Day one - Monday, 2 November | Click here for Day two - Tuesday, 3 November | Click here for Day three - Wednesday, 4 November | Click here for Day four- Thursday, 5 November | Click here for Day five - Friday, 6 November
International Conference on Inclusive Insurance 2020 - Day One
The first ever digital ICII opened with the launch of the Landscape of Microinsurance 2020 study, setting the scene for five days of discussions and insights. Welcoming some 2000 registered participants, Dirk Reinhard, Vice Chairman of the Munich Re Foundation, noted that the conference comes at a very difficult time both on a personal level for millions of people, but also for the insurance industry as a whole.
Post-pandemic we will still face the much bigger challenge of climate change. Insurance can and should help vulnerable populations to manage climate risk, educate them about the benefits and limitations of insurance, and encourage an enabling regulatory environment to create more efficient distribution channels. Collecting and sharing reliable data is also key.
Keynote speaker Achim Steiner, Administrator of the United Nations Development Programme (UNDP), also focused on the dual challenges of Covid-19 and climate change. Global human development, he said, is set to decline this year for the first time in a generation. However, inclusive insurance can play a vital role to get the Sustainable Development Goals (SDGs) back on track by protecting lives and livelihoods, reducing poverty, increasing financial inclusion, and empowering women.
You can catch Achim Steiner’s full keynote speech - on the conference website.
Katharine Pulvermacher, Executive Director of the Microinsurance Network, introduced the Landscape of Microinsurance 2020 study, which provides much-needed insight into developing markets. She said the findings make for sobering reading - only one person in four has insurance, and out of the 5.4 billion emerging consumers worldwide, only about 500 million have any kind of insurance to protect them against daily and catastrophic risks.
Author of the report Alice Merry said four trends are emerging: the continued rise in low-cost health products; shifting perspectives on climate risks; combining digitalisation and the human touch; and concerns around customer value, highlighted by the alarmingly low claims ratios for low-cost personal insurance products. A third of all products in all regions have claims ratios of less than ten percent, which rises to half in Latin America and the Caribbean. The full report can be downloaded here.
Panellists Garance Wattez-Richard, Head of AXA Emerging Customers, and Craig Churchill, Chief of the ILO’s Social Finance Programme & Team Leader of its Impact Insurance Facility, both commented on the significance of the Landscape study and the importance of robust data.
Garance said she had been positively surprised by how the “essential building blocks” already in place have helped countries cope with Covid - for example in India, where 200 million women received emergency subsidies through existing channels. “The world has taken a crash course on life and health insurance,” she said. “How can we turn this all into a silver lining?”
“Climate change and Covid demonstrate how vulnerable we all are, and insurers should be able to respond to those opportunities,” said Craig. “However on the flip side there are huge challenges - it’s deeply troubling to see the data on claims. It’s definitely not a pretty picture.”
Session two, facilitated by Craig Thorburn, Lead Financial Sector Specialist at the World Bank, developed the theme of inclusive insurance responses to the Covid pandemic. An opening online poll showed most participants (40 percent) believed the biggest challenge to come out of the pandemic was distribution and delivery, followed by ineffective cover for customers (32 percent). According to Shilpi Shastri, Strategic Advisor at Women's World Banking, the pandemic has exposed cracks in the system. Most women work in the informal sector, have no social security protection and have been hardest hit by the virus. Men are more likely to die, but the women left behind risk being pushed back into poverty.
Rehan Butt, Chief Commercial Officer at MicroEnsure in Pakistan, identified access and delivery as the biggest challenges. Microfinance Institutions (MFIs) and call centres closed down, making service and delivery difficult. Demand for health insurance rose significantly but most people couldn’t afford it. People want insurance but can’t pay for it.
It was a similar story in the Caribbean, said Jordon Tait, Assistant General Manager at GK General Insurance in Jamaica, where many people have lost their regular source of income. Jordon also identified distribution as a key challenge, along with regulatory obstacles. With 30-plus regulators in the region, getting consensus on reform to push the inclusion agenda is a significant issue.
Gilles Renouil, Global Head of Insurance products at Women’s World Banking, referred to a “Swiss cheese model of obstacles” which presents problems for women at every level. They may be afraid to go to hospital, and even if they do, it’s hard to file claims and get them processed - which shows the need for digital inclusion for women to access services online and via mobile.
From the regulators’ point of view, Syed Nayyar Hussain, Director at Pakistan’s Securities and Exchange Commission, noted how the pandemic has kept regulators busy, with new ways of working and demands from the industry to relax regulations. On the upside, the pandemic meant approval processes were sped up and more health products were developed.
Craig commented that the pandemic has highlighted the debate about business interruption, and the closing online poll revealed that over two-thirds of participants were optimistic there would be cover for epidemics and pandemics in the future, one way or another, with a fifth believing it will be insurers paving the way and another 20% believing it will be left to governments to help cover the risk.
Session 3 was hosted by the International Actuarial Association’s Microinsurance Working Group and looked at pricing inclusive insurance in the midst of a pandemic. Participants were reminded of the basic processes for pricing insurance: market research, gathering data, setting assumptions of expected claims, the value and distribution of claims, adding margin for covering overhead and profit, and finally calculating the premium. The same process also applies to Covid insurance, although new studies from Swiss Re and Women’s World Banking reinforce the need to monitor the market and be prepared to adjust premiums in the future, given the high incidence of mental health issues created by financial and health stress.
