LOOKING INTO THE FUTURE: LEVERAGING NEW DISTRIBUTION CHANNELS FOR MICROINSURANCE

Barbara Chesire-Chabbaga, Lead Consultant – Actuarial & Strategy

Jo’burg, September 27th 2016

Disruptive innovations

Trendsetters

The Kenyan context

Introduction

Mobile money

Internet

Mobile phenomenon

Livestock

Tea value chain

Agriculture

Leveraging lessons

Emerging innovations

The Health Paradox

Content

Introduction

Disruptive Innovations

Financial M-Pesa Lipa na M-Pesa M-Shwari Agency Banking

Non-financial

Uber Tech hubs & labs Huduma Centers Beba Pay

Upcoming mVisaFacebook/Whatsappfor money transfer

Psychometric analysis for loan

disbursement

Satellite loan vetting for farmers

Kenyan trendsettersM-Bima

•Started in 2010

•First mobile insurance platform

Safari Bima

•Started in 2008

•Short-travel insurance product

•Distribution was unsuccessful

Kilimo Salama

•Started in 2011

•Crop insurance bundled with inputs

Linda Jamii

•Health product –started in 2014 and folded within one year

•Partnership between Britam and Safaricom

•Poor product design and low uptake due to distribution model

M-Tiba

•Launched last week

•Partnership between safaricom and pharmaccess

•Mobile wallet ear-marked for health

Use of financial services

Banks 8.1M

Coops 2.7M

MFIs 0.8M

MFSP 15.1M

Informal Groups 2.1M

….of Kenyans have never had an insurance cover

75%

Mobile Technology: Use of mobile money and internet

The Kenyan Context

90% mobile penetration

38 million mobile

phone users16.6

million users of M-Pesa

40% of Kenyans

own a smart phone14 million

users of mobile

internet

Kadogo economy

Mobile money

Kenya has the world’s highest mobile money penetration

16.6 million users transact USD 50 billion annually

Over 100,000 mobile money agents country-wide

Successful due to ability to stay ahead of lagging regulators

Opportunities in mobile money

Leveraging mobile money agents for distribution

Mobile walletsm-Tiba: Savings wallet ear-marked for health only unlocked at a registered health care facility; old mutual offering USD 80 personal accident cover – we are yet to see the success of this however we believe refinement will need to be done to increase value: e.g. Insured emergencies

Lipa na M-Pesa

Use of internet

30% of Kenyans use smart phones

Mobile internet subscriptions rose 5.9% to reach 14.7 million users

Total internet users stand at 23.2 million

Internet.org/Free basicsProviding a bundle of free basic internet servicesInitiative by Facebook that plans to bring free access to selected Internet services to less developed countriesSouth Africa and Kenya both participants of the internet.org initial launch –however riddled with many controversies including withdrawal of major players in India and ZambiaIn Kenya internet.org has partnered with Airtel - People in Kenya with an Airtel SIM card can access these services by visiting www.internet.org or by downloading the Internet.org app for Android from the Play Store. Access to the Internet.org app is free. Through Internet.org, you can access a version of Facebook that’s free of data charges, as well as other services such as health, news, and sports info.

Opportunities for insurance and financial services

Consumer education – tips and education about insurance

Bundling with online services such as free basics

Huduma center, e-citizen, IPRS – online platform for all government services

mVisa – looking to take on Safaricom in its home turf. Leveraging smart phone use providing a cheaper platform for money transfer. Is there an opportunity for bundling insurance services?

Agriculture

Agriculture is the largest employer in Kenya

Agriculture is the largest contributor to Kenya’s GDP

Main sectors include:Dairy – Approx 5 million cows and only 39,000 livestock policies

Tea – 560,000 tea farmers; 700,000 tea pickers; 70 factories but no significant insurance product in this industry

Horticulture

Financial inclusion is at 69%

93% of farmers still receive their income through cash

Opportunities in Agriculture

Leverage on agricultural input companiesFertilizer

Seed

Artificial Insemination – not yet been done

On-demand cover that provides protection when a farmer most needs it e.g. when the cow is pregnant

Including the entire agricultural value chainTea pickers – weather index income protection

Other farm workers

The health paradox

The health paradox

History of health financing in Kenya shows that we are still grappling with a solution

Products that have been shelved:Bima ya jamii – PPP – partnership issuesChangamka savings wallet – a pure savings product for health has no valueLinda Jamii – a “low” income product, offered to the wrong market, poorly designed and simply distributed wrong – pulled off the market after 21 months– this has affected the Kenyan market immensely

Insurance companies want to offer health microinsurance but struggling with product design, pricing and distribution channels.

New health products

M-Tiba – safaricom and pharmaccess – over 40,000 registered users; savingswallet ear-marked for health only unlocked at a registered health care facility; oldmutual is offering USD 80 personal accident cover – we are yet to see the successof this however we believe refinement will need to be done to increase value: e.g.Insured emergencies

iNuka – an app based product that can be downloaded on play-store. If you save aminimum of KES 20,000 on their platform you get access to an inpatient limit ofKES 200,000 and an outpatient loan of up to KES 20,000 – they project to have40,000 users within 4 months. This is in partnership with Britam.

Hello doctor – a phone based tele-medicine service that allows consultation overthe phone, prescription and bundles a hospital cash at USD 3 per month

Opportunities in health

Models

• Provider-based

• PPP

• Emergencies only cover

• Hospital Cash

Promising distribution channels

• Saccos & cooperatives

• Cashless transport system (accident)

• Mobile

Disruptive Innovations

Financial M-Pesa Lipa na M-Pesa M-Shwari Agency Banking

Non-financial

Uber Tech hubs & labs Huduma Centers Beba Pay

Upcoming mVisaFacebook/Whatsappfor money transfer

Psychometric analysis for loan

disbursement

Satellite loan vetting for farmers

Key messages and take-aways

• Look out for potential market disruptors • The Ubers, Mpesa’s, Agency bankings etc.

• Capitalize on the peculiarity of the market to your advantage• Copy & paste of successful models will not always work (e.g.

Airtel in Kenya, M-Pesa in SA etc.)

Do you have an innovation team?

Stay ahead of your

industry at all costs