LOOKING INTO THE FUTURE: LEVERAGING NEW DISTRIBUTION CHANNELS FOR MICROINSURANCE Barbara Chesire-Chabbaga, Lead Consultant – Actuarial & Strategy Jo’burg, September 27 th 2016
LOOKING INTO THE FUTURE: LEVERAGING NEW DISTRIBUTION CHANNELS FOR MICROINSURANCE
Barbara Chesire-Chabbaga, Lead Consultant – Actuarial & Strategy
Jo’burg, September 27th 2016
Disruptive innovations
Trendsetters
The Kenyan context
Introduction
Mobile money
Internet
Mobile phenomenon
Livestock
Tea value chain
Agriculture
Leveraging lessons
Emerging innovations
The Health Paradox
Content
Introduction
Disruptive Innovations
Financial M-Pesa Lipa na M-Pesa M-Shwari Agency Banking
Non-financial
Uber Tech hubs & labs Huduma Centers Beba Pay
Upcoming mVisaFacebook/Whatsappfor money transfer
Psychometric analysis for loan
disbursement
Satellite loan vetting for farmers
Kenyan trendsettersM-Bima
•Started in 2010
•First mobile insurance platform
Safari Bima
•Started in 2008
•Short-travel insurance product
•Distribution was unsuccessful
Kilimo Salama
•Started in 2011
•Crop insurance bundled with inputs
Linda Jamii
•Health product –started in 2014 and folded within one year
•Partnership between Britam and Safaricom
•Poor product design and low uptake due to distribution model
M-Tiba
•Launched last week
•Partnership between safaricom and pharmaccess
•Mobile wallet ear-marked for health
Use of financial services
Banks 8.1M
Coops 2.7M
MFIs 0.8M
MFSP 15.1M
Informal Groups 2.1M
….of Kenyans have never had an insurance cover
75%
Mobile Technology: Use of mobile money and internet
The Kenyan Context
90% mobile penetration
38 million mobile
phone users16.6
million users of M-Pesa
40% of Kenyans
own a smart phone14 million
users of mobile
internet
Kadogo economy
Mobile money
Kenya has the world’s highest mobile money penetration
16.6 million users transact USD 50 billion annually
Over 100,000 mobile money agents country-wide
Successful due to ability to stay ahead of lagging regulators
Opportunities in mobile money
Leveraging mobile money agents for distribution
Mobile walletsm-Tiba: Savings wallet ear-marked for health only unlocked at a registered health care facility; old mutual offering USD 80 personal accident cover – we are yet to see the success of this however we believe refinement will need to be done to increase value: e.g. Insured emergencies
Lipa na M-Pesa
Use of internet
30% of Kenyans use smart phones
Mobile internet subscriptions rose 5.9% to reach 14.7 million users
Total internet users stand at 23.2 million
Internet.org/Free basicsProviding a bundle of free basic internet servicesInitiative by Facebook that plans to bring free access to selected Internet services to less developed countriesSouth Africa and Kenya both participants of the internet.org initial launch –however riddled with many controversies including withdrawal of major players in India and ZambiaIn Kenya internet.org has partnered with Airtel - People in Kenya with an Airtel SIM card can access these services by visiting www.internet.org or by downloading the Internet.org app for Android from the Play Store. Access to the Internet.org app is free. Through Internet.org, you can access a version of Facebook that’s free of data charges, as well as other services such as health, news, and sports info.
Opportunities for insurance and financial services
Consumer education – tips and education about insurance
Bundling with online services such as free basics
Huduma center, e-citizen, IPRS – online platform for all government services
mVisa – looking to take on Safaricom in its home turf. Leveraging smart phone use providing a cheaper platform for money transfer. Is there an opportunity for bundling insurance services?
Agriculture
Agriculture is the largest employer in Kenya
Agriculture is the largest contributor to Kenya’s GDP
Main sectors include:Dairy – Approx 5 million cows and only 39,000 livestock policies
Tea – 560,000 tea farmers; 700,000 tea pickers; 70 factories but no significant insurance product in this industry
Horticulture
Financial inclusion is at 69%
93% of farmers still receive their income through cash
Opportunities in Agriculture
Leverage on agricultural input companiesFertilizer
Seed
Artificial Insemination – not yet been done
On-demand cover that provides protection when a farmer most needs it e.g. when the cow is pregnant
Including the entire agricultural value chainTea pickers – weather index income protection
Other farm workers
The health paradox
The health paradox
History of health financing in Kenya shows that we are still grappling with a solution
Products that have been shelved:Bima ya jamii – PPP – partnership issuesChangamka savings wallet – a pure savings product for health has no valueLinda Jamii – a “low” income product, offered to the wrong market, poorly designed and simply distributed wrong – pulled off the market after 21 months– this has affected the Kenyan market immensely
Insurance companies want to offer health microinsurance but struggling with product design, pricing and distribution channels.
New health products
M-Tiba – safaricom and pharmaccess – over 40,000 registered users; savingswallet ear-marked for health only unlocked at a registered health care facility; oldmutual is offering USD 80 personal accident cover – we are yet to see the successof this however we believe refinement will need to be done to increase value: e.g.Insured emergencies
iNuka – an app based product that can be downloaded on play-store. If you save aminimum of KES 20,000 on their platform you get access to an inpatient limit ofKES 200,000 and an outpatient loan of up to KES 20,000 – they project to have40,000 users within 4 months. This is in partnership with Britam.
Hello doctor – a phone based tele-medicine service that allows consultation overthe phone, prescription and bundles a hospital cash at USD 3 per month
Opportunities in health
Models
• Provider-based
• PPP
• Emergencies only cover
• Hospital Cash
Promising distribution channels
• Saccos & cooperatives
• Cashless transport system (accident)
• Mobile
Disruptive Innovations
Financial M-Pesa Lipa na M-Pesa M-Shwari Agency Banking
Non-financial
Uber Tech hubs & labs Huduma Centers Beba Pay
Upcoming mVisaFacebook/Whatsappfor money transfer
Psychometric analysis for loan
disbursement
Satellite loan vetting for farmers
Key messages and take-aways
• Look out for potential market disruptors • The Ubers, Mpesa’s, Agency bankings etc.
• Capitalize on the peculiarity of the market to your advantage• Copy & paste of successful models will not always work (e.g.
Airtel in Kenya, M-Pesa in SA etc.)
Do you have an innovation team?
Stay ahead of your
industry at all costs