Independent Actuarial Consultant Jeff Blacker noted the challenge of finding relevant inclusive insurance data, but pointed to solutions including basic pricing concepts, alternative data sources, focus groups and surveys, and stochastic or random variable models. Different types of products such as non-life, health or life may involve different data, but the process is the same. Missing or incomplete data should not be an obstacle to accurate pricing.
Denis Garand, of Denis Garand and Associates, identified the issue of ‘tail risk’ - a pandemic is a very rare event, maybe one in a hundred years, and it’s harder to get reinsurance compared to something like a natural disaster - and that needs to be built into pricing so that claims can be paid out of assets.
As facilitator Nigel Bowman, Co-founder of Inclusivity Solutions noted, monitor the data against your experience and then ask the questions - and be prepared to adapt quickly.
Day Two of the Digital ICII put public-private partnerships (PPPs) under the spotlight and asked what lessons can be drawn on what works and what doesn’t. The session - hosted by the ILO´s Impact Insurance Facility and facilitated by ILO Senior Technical Officer Pranav Prashad - looked at case studies from India, Uganda and Southeast Asia as well as a global overview of climate risk PPPs.
The ILO has been working in partnerships with governments and the private sector for many years, said Pranav, but there are still challenges around long-term efficiency and sustainability, and there are questions over the roles of different partners.
Srinivasan Iyer, Programme Manager at the Ford Foundation in India highlighted Pradhan Mantri Fasal Bima Yojana (PMFBY), a PPP between the Indian government, the Ford Foundation and insurance companies to provide index-linked insurance to small farmers. Although more than 11 million farmers are now covered, the scheme has encountered multiple challenges including very high transaction costs, inconsistent and arbitrary damage assessment and poor claims’ payment. To make climate insurance protection more effective, concluded Srinivasan, there needs to be better inclusion, credibility, education, simplification and innovation.
The Uganda Agriculture Insurance Scheme (UAIS) is a PPP involving the government, the Agro Consortium of 11 insurers and NGOs, which the government subsidises by about US$1.5 million a year. Munyaradzi Daka, Consultant with the Agro Consortium, said one of the keys to success was for each partner to know exactly what they were responsible for. As well as offering the insurance products, Agro undertakes ‘sensitisation and awareness’ to increase uptake; the government subsidises the scheme; government agencies provide data support; and financial institutions foster lending. Key takeaways include the importance of engaging all stakeholders; ring-fencing subsidy funds; creating a consortium of insurers; and minimising political influence.
Mario Wilhelm, Head of Middle East and Africa at Swiss Re, took a global view of climate risk. Not surprisingly, an audience poll found that 95 percent of participants believed that climate change is responsible for the rise in NatCat losses, which stood at US$350 billion in 2018 - only US$60 billion of which was insured. PPPs are essential, otherwise climate risks could become uninsurable. Other factors which contribute to NatCat losses include increasing urbanisation - more and more people live in coastal cities - and ‘secondary perils’ which follow an extreme weather event, such as a storm surge after a cyclone. Swiss Re has been involved in more than 600 PPPs around the world in the last ten years, but Mario singled out the Kenya Livestock Insurance Programme (KLIP) as a success story - though with 20,000 households and 100,000 animals covered, there is still plenty of room to scale up. His key lessons? Think Big, Start Small, Scale Fast.
Emily Coleman, Agricultural Insurance Lead at the International Fund for Agricultural Development (IFAD) said that PPPs are needed because sustainable insurance needs a wide range of stakeholders and public money is essential to kick-start a project. IFAD facilitates these partnerships globally, but has done country-level assessments in Cambodia, Indonesia, Vietnam and the Philippines. Governments and donors can help overcome supply and demand-side inefficiencies as well as create an enabling environment, she said. Public goods can benefit state institutions as well as the private sector, and private insurance companies should be ‘crowded in’ when possible - PPPs can put a lot of pressure on a single insurer to deliver products successfully, and public insurance can create an uneven playing field for the private sector.
The role of mobile in scaling index insurance was under discussion in the next session, hosted by GSMA - Mobile for Development. Facilitator Rishi Raithatha, GSMA’s Senior Advocacy Manager, pointed to a recent GSMA report on the trends, challenges and opportunities in mobile-based index insurance. Among the key findings were that index insurance enables first-time access for many smallholder farmers, but uptake remains limited; partnerships are fundamental for scaling up and education; B2G remains popular although some providers have grown through B2C and B2B; mobile technology enables service delivery across the agricultural insurance value chain; MNOs and mobile money providers can grow index insurance services; and insurance should be bundled with loans.
OKO CEO Simon Schwall said digital payments have been a revolution, with smart phones, 3G and 4G helping collate digital yield records to create index insurance products. But the biggest problem remains new distribution tools.
Pranav Prashad, Senior Technical Officer at the ILO’s Impact Insurance Facility, said that tech can be a game-changer for people with no experience of any financial services, let alone insurance. The number and variety of tech players in the agriculture insurance sector has grown significantly, right across the insurance value chain in product development, distribution, enrolment, education, loss assessments and verifications. And, he added, the Covid pandemic has proven the case for technology.
