Development meets business at the ILO’s Insurance Impact Academy

Thursday, August 15, 2019

67 participants from 40 countries gathered in Turin, Italy last month for the week-long Impact Insurance Academy at the ILO’s International Training Centre. The Academy attracts insurance practitioners as well as regulators, supervisors, financial institutions and development agencies.

“We had a great selection of profiles,” said Craig Churchill, Chief of the ILO Social Finance Programme and Team Leader of the ILO’s Impact Insurance Facility. “The different levels of experience, markets and countries gave participants the opportunity to share knowledge without worrying about revealing secrets to competitors.”

From the plenary on digital insurance, participants learned that moving from pen-and-paper to digital requires a systematic, detailed, trouble-shooting approach. Options are to build, buy or partner - in most cases partnerships with trusted, reliable InsurTechs, bank agents and governments are key.

Customer centricity means putting the customer first, focusing on where you can provide most value and making sure clients can afford to stay with you. Sometimes it’s more profitable to have fewer customers, as focusing on customer value can reduce costs-per-sale, overheads and reduce the number of defections.

The women’s insurance sector could be worth up to US$1.7 trillion by 2030, with half of that coming from emerging markets. Insurance can help women better protect themselves and their families and expand their businesses, but they have gender-specific risks, needs, and behaviours. Initiatives aimed at women are seeing positive results - Insular Life and 1st for Women are two companies who have been successful targeting this market.

Key takeaways from the session on impact insurance for climate change adaptation included:  building resilience makes economic sense; insurance can help achieve the SDGs; insurance should be part of a comprehensive and integrated climate risk management and adaptation approach; solutions need to be for both the demand and supply side; and investment, technical assistance and temporary premium support are essential.

Complementary health insurance is difficult to orchestrate, especially for the low-income market, but is possible. Being mindful of existing Universal Health Coverage to ensure the product offered is truly complementary and adding real value is key. Keep your eye on the three Ps: Products, Processes and Partnerships, and always balance client value and business viability.

The session on regulatory and supervisory approaches to inclusive insurance was attended by regulators from the Pacific region who wanted to find out more about microinsurance regulatory frameworks. They discussed the importance of appropriate regulation for informal insurance, index-based insurance regulation, the use of sandboxes and the need to support innovation.

Insurance can help small businesses manage risks better, yet most MSMEs are under- or uninsured. It’s important to account for existing risk-management mechanisms in product design. Product customisation is better done at distributor level or with large groups of clients. Health insurance for small businesses is a major business opportunity, but it’s important not to compete with state health services - rather to focus on value-added services such as hospital cash that meet the specific needs of small businesses.

Market research can help improve results, but only if it is continuous - not just to recruit new customers, but also to keep them. Use existing data before embarking on primary research and build in-house capacity to conduct it on an ongoing basis. Bring in different functions such as underwriting, claims or IT during different research phases to expose them to clients. Tracking social and financial KPIs and monitoring the performance of products and services can help improve the sustainability of inclusive insurance and can add value to clients. When it comes to accessing new markets through alternative distribution channels, insurance has to align clients’ needs with those of the channel to create a win-win-win solution.

Agriculture insurance requires collaboration between many stakeholders including farmers, insurance companies, distribution channels, aggregators, reinsurers and governments. It works best when combined with other risk management tools and services. Participants were advised to scale up by offering insurance to groups, and to create value and long-term engagement by bundling with related services. Data is crucial, but it must be accurate, accessible and affordable. Technology is important for crop and livestock insurance, as it can promote time and cost efficiencies and create trust.

Claims truly are the moment of truth, especially for microinsurance clients. End-to-end integrated systems combining people and IT are key to fast turnaround times, better data management and improved client communication. However, insurers often have old systems which are difficult to integrate with new ones - should they build their system first or use an existing InsurTech platform? A Business Intelligence system could, for example, allow partners to see the status of claims and thus improve client centricity. Claim turnaround times should be measured from the date of the risk event itself, not the date when documents were submitted.

Finally, the investors’ round table gave participants valuable insights into raising capital. As insurers look to raise additional capital, they should consider talking to ‘impact investors’ who bring more than just money to the table - they can also bring technical assistance and other strategic interests.

“The Academy shows that insurers are very interested to understand how they can contribute to the development agenda, especially if there is also a business case,” said Churchill, reflecting on an intense but rewarding week.