This is the second in a series of insight papers exploring selected topics based on the findings of the 2017 State of the Industry Report on Mobile Money. In this deep-dive, we provide an overview of the mobile-enabled microinsurance industry, as part of our mission to support broader industry stakeholders to increase the utility and sustainability of mobile financial services.
Over the past few years, the growth of mobile-enabled microinsurance has offered cover to millions of previously uninsured people against unpredictable financial shocks and other debilitating life events. With 67 per cent of the global population subscribed to mobile, mobile-enabled microinsurance has the potential to ‘leapfrog’ traditional insurance models by reaching and insuring the under-insured.
A number of key trends have emerged in the mobile-enabled microinsurance industry, as of the end 2017:
- 93 services are available across 27 emerging markets;
- Over 61 million policies have been issued, with at least eight million new policies added in 2017;
- Over 67 per cent of services are led by technical service providers; and
- The majority of commercial models in use are premium.
The industry has shown healthy signs of progress – providers are now offering sophisticated policies that combine a range of products such as life, personal accident, hospital and even crop insurance. The increased diversity of products has emerged in tandem with a change in commercial models used by providers. The loyalty-based approach used by mobile network operators (MNOs) to provide free insurance is still in use, but is now complemented – and even replaced in some cases – by premium policies that require an upfront payment for higher levels of cover.
The industry’s growth has led to a complex and highly specialised delivery value chain – one that includes MNOs, major global insurers (both as shareholders of technical service providers (TSPs) and as underwriters), local insurers and well-established TSPs. Earlier arrangements were often led by MNOs or insurers; however, our report shows that TSPs have evolved to carry out multiple functions in the value chain and, as a result, have cemented their position as the commercial model of choice across the industry.
The TSP-led business model offers a near one-stop shop for most functions in the value chain, though underwriting remains the preserve of insurers (and enrolment the responsibility of MNOs). As a result, two of the largest TSPs, BIMA and MicroEnsure, have positioned themselves successfully for investment from Allianz X and AXA respectively. This allows major underwriters to become collaborative shareholders with digital disruptors, rather than their competitors. Our report explores how these inward investment flows enable TSPs to expand to a wider range of product offerings, as well as to new markets.
Further detailed analysis on the mobile-enabled microinsurance industry can be found in the full report below, and as always, we welcome your feedback and comments.