A look at mobile insurance: From past to present
This is a guest post written by Jody Delichte from Inclusivity Solutions, a company that specialises in creating inclusive digital insurance markets. This post is part of a two-part series on mobile insurance.
Bharti AXA Life Insurance is said to be one of the pioneers of mobile insurance, with its Telcassurance initiative in India that launched in 2007. The initiative leveraged Airtel Relationship Centres to extend insurance coverage to Airtel’s substantial customer base. Despite challenges converting retail customers to insurance customers at telecom touchpoints, Telcassurance was said to account for 20% of policies sold at Bharti AXA Life Insurance in 2009.
Soon after, other models started to appear across the developing world that extended mobile insurance beyond retail touchpoints to leverage the broader potential of mobile. Initially these were led by India, South Africa, Thailand, and the Philippines, but by 2010 the momentum erupted with a plethora of new initiatives across Africa.
Most of the early initiatives were driven by insurance companies seeking to expand their customer base. Mobile operators played a more transactional role as a delivery channel or payment mechanism. However, mobile operators soon recognised the benefits of taking a more strategic role, and became more active in branding, marketing, and shaping products, as well as the front-end customer relationship. Reported benefits include reduced churn, increased ARPU, and increased adoption of other services. Tigo in Ghana for example, reported reduced churn due to its mobile insurance offering, as well as increased revenue with 55% of ‘freemium’ customers opting for its paid product. In another example, MTN’s mobile insurance offering in Ghana helped the mobile operator drive mobile money adoption, with 40% of mi-Life customers being new to mobile money.
The strategic role of the mobile operator was recently highlighted as one of the seven keys to success for mobile microinsurance in a comprehensive analysis of the market. Some mobile operators have extended their strategic role even further along the insurance value chain through the acquisition of insurance licenses, such as Econet in Zimbabwe and Vodacom in South Africa. In other cases, mobile operators are focusing more on strategic investments and partnerships, such as Telenor’s investment in MicroEnsure, and Tigo’s group-wide partnership with BIMA. Technical service providers such as MicroEnsure, BIMA, and Inclusivity Solutions provide specialist expertise and in-depth experience in designing, building and operating mobile insurance solutions for emerging consumer markets. Among the providers which have more than one million registered customers, most are powered by technical service providers.
A number of these providers reached over a million customers through simple life (funeral) loyalty offerings, although not all of them. Tigo Bima Ghana, for example, supported over 1.1 million people within the first two years of a hospital cash product, although this was following the offering of a successful freemium life offering.
Life products have dominated the mobile insurance market primarily because they are widely viewed as the simplest type of microinsurance. Although they are not always appropriate for every market, as was the case in Tanzania where a loyalty life product was inferred by customers to be wishing them dead. It is also not always the most valued and needed product, as we have found in our Human Centred Design market research in a number of countries.
We are now starting to see increasing diversification of mobile insurance products to meet a broader range of customer needs and add value to specific market segments. As the GSMA highlighted in its recent Mobile Insurance, Savings & Credit Report, 55% of all mobile insurance offerings are still life products, but 67% of new offerings are non-life products, such as health insurance.
We are also seeing more varied loyalty offerings, such as Airtel’s ‘Three for Free’ offering which includes life (funeral), accidental permanent disability, and hospital cash. While there are some shifts to focus on paid products, loyalty products continue to have an important role to play in developing consumer understanding and appreciation of insurance. They have also served as a differentiator for mobile operators. However, as the number of players in the mobile insurance space escalates, the competition is heating up. According to the GSMA, there are now 120 live mobile insurance offerings in 33 emerging markets, the majority of which are led by mobile operators.
Mobile operators will need to continue to innovate to differentiate. We expect to see more innovation around product bundling, convergence with other mobile financial services, and linking with other services to provide more holistic offerings for consumers. We also expect to see mobile insurance offerings that leverage smartphones and applications, as well as more innovative ways of engaging consumers. And, we cannot ignore the massive investments and innovations in the broader InsurTech space across the insurance value chain, ranging from product development to distribution to claims, and everything in between. A number of these InsurTech innovations are likely to impact the evolution of mobile insurance. I will explore these innovations in more detail in Part 2 of this blog, which will focus on the future of mobile insurance.
Photo courtesy of Inclusivity Solutions
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