Hosted by the MicroInsurance Centre at Milliman, and facilitated by Microinsurance Specialist Indira Gopalakrishna, Session 6 aimed to give practical lessons from all levels of parametric solutions - macro, meso and micro. Iker Llabres, MiCRO’s Monitoring and Evaluation Specialist, said holistic risk management means combining different risk transfer and risk management alternatives for individuals and organisations. For macro, the government is the beneficiary; for meso, it’s the aggregator. At the micro level, individuals are the beneficiaries and the aggregator could be an MNO, MFI or non-profit. MiCRO, for example, uses the World Food Programme as an aggregator to reach individuals. At each level, the risk management process comprises risk identification (which risks am I exposed to?); risk management (can I transfer, mitigate or avoid the risk?); and residual risk. If you don’t like the residual risk, look again at the risk management solutions.
At the other end of the spectrum, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) focuses on macro level parametric insurance. CEO Isaac Anthony explained that after Hurricane Ivan in 2004, Caribbean governments realised they needed to protect themselves from NatCat events. CCRIF now covers 50 million people in 19 countries, providing short-term funding in the immediate aftermath of a disaster. Claims are settled within 14 days, and it’s less expensive than traditional indemnity insurance, so governments reduce negative impacts on their national budgets.
Matt Chamberlain, Principal and Consulting Actuary at Milliman, highlighted the US National Flood Insurance Program which had to borrow US$17 billion after paying out in the aftermath of Hurricanes Katrina, Rita and Wilma, followed by a further US$6 billion after Hurricane Sandy. However, with better data, more accurate pricing and better understanding of flood risk, private flood insurers are coming into the market - more than 100 products launched since 2013. Matt’s key takeaways? Inaccurate pricing leads to low take-up rates and may be unprofitable; reducing the protection gap requires higher quality models, adjustments to reflect model limitations and pricing that reflects location risk level; and community rating – i.e. one single rate - negatively impacts take-up and introduces adverse selection.
So to the last session of Day Two - Quality Index Insurance Certification (QUIIC), hosted by CEAR and facilitated by Glenn Harrison, Chair of Risk Management & Insurance at Robinson College of Business, Georgia State University.
Professor Michael Carter of the MRR Innovation Lab at the University of California, Davis suggested that both the good and bad news about index insurance is that it doesn’t pay out based on verified individual losses, but instead pays out on a cheap-to-measure index that is correlated with individual losses. However, this makes it prone to both false positives and false negatives - that’s not good for business and keeps the price higher than it would otherwise be. So what does ‘good’ insurance look like? That’s where QUICC comes in, with objective standards to determine whether an index insurance product meets a minimum level of quality. Certification allows insurance to be judged on one basic principle: will the policyholder be financially better off with or without it?
Lilian Ndungu from the Regional Centre for Mapping of Resources for Development (RCMRD) - one of QUICC’s partners - said they are not seeking to compete with existing quality processes but to complement them. The data gap is a major challenge, as without the right data, insurance contracts will be ineffective. RCMRD is strengthening data collection - for example on livestock insurance in Kenya - and hopes to scale up in other African countries.
Index insurance quality has also been a major challenge in Uganda, said Munyaradzi Daka of the Uganda Agro Insurance Consortium (AIC). Many companies were ill-equipped to handle complex products; some launched products without any monitoring; there was no awareness raising; once premiums were collected, consumers did not see insurers again; claims were not paid out; and there was no way to file complaints. QUICC could help address those issues.
Although good quality data is hard to come by, Michael Carter had some wise words of advice: "Don't let the perfect stand in the way of the good."
Integrated risk management solutions were first for discussion as Day Three of the Digital ICII got underway. Hosted by the ILO's Impact Insurance Facility, the session heard case studies from the Philippines, India and Kenya.
Facilitator Aparna Dalal, Senior Technical Officer at the ILO, pointed out the need for different products for different risks: these need not necessarily be insurance products. Savings are a cheap and versatile way to build a buffer, but are most suitable for expected or planned expenses. Insurance is more suitable for large, unplanned losses, while loans can also be used to plug the gap, but only if a household has repayment capacity. Insurance should be integrated into a broader package of risk management and transfer solutions.
Floriano Hilot, CEO of Oro Integrated Cooperative, showcased two products: Safe Plus, a scheme for low-income customers to save for their children’s college costs, which includes integrated free life insurance; and a health and disaster savings plan which includes free calamity insurance but also encourages customers to save for emergencies. Although both products were launched just a week before the Covid lockdown, early indications are encouraging.
Dvara KGFS in India uses a four-pillar framework to help low-income people manage risk: plan, grow, protect and diversify. Nikhil AC, Head of Liability Products, explained that most rural people have erratic incomes and no savings, and tend to rely on loans to help them through a crisis. “We thought, why can’t they save something? We know they can’t save in a consistent manner, but they do have some surplus income.” Dvara KGFS uses a sophisticated algorithm which looks at customers’ needs and aspirations to create a comprehensive wealth management strategy including income concentration; income volatility; household surplus levels; liquid assets holdings; and credit history.
Sicco van Gelder, Director of Demandside Financing at the PharmAccess Foundation, said digital savings increase access to healthcare and mobile technology simplifies connections, and since 90 percent of Africans now have a mobile phone, even the most vulnerable are directly accessible. M-TIBA mobile health exchange in Kenya, for example, connects people to clinics through its mobile health wallets. M-TIBA has enabled consumers to evolve from simple out-of-pocket cash payments to a range of insurance solutions.
The next session asked how digitalisation can spur market growth. Hosted by GIZ and facilitated by Hui Lin Chiew, an Advisor at a2ii, the discussion explored if Covid-19 has spurred regulators to allow more innovation. “The pandemic has made us ask whether digital works for everyone and has made digitalisation urgent,” she commented.
