Last week we talked about what insurers need to do in order to succeed with small-ticket insurance or microinsurance, whether it’s in a mature market or the developing world. Today we’ll take a closer look at the critical role that mobile technology is playing in the growth of this market niche.
As an example, let’s look at the experience in Africa, where the convergence of a rise in average income and the availability of mobile phones is driving microinsurance growth.
The African microinsurance market grew by more than 200 percent during 2010 and 2012, and mobile phones were key to that growth. Eight of the nine markets with more than one million insured (excluding South Africa) have reached those customers through mobile-phone-based insurance, according to the Microinsurance Innovation Facility.
Consider that it took only one year to insure 1 million lives via microinsurance versus 40 years for conventional insurance!
Many observers were surprised at the speed of adoption of mobile phones in developing countries, but the logic is sound—the lack of infrastructure made the value proposition more persuasive than in developed countries. The same is happening with mobile money, and other innovations will certainly follow suit. All will help create a marketplace conducive to microinsurance.
Smart insurers are leveraging mobile to its fullest potential, not just in Africa, but in both developing and mature economies where mobile usage is ubiquitous.
This means being able to adapt from a “partial” to a “fully mobile” value chain that goes beyond simple premium collection to provide a full range of insurance services via mobile technology. This could include fully mobile registration; mobile policy information and coverage views; after-sales services such as renewals, reminders, and queries; claims filing and processing; and claims payment via mobile money.
Mobile technology allows insurers to connect not only with customers, but with the intermediaries that play an essential role in making microinsurance a success. Empowering intermediaries with mobile applications at point of sale and educating them on sales and service via mobile are essential steps to success. So is the integration of the mobile front-end with the systems of insurers and intermediaries to automate processes in real time.
Insurers involved with multinational microinsurance sales must also be able to set up multi-country operating models and mobile network operator partnerships that will enable them to go from a simple niche model to an industrialized, multi-country operating model.
This will allow insurers to move toward multi-country strategic partnerships with local country implementation, large-scale operations, shared experiences and IT capabilities, multi-country operating models, and substantial value generated for all partners.
Is your company taking advantage of the vast possibilities of microinsurance? Feel free to share your stories and experiences with me for future discussion.
For more information download the report: Big Opportunities in Small-Ticket Insurance