Dubai-based Democrance joined the MiN earlier this year and has been attracting attention for its pioneering work with migrant workers. But CEO and Founder Michele Grosso shared with us that his company is neither an insurer, third party administrator, broker nor aggregator. So what is Democrance, exactly?
Michele: We’re an insurance technology firm founded and based in the United Arab Emirates (UAE), operating in 12 markets across the globe including MENA, Southeast Asia and Latin America. We develop innovative digital and mobile technology solutions for uninsured and under-insured populations, particularly underserved markets with low insurance penetration but high protection needs.
Democrance believes that technology should be used for good, and that innovation can help reach those low-income populations who need social protection the most. You only have to look at Covid-19 to see that tech is key for inclusivity. Democrance minimises operational costs while maximising easy access, allowing insurers to tap into previously unattainable markets. Put simply, we provide a plug-and-play, fast-to-market platform covering the entire insurance value chain – from the customer experience to the back-office processes - dramatically cutting down insurers’ cost-to-sale and cost-to-serve and enabling them to reach previously unviable consumer segments.
MiN: What are the highlights so far?
Michele: In February 2020, Democrance and AXA launched Hello Protect, a new personal accident insurance scheme for customers of the international money transfer service Hello Paisa. UAE residents remitting money to their home countries get free accident and disability cover. Payouts for all claims are made instantly via Hello Paisa branches in beneficiary countries. The idea is to improve financial inclusion and accelerate the development of insurance and protection services for low- and middle-income people.
In Cambodia, Democrance partnered with Cambodia Life Insurance (Camlife) to offer affordable and accessible life microinsurance products via mobile operator Cellcard. Subscribers only need their phone to buy cover and make claims. In Mexico we support partnerships with some of the largest banks and convenience stores, which together give traditionally unbanked customers access to a simple app-based bank account with embedded insurance benefits. In Egypt, we support microfinance institutions (MFIs) to bundle insurance on any outstanding loan if the borrower dies, or to provide a lump sum in case of hospitalisation.
MiN: Why the focus on migrant workers?
Michele: For most low-income migrant workers in the UAE, the inability to send money due to unforeseen circumstances such as illness, unemployment or even death is the number one concern. Traditional insurance has ignored them because they don’t see a profit in it - meaning 70 percent of the population is uninsured.
Democrance partnered with ADA and the International Fund for Agricultural Development (IFAD) to provide insurance protection via remittances to low-income migrants working in the UAE. We also partnered with AXA to offer insurance and telemedicine products to low-income migrants that send money back home via Hello Paisa, and domestic workers who use the online Rise bank.
MiN: How has Covid-19 affected you?
Michele: Democrance enabled insurers to adapt quickly and their customers to continue using online channels. The pandemic showed traditional insurers the need for agile, easily accessible services - but more importantly the need for inclusive insurance products for the most vulnerable. Never before has insurance been such an imperative.
MiN: How did you find the recent Digital ICII?
Michele: I thoroughly enjoyed the format and all the participants adapted well. Audience participation in our session was thoroughly encouraging, and compared with previous conferences the emphasis was very much on sharing experience and learning lessons, which created added value for everyone.
MiN: What are the main challenges and opportunities for microinsurance looking ahead?
Michele: Microinsurance is growing rapidly in Southeast Asia, expanding in Latin America and is still in its nascent stage in the Middle East and North Africa. We’re delighted to be at the forefront in these markets, and particularly interested in how different distribution channels work. For example, in UAE we focus on remittances; in Cambodia and Thailand we work through telecom operators; in Mexico we work with a retailer and a digital bank; and in Egypt, through Fawry’s network of 151,000 sales outlets used by over 30 million consumers. Each market has the same need - it’s only the distribution that changes.
Most traditional insurers are still waking up to the world of emerging markets, and one of our biggest challenges is getting insurers to view underserved markets as emerging markets. Traditional insurance markets are saturated, so it’s imperative to create new revenue and loyalty drivers - not just for the greater good, but also for insurers to reduce risk and increase awareness in a post-Covid world.
MiN: Can InsurTech drive growth?
Michele: Tech reduces the cost of selling and servicing, ensures profitability and adds value for distribution partners. But product testing, customer research and learning how to sell and service insurance via digital channels are also important. InsurTechs are extending innovation, offering valuable opportunities for partnering and creating a competitive threat to existing players. Customer expectations of seamless, instant digital transactions are increasingly the norm. Covid-19 has accelerated the digital trend in both consumer journeys and back-end operations.
MiN: What excites you about the MiN?
Michele: With the Network’s multi-stakeholder approach, it’s exciting to break the traditional barriers of an inward-looking industry which is often disconnected from the real world and to promote the relevance of insurance for non-traditional insurance customers and other industries. We need to bring in more new insurers, showcasing the opportunities and the risks of not being proactive. As Denis Duverne, Chair of AXA and the Insurance Development Forum, said during the closing session of the ICII, the lessons of microinsurance product and process simplification also apply to traditional insurance in mature markets.