Profitable Product Design in a Diverse Continent Product Design in a ... Profitable Product Design in Algeria, ... So only USD 1.2bn in life premium written in 2011 in 42 other countries

a Profitable Product Design in a Diverse Continent 14 May 2013

Lloyd Campbell-Gibson

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Profitable Product Development

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2

Access

Education

Trust


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3


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a Profitable Product Design in Algeria,

Angola,Benin,Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d'Ivoire, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea,Guinea-Bissau,Kenya, Lesotho, Liberia,Libya, Madagascar, Malawi, Mali, Mauritania,Mauritius,Morocco,Mozambique,Namibia, Niger, Nigeria, Rwanda, Sahrawi Arab Democratic Republic, São Tomé Principe, Senegal, Seychelles,Sierra Leone,Somalia,South Africa,South Sudan, Sudan, Swaziland, Tanzania, Togo,Tunisia, Uganda, Zambia, Zimbabwe

14 May 2013

Lloyd Campbell-Gibson

a Profitable Product Design in Diverse Continent


a Analysing the landscape

What drives insurance demand

Designing for profitability

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Agenda


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Where is the best place to develop a profitable product


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8

The good The bad Analysing the landscape – a macro view


a 780mil people – more than half of working age

346mil earn USD1.25 to USD4 per day

60% in agricultural sector

270mil people are Muslim

475mil mobile phone subcribers

* Sub-Saharan Africa

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Analysing the landscape – a macro view*


a USD 8.8bn in premiums*

More than half in Nigeria, Mauritius, Kenya, Angola and Namibia

2/3rds Non-life

So only USD 1.2bn in life premium written in 2011 in 42 other countries

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Analysing the landscape – a macro view

Growth opportunity or warning sign?

life USD

2.88 bn 33%

non-life USD

5.92 bn 67%

* 2011, excluding South Africa


a

Burundi

Zimbabwe Cote d Ivoire

Ethiopia

Madagascar

Tanzania

Kenya

Ghana

Swaziland

Namibia

BotswanaMauritius

Cameroon

Nigeria

Congo

Angola

-5.0%

0.0%

5.0%

10.0%

15.0%

100 1000 10000

Real G

DP

gro

wth

, 2

00

0-1

1

Real GDP per capita, 2011 (logarithmic scale)

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Analysing the landscape – zooming in

*Source: Swiss Re Economic Research and Consulting


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Analysing the landscape – zooming in

Togo Cote d Ivoire

Ethiopia

Madagascar

Malawi

Tanzania

Kenya

ZambiaGhana

Botswana

Cameroon

Nigeria

CongoAngola

Gabon

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

100 1 000 10 000

SSA average

EM average

*Source: Swiss Re Economic Research and Consulting

life premiums as a % of GDP (2011)


a

Economic growth and stability

Wealth and distribution of wealth

Culture and religion

Demography

Political stability and governance

Financial education and awareness

Tax and regulatory regime

Trust in the industry

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What drives insurance demand

TARGET TERRITORIES

DRC

Zambia

Angola


a

3rd Biggest economy

Oil accounts for 80% of GDP, 1% of jobs

Poverty +unemployment high

95% non-life because infrastucture + compulsory insurance (eg 3rd party)

Number of new composite startups so expect penetration to improve

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Angola

Burundi


Ethiopia

Madagascar

Tanzania

Kenya

Ghana

Swaziland

Namibia

BotswanaMauritius

Cameroon

Nigeria

Congo

Angola

-5.0%

0.0%

5.0%

10.0%

15.0%

100 1000 10000

Real G

DP

gro

wth

, 2

00

0-1

1



a Politically stable

More diversification of industry than Angola (Cocoa, mining)

Strong competition – 13 life companies. Real premium growth of 29%pa

Life/non-life close to 50/50.

Profitability poor because of high commission and high lapses

Big opportunities in Micro-insurance

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Ghana

16

Burundi


Ethiopia

Madagascar

Tanzania

Kenya

Ghana

Swaziland

Namibia

BotswanaMauritius

Cameroon

Nigeria

Congo

Angola

-5.0%

0.0%

5.0%

10.0%

15.0%

100 1000 10000

Real G

DP

gro

wth

, 2

00

0-1

1



a Mature, developed but innovative financial markets (M-PESA)

Almost 50% of population have a bank account

More even distribution of wealth so low poverty levels

Long history of relatively stable economy (agriculture and tourism)

46 insurance companies!

35% life and 60% group risk

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Kenya

17

Burundi


Ethiopia

Madagascar

Tanzania

Kenya

Ghana

Swaziland

Namibia

BotswanaMauritius

Cameroon

Nigeria

Congo

Angola

-5.0%

0.0%

5.0%

10.0%

15.0%

100 1000 10000

Real G

DP

gro

wth

, 2

00

0-1

1



a 2nd largest economy

7th largest population in the world

Uneven distribution of wealth, extreme poverty

Infrastructure poor

59 insurance companies

<40% life business but growing rapidly

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Nigeria

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Burundi


Ethiopia

Madagascar

Tanzania

Kenya

Ghana

Swaziland

Namibia

BotswanaMauritius

Cameroon

Nigeria

Congo

Angola

-5.0%

0.0%

5.0%

10.0%

15.0%

100 1000 10000

Real G

DP

gro

wth

, 2

00

0-1

1



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Summary

Angola Ghana Kenya Nigeria

Economic stability/growth

Average Good Good Average

Distribution of wealth

Poor Good Good Poor

Financial awareness

Poor Average Good Average


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Local knowledge or partner

Use existing research

Ask the people

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Designing for profitability – the insurance need

Medical indemnity

Hospital cash

Critical illness

Disability Death


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Key elements of product design

Product

Price

Distribution


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Eligibility

Benefit description

Claims process

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Product


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Reviewability

Value for money

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Price


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Key to success in a business where scale is important

Eliminate unnecessary hurdles to sales process

Find the "golden moment"

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Distribution S

ucce

ss r

ate

Distribution method

Embedded Compulsory Group Cold calling Advised


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Profit

Underwriting result

Premiums vs claims

Persistency

Expenses

Investment result

Asset allocation

Investment Return

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Profitability drivers


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Do your research (get into the detail)

Educate your target market

Stick to your strengths (but don’t be married to your structure)

Learn from mistakes in other territories

Pay valid claims

Review key profitability drivers regularly

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Conclusion

a Thank you


a Legal notice

©2013 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re.

Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation.

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Profitable Product Design in a Diverse Continent Product Design in a ... Profitable Product Design in Algeria, ... So only USD 1.2bn in life premium written in 2011 in 42 other countries

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