Wolfgang Buecker, Head of Financial Sector Development at GIZ, said digital financial services strongly support the achievement of the UN Sustainable Development Goals (SDGs). Public-private partnerships (PPPs) are key to help digital technology revolutionise insurance provision, but the mix of stakeholders is a challenge for regulators. With so many innovative private sector players bringing new products and technologies to market, timely approval is essential. Wolfgang pointed to the example of the GIZ PPP with Allianz in Morocco and Ghana to implement integrated climate risk management approaches for small and medium enterprises (SMEs).
Andrea Camargo, Risk Financing Consultant at Inspowering, shared the findings of a study analysing the impact of regulation on mobile insurance in Egypt, Morocco and Ghana. Regulation is important but success relies on other enablers including digital payment infrastructure, consumer education, innovative providers, digitally empowered consumers and prioritised financial inclusion strategies. However, supervisors face a raft of challenges including assessing the value of mobile insurance products, consumer protection and partnerships, while industry players need investment, space for innovation, new partnerships and “a huge effort in learning.”
Four digitisation trends have emerged this year, according to Mathilda Ström, BIMA’s Deputy CEO, some of them accelerated by the pandemic. Increased use of digital subscription channels including ride-hailing apps and mobile wallets; increased use of digital media channels such as Whatsapp and Facebook in Asia to engage with insurers’ claims processes; digital marketing and influencers instead of face-to-face sales agents; and new channels and platforms such as Grab selling insurance. However, some regulations - for example, on digital signatures - still look like the 1980s, making it difficult to operate at scale.
In Ghana, said Kofi Andoh, Deputy Commissioner of Insurance at the country’s National Insurance Commission (NIC), regulators embrace innovation and overcome barriers. As a result, Ghana has a thriving mobile insurance market and with no restrictions on which part of the value chain can be digitised. “We don’t stipulate what you can and can’t do, from onboarding through to claims management,” said Kofi. “Once we’re satisfied that there are adequate measures to mitigate the risks, we let go.” Small wonder that 65 percent of inclusive insurance in Ghana is sold by mobile phone.
Morocco faces different challenges, said Mohamed Feriss, Head of Department at the national insurance regulator ACAPS. The mobile network doesn’t cover the whole country and intermediaries use digital for banking but not insurance, and many Moroccans are afraid of digital technology. Moroccan law does, however, recognise equivalence between paper and electronic documents and allows for electronic signatures. Operators wanting to digitise insurance sales must get the process approved before launch, and if necessary the authority works with the insurer to improve the product before launch.
National financial inclusion strategies are essential for supporting the development of inclusive insurance, but experiences vary widely. The next session aimed to share some lessons learned from developing national strategies, facilitated by Lemmy Manje, Founder and CEO of FinProbity Solutions in Zambia. Setting the scene, he made a number of observations: insurance markets are not naturally inclusive in most developing countries; national strategies can stimulate inclusivity and propel insurance growth; multiple stakeholders need to be involved; regulators play a dual role in both supervision and market development; market and regulatory diagnoses are useful investments; and dialogue between market players and regulators is essential for an enabling environment.
The session started off on an optimistic note, with 86 percent of poll respondents agreeing that insurers can serve low-income populations and still make a profit for their shareholders. On the other hand, 27 percent believed insurers avoid investing in inclusive insurance because they are not convinced of the business case! 40 percent believed getting customers to understand and appreciate insurance is the biggest challenge.
Dante Portula, Senior Advisor at GIZ Philippines, said that while banks are the main distributor in the Philippines, their numbers are shrinking especially in rural areas. Uniquely, pawnshops also act as distributors. Mutuals have 57 percent of the microinsurance market share, with more than 45 million clients at the end of 2019. The government has laid the foundation for market development, creating a national strategy and regulatory framework which clearly defines microinsurance target sectors and the roles of the various players. Other success factors include regulatory leadership, proportionality of regulations, a multi-stakeholder approach, and management support.
Kemibaro Omuteku, Head of Insurance at Tanzania’s Financial Sector Deepening Trust (FSDT), said their aim is to have 50 percent of the adult population with at least one insurance product by 2030. To achieve that, capacity building, technical assistance and support from the regulator is key, as is continuous dialogue between private and public sectors. However, Tanzania remains a challenging environment: players need to be adaptive, nimble and patient because microinsurance is a medium- to long-term endeavour. Key lessons include KPI training to help deepen understanding of where the market has come from, where it is going and whether it is becoming more responsible; using case studies to document success stories; and always remembering that customers should be the ultimate beneficiary.
Peru is also a challenging market, said Eduardo Morón, President of APESEG. Insurance penetration is less than two percent, while banking, borrowing and mobile money accounts all show a significant gender gap. The regulation journey has not been easy either, he said. “It’s been non-linear, with many stop-starts and many changes of heart from central government. In 2011 they launched a national crusade for financial inclusion, but then immediately forgot about it.” A special microinsurance regulation limited premiums and cover, only to be removed two years later. Eduardo’s key takeaway? “We have to work much harder on how we measure success,” he said. “Otherwise you don’t know where to aim. If you don’t have those metrics, it’s hard to say whether your country is doing a good job on microinsurance.”
The final session of the day, hosted by MCII, focused on leveraging sovereign insurance to build scale. Facilitators Elizabeth Emanuel and Jennifer Phillips asked each panellist to sum up the impact of Covid-19 in their markets in two words. Isaac Anthony, CEO of CCRIF was “surviving well”; for Matthew Branford, Acting Accountant General at the Government of Saint Lucia it had been “challenging but optimistic”; Dean Romany, President of Guardian General Insurance Limited in Trinidad and Tobago “adapted quickly”; and Dirk Kohler, Insurance Advisor at MCII, was in it for the “long-term”.
