This is a guest post written by Jody Delichte from Inclusivity Solutions, a company that specialises in creating inclusive digital insurance markets. It is the second post of a two part series, the first of which can be read here.

As was highlighted in the first part of this blog, the mobile insurance space has evolved rapidly since the first implementations in India. The number of initiatives has exploded across the emerging markets, and a couple handfuls of ‘sprinters’ have emerged, mostly powered by technical service providers. As more players enter this space, the competition is heating up and mobile operators increasingly need to innovate to differentiate.

We are already seeing innovation with respect to bundling of both insurance and non-insurance products. Airtel has been one of the leaders with its multi-product loyalty offering, which has been introduced in multiple markets including Ghana, Kenya and Malawi. The offer includes free life, accident, and hospital cash products, with increasing benefits based on monthly airtime usage.

Insurance is also being linked with other mobile financial services, such as savings. For example, Unibank Ghana Limited, Airtel Money and Star Micro Insurance partnered to offer free life insurance based on a minimum mobile money balance at the end of each month in Ghana. Easypaisa in Pakistan has a similar offering, which includes varying levels of life and accidental death insurance, based on the amount saved in the customer’s mobile account.

Telenor in Bangladesh (Grameenphone) has extended bundling beyond insurance and mobile financial services to provide more holistic offerings to their customers. Telenor’s recently launched ‘Tonic’ offering includes health and wellbeing content delivered via Web, SMS and Facebook, as well as phone-based medical advice, discounts on key services at hospitals, and a hospital cash insurance product.

Going forward, we expect to see more bundling of insurance products, as well as bundling of insurance with other mobile financial services and other related services. This will enable mobile operators to meet a broader range of customer needs, as well as attract and deliver value to specific market segments.

Mobile insurance initiatives are also likely to start leveraging smartphones. Who can ignore the almost weekly reports about the massive growth and potential of smartphones in emerging markets? The question though, is what does this mean for mobile insurance?

Smartphones are being used in innovative ways in more developed markets.  For example, Metromile in the US offer pay-per-mile car insurance for low-mileage drivers, combined with a smart app to track and optimise trips, monitor car health, find a missing car, and get street sweeping alerts (to avoid parking fines). Similarly, Oscar provides a more holistic health insurance offering in the US, which includes an app that enables customers to talk to a doctor, get prescriptions, and keep track of their health history. Customers can also earn rewards for staying active using wearable devices like a step tracker.

While smartphones have a lot of potential in emerging markets, insurance offerings that leverage them must be tailored to the specific needs of consumers in these markets. And we must remember that insurance is generally not considered to be fun. So an app that lets customers buy insurance and check coverage is unlikely to elicit a barrage of downloads or usage. That said, we do expect to start seeing increasing innovation around smartphones with more holistic offerings, gamification, and even applications that address other challenges along the mobile insurance value chain.

Innovation across the insurance value chain will also come from emerging InsurTech players. Last year, InsurTech start-up funding exceeded $2.5 billion. This trend continued in the first quarter of 2016, with 45 InsurTech deals generating over $650 million, according to data from CB Insights. This includes innovations ranging from product development to distribution to claims, and everything in between.

Companies like AdviceRobo are combining data from structured and unstructured sources to score and predict consumer risk behaviour on an individual level. And other companies like EagleView Technologies, are providing aerial imagery, data analytics, and geographic information solutions based on aircraft and drones that capture images throughout the year. The data could be used for cases such as assessing property damage before and after a storm, and even to provide crop data for agricultural insurance.

While some InsurTech innovations, like the use of drones, may seem limited to developed countries, the fact that Rwanda is planning to build three drone ports by 2020, brings what may seem futuristic into reality for emerging markets.

The potential for innovation in mobile insurance is exciting and we can expect to see the rapid pace of evolution in this space continue. What we must bear in mind as we progress is that innovation must be married with customer-centricity. There will be a lot of ideas and innovations, but the successful ones will be those that deliver real value and address existing gaps and challenges.

Photo courtesy of Inclusivity Solutions