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Mobile Money for the Unbanked

By Philip Levin

Tigo, Bima, and MicroEnsure bring a “Freemium” model to mobile insurance

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Insurance is a complicated product but one where mobile distribution methods hold some promise. MMU’s latest paper on mobile microinsurance tries to lay out some of the options and complexities.  The obvious question becomes: What works and what doesn’t? MicroEnsure, a company that partners with MNOs to offer insurance to the mass market, has experimented with a few models and their experience in Ghana might give mobile operators some ideas.

MicroEnsure had originally experimented by partnering with MNOs to offer insurance directly to customers through the mobile money wallet.  Customers would sign up for insurance directly on the phone or through an agent and pay premiums through their mobile money accounts. Unfortunately, insurance awareness and understanding in Ghana is low (life insurance penetration is under 2%) and the mobile money ecosystem was still developing. These schemes struggled to reliably collect premiums and secure consumer trust in an unfamiliar product through a non-traditional channel.

In Ghana, MicroEnsure tried a variation on this model that seems to have had more success. Through a partnership between Tigo, Bima and MicroEnsure[1], Tigo subscribers were offered so-called “embedded” insurance – a free benefit on an opt-in basis. Subscribers are awarded free life insurance coverage in proportion to the amount of airtime they use as a loyalty benefit. The purpose of the free insurance is to create brand loyalty for Tigo and reduce churn. The scheme has resulted in more than 1 million new individuals covered by insurance in Ghana and Tanzania (where a similar service was launched), 80% of who had never previously had insurance coverage.

Here is the innovative part: In addition to the free embedded benefit, Tigo offered an option to double the insurance coverage for a monthly fee of GH₵1 (US$0.52).  This might be called a “Freemium” model – offering a basic level of service for free to many customers in the hope that some customers will voluntarily upgrade to a more premium paid service. Free + Premium = Freemium.

Impressively, Tigo has seen tens of thousands of customers upgrade from free insurance to paid premium product since the program’s launch in February. By offering the free embedded product they have created a market of customers that want and understand insurance. This market is coming back to Tigo to buy more of the product.

Peter Gross from MicroEnsure points out that Coca-Cola enters new markets with a similar model – first offering free samples of Coca-Cola to customers to get them hooked on the product and then subsequently selling it to them. For new products that are not yet well understood by consumers, this approach might have some merit.


[1] The roles between the parties are split as follows: Tigo provides the subscriber base and markets the product. Bima provides the technical interface, agency force to register users to the insurance service, and other supporting functions. MicroEnsure handles the insurance partnerships and claims administration.

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