assess whether there are appropriate levels of disclosure vi. Clarify consumer recourse options available vii. If you fail, then fail well - creating a living will
m-insurance innovations m-insurance regulatory considerations conclusions
CONCLUSIONS m-insurance is increasingly taking off in emerging markets and has incredible potential for scale if the right ingredients are present and it has the strategic backing of MNOs (i.e. strategic m-insurance) Whilst a number of m-insurance sprinters have exploded in the market the majority remain slow growing but lessons are being learnt fast Challenges remain in terms of regulators who are wary of these models, to balancing the need for low touch (digital) vs high touch (physical) sales and client engagement and the right product mix for the channel As an example, in Zimbabwe, both FML and Econet have since launched new m- insurance products with some success And now new players are entering the market watch this space
Jeremy Leach Founder, Inclusivity Solutions jeremy@inclusivitysolutions.com Experts in creating inclusive digital insurance markets