This guest post is written by Mathilda Ström from BIMA, a provider of mobile-delivered insurance and health services in emerging markets. This post is part of a guest series looking at lessons learnt from mobile insurance. Read the first and the second guest posts.
Much attention is given to the rapid growth of the mobile insurance market – this year’s GSMA State of the Industry Report calculated an annualised growth of 263%, which is inarguably impressive. As a nascent industry, it’s natural for us to focus on subscriber adoption, but we are all aware that the long-term challenge is to convert these subscribers into recurring consumers and ambassadors for our insurance products in their communities. As demand for paid products increases, the issue of how to create a sustainable customer base becomes even more important.
The quality of the sales experience during and post purchase is an essential factor in determining whether a consumer will buy again, an effect that is magnified when someone invests in a product for the first time. Quality is, therefore, a critical issue for the mobile insurance industry, where between 75-95% of the addressable market has never had insurance before.
For us, quality of the sales is measured by how well the customer understands the product. Effective product education enables customers to perceive the benefits of insurance and, most importantly, make successful claims. Both these aspects are essential if you want to build lasting customer relationships and activate positive word-of-mouth support.
The ability of the self-registration model to deliver sufficient product awareness and education is severely limited. People often sign up for mobile insurance products without fully understanding what they have subscribed to, resulting in passive consumers and low claims ratios. Using agents to support registrations provides an essential opportunity for education, which in turn translates to real consumer engagement.
There are several models of agent distribution to choose from: A provider can make use of a mobile operator’s existing sales network, or they can build and manage their own agent force, as we do in BIMA. They can also choose to outsource distribution to a third party (i.e. companies who operate sales teams selling a wide range of wide range of consumer-facing goods).
Given the challenges of selling to consumers at the base of the pyramid, retaining the services of an external distribution partner can seem appealing. But insurance requires specialist sales training and standards that these companies typically struggle to deliver. We tested this by running a trial of outsourced distribution in one of our Asian markets. Over one year, we measured the performance and quality of agents from an external sales partner against that of the agents trained and managed by BIMA. The results showed that BIMA agents were not only more productive than the outsourced team, they also delivered a significantly superior quality of service.
Agents from a third-party distributor scored consistently lower than BIMA’s agents during our ongoing quality assurance process (For customers registered by BIMA agents, 90% understood the features of the product and knew how to claim, compared to just 20-40% for customers registered through the third party channel). Issues ranged from basic errors inputting registration data, through to more serious problems such as confusion around exclusions, cost and claims process.
This experience taught us that to ensure that customers truly adopt insurance, specialist training and rigorous management of the agent force is crucial. The long-term success of the mobile insurance industry will depend on increasing customer education and sustaining a positive reputation – two things that cannot happen unless we defend quality in the sales and post-sales process.
Photo courtesy of BIMA.