CCRIF offers COAST, a sovereign product with microinsurance features, and a livelihood protection policy in partnership with the Climate Risk Adaptation and Insurance in the Caribbean (CRAIC) project. Leveraging its competitive advantage to achieve scale, the Facility has paid out a total of US$163 million, all within 14 days of a NatCat event. Models are continuously reviewed, incorporating new data as it emerges, enabling CCRIF to offer products not readily available on the traditional insurance market. The fact that people now understand the role of insurance better than they did ten years ago also helps leverage scale.
Dean Romany introduced COAST, Guardian’s first foray into parametric insurance, a partnership with CCRIF to offer microinsurance for small-scale fishing operators. “Once the parameters are met, the insurance is paid,” he explained. “No questions asked, no exclusions or policy conditions. It’s simple, and the idea of non-negotiated claims settlement and support brings confidence to the insurance industry.”
Isaac Anthony was excited about COAST’s inclusiveness - as well as fishermen, thousands of women working in fish processing and markets are covered. The Caribbean fishing industry employs around 300,000 people, who are particularly vulnerable to tropical cyclones. “COAST is unique in that the government is the policyholder, but the benefits go to the fisherfolk,” he said. However, Dirk Kohler highlighted several challenges getting CRAIC off the ground, including outreach and a difficult regulatory environment. Farmers found it hard to understand that it’s not crop insurance, it’s a type of business interruption insurance.
After Saint Lucia was hit by Hurricane Matthew in 2016, the government received a US$3 million payout from its parametric insurance cover. Matthew Branford explained the advantages: insurance buys you time, adds to other disaster risk management strategies, alleviates immediate social pressures and means you can start recovery measures straight away. In the long term, climate insurance relieves the government’s financial burden. It would be unwise for any government to try and self-insure against climate risk, he said. “Climate change has no season. It’s a year-round risk.”
Day Four of the Digital ICII explored new products and solutions to increase insurance outreach. In 2018, around 200 million migrants sent remittances worth US$530 million - with many more in the informal system - but very few are protected. Insurance from a distance: Using remittances to increase protection - facilitated by Craig Churchill, Chief of the ILO’s Social Finance Programme - looked at the case for remittance-linked insurance products.
Cenfri Senior Associate Kate Rinehart-Smit shared a study showing that 21 percent of migrant workers surveyed already send money back home for insurance purposes and 84 percent for health purposes, which is an insurable risk. 21% would send remittances directly to an insurance company, suggesting there is a reasonable business case, especially if working with a trusted mobile transfer operator (MTO). Kate identified four potential product models with varying levels of complexity relating to regulatory challenges, with both senders and receivers in multiple jurisdictions.
AXA covers 200,000 migrant workers worldwide with a mixed portfolio of on- and offline business models, digital and physical distribution. However, Michal Matul, Head of VAS, consumer insights and training at AXA Emerging Consumers, said it has not been easy. “In theory, migrant workers should be receptive to insurance but there is a demand issue around people who have never had insurance before and may not even know what it is.” Research from the UAE and Spain showed migrant workers share the same worries - accident, life and health risks - but rank them very differently. In Malaysia, AXA partnered with MTO Merchantrade on two products: simple personal accident and income replacement. In the UAE, it works with fintech bank Rise and tech company Democrance to offer freemium cover for Filipino maids, with the opportunity to up-sell. Important lessons include providing immediate client value; investing in multi-channel, on-going, native marketing; starting with a seamless customer journey and agile tech partner; going beyond remittance-based distribution models; and lobbying to change regulations.
Michele Grosso, Founder and CEO of Democrance, said the sales campaign and backend policy admin system must work seamlessly together. Democrance helps insurers increase digital sales and access new markets using a plug-and-play software-as-a-service (SaaS) platform, and has developed an integrated data analysis platform to allow informed campaign decisions. Michele highlighted the partnership with MTO Hello Paisa and Axa to offer ‘Helloprotect’ covering migrant workers against losses sending money back home. Under the partnership, UAE residents remitting money to their home countries in the Middle East, Africa and Asia get free accident and disability cover. It’s a simple five-step system in which the remittance sender is the policyholder but the receiver is the beneficiary. Claims are made via mobile phone and are paid directly by Hello Paisa to the receiver.
Gregor Sahler, Advisor at GIZ, facilitated an interactive session on developing insurance markets for small and medium enterprises (SMEs) based on a learning note published by the Microinsurance Network, with the support of Cenfri and GIZ, Managing risks (more) effectively: Rethinking insurance for MSMEs. The publication, produced by one of MiN’s best practice groups (BPGs) was compiled after the BPG identified seven main challenges: inadequate risk management strategies; rapidly changing risk management needs; lack of awareness of insurance; insurers' lack of knowledge about MSMEs; high heterogeneity of MSMEs; difficulty of reaching MSMEs; and regulatory barriers.
Participants shaped the discussion through a series of polls. Top of the list of challenges identified were insurers’ lack of awareness about MSMEs (47 percent) and MSMEs’ lack of awareness about insurance (46 percent). For Jeremy Gray, Resilience Team Lead at Cenfri, those are two sides of the same coin: MSMEs lack awareness of insurance or risk management, while insurers have poor understanding of MSMEs. Humans, he said, don’t understand or assess risks well, and the same is true for business owners. For example in Morocco, flood risk is a major challenge, climate risk insurance is available, but MSMEs are slow to take it up. In addition, insurers lack granular data on subsets of MSMEs in the developing world to help them develop suitable insurance or financial products.
