Succeeding at microinsurance: Operating models (Part 4 of 5)

When it comes to microinsurance, an effective operating model is critical. It needs to enable the insurer to overcome challenges through development and marketing of a successful microinsurance product. Here are four key areas where the effectiveness of the operating model will be put to the test:

Product development

Products must appeal to customers with limited experience with insurance and limited affordability, so insurers need to ensure that they gain a deep grassroots understanding of their customer base. This knowledge, merged with experience with more traditional products, can generate new products that are simple, cheap and easy to buy.

Marketing and distribution

Marketing and distribution is more about bundling sales with a partner’s products, such as short-term credit, than it is about direct sales. To ensure maximum understanding, keep the product, terms and documentation as simple as possible. It can be advantageous to share a distribution network to take advantage of localized infrastructure, centralizes processing and technology support.

Claims and administration

As with traditional insurance, claim settlement is a critical part of the equation. We recommend leveraging the professionalism and trust the local partner to achieve consistency between the sales message and the claims outcome. Outsourcing back- and front-office distribution is one way to better manage costs and service levels.

Risk and regulation

It can be difficult to accurately evaluate the risk involved, given the novelty of microinsurance, lack of data and insurers’ lack of familiarity with potential customers. Insurers can collaborate with partners to learn more about a community’s risk, pool risk across markets and regions, offering short-term products to limit exposure and use analytics to make the most of what data is available.

Overall, the quirks of microinsurance mean that the insurer’s chosen operating model will probably look very different from anything else in the business.

This is the fourth in a five-part series on microinsurance. Read the earlier posts:

To learn more, download Succeeding at Microinsurance through Differentiation, Innovation and Partnership (pdf; opens in a new window).

Michael Costonis

About Michael Costonis

Michael Costonis is executive director of Accenture’s Insurance practice for North America. He is responsible for setting the overall vision and strategy for the practice, as well as pursuing new client relationships. Costonis has twenty years experience developing, managing and deploying large scale technology systems, business processes, and strategies for some of the world’s leading insurers, including property & casualty, life, and multi-line insurance companies. In his career with Accenture, he has worked with more than 50 leading insurance clients in 14 countries around the world. In addition to his role as North America industry executive director, Costonis is the lead for Accenture’s global claims services. In that role, he oversees claims strategies, assets, capabilities, and sales development. He also has led Accenture’s Insurance Solutions practice in North America, where he was responsible for driving growth for Accenture’s asset-based business in Insurance, including claims, underwriting, and policy administration. Costonis has authored several articles in leading insurance trade publications, and has been quoted in The New York Times, Bloomberg News, Reuters News, Best’s Review, Insurance & Technology, InformationWeek, National Underwriter, Technology Decisions, and the Philadelphia Inquirer. He has spoken at several leading industry conferences in the U.S. and internationally. Costonis received a bachelor’s degree in political science from Swarthmore College (Swarthmore, PA). He is based in Philadelphia.

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