Client journeys into microinsurance

Thursday, June 14, 2018

There was an impressive turnout for the 44th Midi of Microfinance on the theme of “Client Journeys into Microinsurance” hosted by ADA, with the support of InFiNe.lu and Arendt & Medernach, as well as the collaboration of the Microinsurance Network (MiN) at Arendt House in Luxembourg last week. Two MiN members - Jonathan Batangan, First Vice President at Cebuana in the Philippines and Shahzad Iqbal, CFO at the Kashf Foundation in Pakistan - were in conversation with ADA’s Matthew Genazzini, also a member of the Network.

Genazzini reminded the audience that microinsurance is different: it targets the poorest and least educated and so needs to be designed, packaged and distributed differently. “It’s back to insurance basics,” he said. “Insurance in its purest form, stripped back to four elements: premium, risk, claim and beneficiary.”

The Philippines is a microinsurance success story - at 32 percent it has the highest penetration in the world, a forward looking insurance regulator and was one of first countries to have dedicated national microinsurance strategy. “Cebuana has been a big contributor that success,” said Batangan. “We’ve issued around 15 million policies so far covering ten percent of the population.”

“It’s all about building trust with the client,” he continued. “If there’s a disaster such as a fire, we’re there settling claims straight away, even in the early hours of the morning. At their lowest point, when they have lost everything, the claimants feel there is truth and integrity in the product. We are not running away from the claims, we are running towards them. That’s the opposite of what normally happens!”

Kashf’s success lies in selling bundled microinsurance to a captive market. “Bundling reduces the cost to the client because we have existing distribution mechanism,” explained Iqbal. “That’s better for the insurance company, better for us and better for the client. A low cost also helps overcome adverse selection.”

Both use a range of innovative promotion methods. In Pakistan, Kashf uses street theatre and runs training programmes to educate people - especially women - in financial literacy and the benefits of microinsurance. Cebuana has developed an app and runs a fleet of “microinsurance on wheels” vans which tour rural districts spreading the message.

Both stressed the need for absolute simplicity. Batangan explained: “All you have to do is give your name, age and address, and for as little as US$3, you’re covered.” Iqbal agreed: “Super-simple enrolment, no exclusions for pre-existing conditions, no lengthy claim settlements. Simplicity is key.”

Watch photos and videos of the event and discussion, as well as other materials on the topic and the panellists' organisations here.