In the past, we have discussed the potential of new delivery channels to help bring insurance products to the BOP. MNOs have large physical and virtual networks with the potential to reach significant numbers of clients at low cost. On the contrary, insurance companies have historically been particularly weak at distribution, and while some MNOS are still trying to find the right mix in setting up their agent networks, there is a lot to gain for all parties when leveraging existing infrastructure to reach the poor. MNO’s are attractive to the insurance industry as they provide access to a vast concentration of clients (including unbanked and informal workers) at low costs, a financial transactions platform in the cases where mobile money exists, and substantial brand power
There is an increasing number of MNOs leveraging the mobile channel to sell and distribute insurance, including some which are specifically using the mobile money platform to improve premium collection and claims handling. However, there are different approaches emerging. While all these models use the mobile phone as an access point, they vary in the ways premiums are paid, claims are initiated and pay-outs are disbursed to name a few. One of the approaches is to provide insurance “free” to a subscriber in return for use of airtime. This loyalty-based approach is currently offered in Ghana with Tigo and Microensure. A second approach is to sell insurance via the mobile money platform as in the case of MTN Ghana, M-KESHO and Kilimo Salama in Kenya, where a client signs up via an agent or the mobile money menu and premiums are deducted monthly or weekly from their m-wallets.
A third model is based on ‘subscription’ fees which are deducted automatically from the customers’ airtime balance. Following this approach, ZONG in collaboration with Adamjee Life has launched, Pakistan’s first m-insurance. The product covers accidental death or disability caused due to an accident or terrorism. Users can now subscribe to the insurance service simply by sending an SMS. To complete the process the user is prompted to confirm their ID number. After verification, the user is allowed to choose from 3 different plans, add the beneficiary’s details and finally receives the policy number as confirmation. Customers don’t require any documentation and daily deductions are automatically made from the airtime balance according to the Insurance plan. In case of accidental death or disability, the insurance policy can either be claimed by sending an SMS or by submitting the claim form to Adamjee.
Distribution channels are key to make insurance affordable & accessible. We will continue to document the emergence of new and innovative ways of leveraging the mobile platform to provide financial services to the poor.