Siani Malama, Head of Business Development & Inclusive Insurance at Hollard Zambia said most MSMEs use informal risk management tools, but poor insurance awareness is definitely a challenge. Insurers try to do their best to educate customers, but it’s costly in a segment with low financial literacy. “You have to take off your insurance hat and make it as easy as possible to relate to it, he said. “These customers know what risk is – they probably understand it better than we do!”
Microfinance institutions (MFIs) have driven financial and insurance inclusion, said Monirul Hoque, Planning Manager at BRAC. MFIs know their clients, bring trust and brand value which insurance companies lack - however, they mostly cover credit-life, and MSMEs have other needs including business interruption insurance. Despite the challenges, there is a definite business case for MSME microinsurance - but insurers must be patient and prepared for long-term partnerships. Above all, there needs to be a shift in attitude. As Jeremy put it: “Most insurers focus on selling insurance, but they should be asking ‘what does this MSME need and how can we build its resilience?’ Being a partner is different from being a service provider.”
Key takeaways: regulators should enable a better business environment; develop partners, not providers; have a long-term strategy; use value chains; insurers should invest in thorough market research and literacy campaigns.
Innovative distribution models - High touch vs. low touch: Is face to face really necessary? hosted by EA Consultants, sought to strike the balance between digital and human distribution channels in the Covid-19 era.
Facilitator Barbara Magnoni, President of EA Consultants, wanted to know what level of touch is needed for conversion. Is it a choice between digital or physical tools, or a combination of both? Can they co-exist? A participants’ poll showed 45 percent thought it’s possible to build a sustainable inclusive insurance business without any face-to-face client contact at all, but 54 percent thought a ‘high touch’ approach is essential for building client awareness.
Francisco Reyes, Co-founder & CEO of Mango Life, noted the huge protection gap in Mexico - only 15 percent of the working population have life insurance and only seven percent have health cover. Mexican life and health products are too complex to understand and acquire, he said, but Mango has a philosophy of simple (flexible and simplified insurance that users finally understand and need), human (less jargon, more conversational approach based on neuromarketing insights), and digital (no paperwork, appointments or signatures on documents). Mango actually launched its latest health insurance with telemedicine nine months early because of client demand for digital health services during the pandemic.
Despite Covid-19, high touch remains key for APA Insurance in Kenya. Ashok Shah, Group CEO, said their target segment - farmers and nomads - still need the personal touch, and although digitalisation will bring big changes, it will take some time. For now, APA reaches its clients through ‘feet on the street’ - agri-input companies, churches, NGOs and development agencies; community-based resources; and ‘VIPs’ - village insurance promoters who go into the market and work seasonally to build their own low-cost channels. Community meetings before sales ensure farmers get answers and gain confidence through peer learning, whilst similar meetings before disbursing claims boost renewals and allow farmers to ask how claims are calculated.
Mauricio Osorio Sanchez, President of Crezcamos in Colombia, is committed to a high touch model with 93 branches and more than 1,300 loan officers throughout the country. Close personal relationships are key to build trust in the claims process. “We have also introduced non-physical channels, but that doesn’t preclude the need for high touch services to give clients confidence. This is why our conversion rate is really high,” he said. “We are a bit old-fashioned. We pay claims through our offices, in person - that way, clients see for themselves how the process works, insurance becomes more tangible and we develop trust.”
If you do introduce low touch channels, concluded Francisco, invest in an IT team dedicated to product management, always measure KPIs and conversion rates, and work with sales and marketing teams to improve. Use CRM and software analytics to measure everything in your funnel - and learn to prioritise where you put the human touch: with leads that are close to a sale.
The final session, hosted by the MiN and ILO's Impact Insurance Facility, aimed to analyse the client value of hospital cash products. Facilitator Lisa Morgan, Technical Officer at the ILO, outlined the initial findings of research undertaken by the MiN BPG on Health and financial inclusion, which focuses on various hospital cash products across three regions.
The BPG aims to analyse at least two hospi-cash products in each of the Latin America, Africa and Asia regions using the ILO’s PACE methodology (Product, Access, Cost and Experience). Erik Jarrin Peters, Head of the Latin America Life Division at Barents Re, highlighted products from Paraguay, Peru and Bolivia, each offering different benefits and experiences. Initial findings suggest that once Covid-19 started, people stopped going to the doctor and telemedicine jumped in popularity. In addition, customers are looking for free services, such as doctor’s visits, annual check-ups and medicine for basic health conditions as part of the offer. Millennials and younger customers want immediate access to tangible products including telemedicine.
Turning to Africa, Neto Ikpeme, Founder and CEO of Wellahealth in Nigeria, and Anne-Sophie Triboulet, Microinsurance Project Manager at Women’s World Banking in Uganda, looked at hospi-cash products in Africa and South Asia. The West African example has no pandemic exclusions but requires a minimum stay of three nights and comes with a three-month waiting period. MNO clients with a mobile money wallet who carry out a certain number of transactions a month qualify for free coverage. Claims can be submitted by WhatsApp or email, and are paid within 48 hours.
In North Africa, where many women work informally and have no access to social security, the product includes maternity cover. It is bundled with loans - all new credit customers are enrolled automatically - but it can only be done through a visit to the branch, with the same applying for claims filing.
