That’s the key to microinsurance success in Africa—that and a willingness to build ecosystems with a wide range of partners.
As I’ve made clear in previous blogs, the keys to microinsurance success in Africa are essentially the use of technology to support flexible, cost-efficient business models and an acute understanding of what consumers want. These are not people who can afford to experiment with products: the margin for error in low-income markets is extremely slim.
An initiative that demonstrates some of these characteristics is one in which Accenture’s not-for-profit development group, Accenture Development Partnerships, is involved. It is providing IT project management and advisory services to two microinsurers in Kenya and Ghana. These services will enable the two to scale their existing businesses nationally. The funding is provided by LeapFrog Investments, which supports financial services companies, mostly insurers, in Africa and Asia, markets where there is the greatest potential for both financial returns and social impact.
Points to notice: The importance of digital technology, and business drivers that are not solely focused on profit—or immediate profit. Microinsurance in Africa requires a long-term view that incorporates social investment.
Here’s another: a sharia-compliant livestock insurance scheme for Muslim herders in Northern Kenya. Based on the concept of takaful, a cooperative system for sharing losses, the scheme uses satellite imagery to help pastoralists mitigate the risks of stock losses in an arid region. It’s the brainchild of a consortium whose major research partner is the Charles H. Dyson School of Applied Economics and Management at Cornell University. Predictions of livestock losses are based on satellite imagery of grazing conditions—classic big-data analytics and predictive modelling. Payouts are based on this analysis, eliminating the need for costly claim verification.
Points to notice: Acute understanding of the consumer’s needs and cultural frameworks, innovative use of technology and analytics, (deceptively) simple, and no-frills business model (no field force of claims adjusters needed).
A final example: a partnership between Airtel Ghana, a cellphone provider, and insurers MicroEnsure and Enterprise Life. Launched earlier in 2014, it provides free life, accidental permanent disability and hospitalization. Benefits are based on recharge levels. Claims are received and paid through Airtel Money (mobile money transfer) within 72 hours of valid claims submission.
Points to notice: The use of mobile technology for payment, affinity-based distribution model, partner-based business model.
Next time, I’ll conclude this brief overview of microinsurance in Africa with summary of the key success factors in this market.
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