So far only one product has been analysed in South Asia, which offers telemedicine and double benefits for intensive care. Premiums are paid through digital wallets and the provider plans to offer six-month cover for those who can’t afford a year up front. Despite significant differences among the African and Asian examples, there were common features including simple and easy-to-understand processes, low documentation requirements, and a desire to build trust through quick claims’ payment.
Initial indications suggest that across all six products, there is a trend to react and adapt to Covid-19; they mostly rely on online and mobile for access; use of digital wallets shows integration with wider digital financial services; keeping things simple reduces barriers to access; digitisation helps users in the end-to-end hospi-cash experience; and clients want quick turnaround times.
You can catch up on all presentations and watch the recordings of conference sessions on the conference website.
The final day of the Digital ICII aimed to identify lessons learnt and next steps. The first session, facilitated by Richard Leftley, Executive VP International of the Micro Insurance Company, focused on what can be learned from the tech revolution of the past decade and how tech can drive inclusive insurance.
Rohan Kumar, CEO and Co-founder of Toffee Insurance in India, said there has been a transition over the last couple of decades, with more people using fintech products and e-commerce which leads to better understanding of consumer behaviour and needs. This in turn helps insurers understand which products work for which specific consumer segments, and it is now possible to get much more accurate data from the ground. Now the challenge is for the actuarial science to keep up with fast-moving datasets to allow for more accurate pricing. In terms of digital trends, said Rohan, it’s clear that telco payments have now declined in popularity, while ATM payments are most popular. Apps are becoming redundant - WhatsApp and automated chatbots are taking over, and AI is driving the user journey.
For Jeremy Leach, Founder & CEO of Inclusivity Solutions, the trend is towards recurring payments enabled by digital technology. “Focus on frictionless payment, otherwise you have to go through the sales process all over again,” he advised. “Push payments are dead. In many markets, mobile money payment systems are predicated on push payments and don’t allow for recurring payments. It’s laudable that people take control of their lives, but it’s a killer for these types of payments. It’s like a gym phoning you up each month saying you haven’t been to the gym, do you still want to pay? Of course you don’t!” However, there’s an issue with regulators making recurring payments difficult because of consumer protection concerns.
Brandon Mathews, CEO of Stonestep, pointed out that airtime as a currency is very expensive as telcos take up to 20 percent of the transaction costs. The challenge with working with MNOs in any given market is that there tend to be only two or three big operators. “You end up elephant hunting - good luck with that!” Fewer people are buying airtime, more are buying data, so apps are increasingly important. For example, Stonestep are working on an insurance option to be included in a maternal health education app. “It makes sense because people need it,” he said. “The best way to educate a customer is to solve a specific problem for them.”
The session on the ups and downs of inclusive insurance: learning from experience was a chance for panellists to be open about some of their less successful experiences - as facilitator Michael McCord, Managing Director, of the Microinsurance Centre at Milliman, said “It’s important to learn lessons as we go. Often we only get the happy story, so we should applaud people prepared to talk about both the ups and the downs.”
First to bare his soul was Lorenzo Chan, CEO of Pioneer Life in the Philippines, who shared the saga of trying to introduce tech into the human touch. Six years ago Pioneer began its automatic enrolment project with an US$80,000 investment in ‘phablets’; after multiple trials and relaunches, the latest version is now testing. Initially, some agents who were unfamiliar with smartphone technology were worried the devices might explode and found them difficult to use - however the biggest challenges was (and remains) poor connectivity in many rural areas. As a result, a lot of time and money has been spent on perfecting a model which allows for both on- and offline data inputting. Even so, by the end of 2019, only 82,000 out of 1.5 million enrolments were through the auto-enrolment technology. Lorenzo’s key lessons included: do not assume; prepare for offline; tech is a continually evolving process and is an enabler, but it cannot fully replace trust and human contact; and keep going!
Peter Gross, Senior Advisor at AXA Emerging Consumers, said ten years of experience working with mobile network operators (MNOs) and telcos has taught him the real story is always messier than the one people like to talk about. He talked us through a timeline of ups and downs since the first mobile insurance product in Ghana in 2010, through the freemium model explosion of 2014-2016, through to the subsequent shrinking of the market and the reality check for mobile insurance. Reflecting on what had happened by 2018, Peter identified three major challenges: seduction of scale; too many mouths to feed; and big expenses, small revenues. Looking ahead to the mobile insurance ecosystem of 2025, he predicted that MNOs will become more passive, acting simply as pipelines for a sharp growth in digital payments; there will be heavier reliance on physical distribution through call centres; freemium will continue to lower customer acquisition costs but insurers shouldn’t get greedy; bundling will continue to work; insurers will be forced to be more agile; and value-added services, especially in health, will continue to grow.
When it comes to agriculture insurance and index insurance, said Agrotosh Mookerjee, Managing Director and Chief Actuary at Risk Shield in Zambia, the evolution of products and roll-out is challenging. “There is no consensus on what products will work in which country or context,” he said. “There’s no scientific consensus on what data you should consider. And in many countries it is extremely difficult to access the data, even when it is supposed to be public and free.” On the plus side, there are promising developments in the use of meso-level insurance, with agri-businesses, banks and microfinance institutions (MFIs) taking out cover not only for their own risk management but to help their clients boost productivity and sustainability.
And so to the closing session, which looked at the next milestones in the development of inclusive insurance and how to close the insurance gap. Munich Re Foundation Vice Chairman Dirk Reinhard recapped some of the stand-out lessons from the past five days, including the impact of Covid-19 on the incomes of those who are most vulnerable, making it even harder for them to afford insurance; the urgency for regulators to facilitate digitalisation, whilst balancing consumer protection; the increasing need for public-private partnerships (PPPs) to drive inclusive insurance; the need for integrated risk management solutions. Lastly, he also reminded all participants that Covid-19 is a huge problem but climate change shouldn’t be forgotten.
Vijaya B. Shah, CEO of the Nepal Insurance Company and President of the Association of Insurers and Reinsurers in Developing Countries (AIRDC), focused on developments in the Philippines and Nepal. The Philippines, he said, is an exciting space - microinsurance premiums up by 12 percent in 2019, 45.13 million people covered, and an encouraging expansion at meso level. This is mainly down to a proportionate policy and regulatory environment; government champions who lead and advocate reforms; a strong microinsurance sector; a multi-stakeholder approach to market development which provides rich opportunities for capacity building; and an active government role in project implementation and donor coordination.
Nepal, however, faces different challenges, including a lack of cost-efficient channels; limited use of tech, inadequate data; poor levels of awareness about insurance; and the return of migrant workers during the pandemic which has badly hit economic growth. Regulators need to synchronise the definition of microinsurance, revise the maximum allowed sum assured, facilitate appropriate products based on low-income needs, and encourage pools to share both risks and benefits.
AXA are one of the leading global insurers in the inclusive insurance space. Chairman Denis Duverne, who also chairs the Insurance Development Forum (IDF) shared some of his experiences: firstly, you cannot simply take traditional insurance from mature markets and make it smaller, it has to be much simpler, with very few exclusions; secondly, classical distribution through agents and brokers is too expensive, you need to use digital and fintech distribution; and thirdly, you need partnerships which go beyond financial incentives. These lessons, said Denis, have allowed AXA to grow from one million to 18 million inclusive insurance clients - although there is still huge room to grow. In the context of Covid-19, the need is even greater - inclusive insurance will have a crucial role to help people who are in danger of falling back into poverty.
Jan Kellett, Special Advisor at the UNDP’s Finance Sector Hub, shared details of the new Insurance and Risk Finance Facility which will support insurance product development and deployment in 20 countries in the next five years, scaling up to 50 countries by 2030. The Facility has five work streams, including one dedicated to inclusive insurance. Although the facility was conceived will before the Covid-19 crisis, it has adapted to the new context, and will focus particularly on three impacts: on health, on SMEs, and on secondary impacts on health such as food security and financial stability. “Risk management and development need to be treated holistically, and Covid-19 has forced us to do that,” said Jan. “Insurance is not a panacea, but a significant tool for resilience and development more broadly.” The Facility also aims to encourage other UN agencies to get involved with the IDF and the InsuResilience Global Partnership.
Chair of the Microinsurance Network (MiN) Doubell Chamberlain commented that the Covid-19 crisis hasn’t really created new insurance problems, it has simply exposed old ones. It has also created opportunities for innovation in inclusive insurance, but it’s not yet clear if, in the end, the positives will outweigh the negatives. Although there has been some recent optimism around market recovery, he said, we can’t get away from the global economic impact - demand will be restrained and insurance premiums will slow down for some time to come. In addition, government debt has increased hugely, which will put their employees and citizens under even more pressure. Insurance companies’ investment incomes will decline, making it even more important for them to innovate new business models.
On the other hand, the pandemic has driven a leap in digitalisation which has the potential to transform insurance, although most of the innovation isn’t coming from within insurers but from tech companies. “Digital is not the panacea,” said Doubell, “it doesn’t necessarily drive good outcomes. What is clear is that digitalisation amplifies the ability of insurance to drive business. It’s no longer just for a rainy day - it is driving business models.”
Dirk asked each panellist for their key insights into the next five years. “If we understand the urgency, we can act,” said Doubell. “Insurance will become far more integrated with other services and business, not just a safeguard.” For Denis, insurance must look beyond climate change. “You can’t just look at climate risk, you have to look at health and protection,” he said, adding that PPPs will be essential. “We have to look much further than five years,” said Jan. “Governments and regulators need to work with the private sector and mutuals for the long haul.” Vijay thought the demand for medical and health products will transform the insurance industry. “There will be no option but to go for a massive use of tech, there will be no products that don’t rely on tech,” he said.
Wrapping up the conference, MiN Executive Director Katharine Pulvermacher identified a strong theme around the need for customer centricity. Insurance, she said, could learn some lessons from the FMCG (fast moving consumer goods) sector which understands its customers and caters to their needs. In addition, there needs to a better understanding of the digital divide if no one is to be left behind in the rush for tech. And she called for a review of the measures to the SDG targets to ensure the role of inclusive insurance in driving sustainable development is fully and specifically recognised - “because if you don’t measure it, it doesn’t exist”.
Katharine also noted the relatively high percentage of women speakers during the conference, although she said there’s still room for improvement. “One of the barriers in inclusive insurance is acknowledging that half your customers are women,” she said. “If you don’t include them, you won’t understand your own customers.”
You can catch up on all the presentations and watch recordings of all 18 sessions on the conference website. The conference attracted a record 2,056 registrations from 127 countries, more than 50 percent of whom came from the insurance industry. Next year the ICII hopes to return to a face-to-face format, and is scheduled to meet from 26 - 28 October 2021 in Kingston, Jamaica.