Ulaanbaatar City Insurance (UBCI) is pioneering microinsurance in Mongolia with a successful home insurance cover against climate risks. We caught up with company CEO Mr. Enkhbold, who shared some challenges faced by the sector in the country and the opportunities that joining the MiN presents for inclusive insurance in Mongolia.
MiN: UBCI joined the MiN at the end of last year. Introduce your organisation - what is your structure and main focus?
Mr. Enkhbold: UBCI was founded in 2002 with a decision of the city counsel of the capital (Ulaanbaatar). We have been providing one of the first microinsurance products in Mongolia which is “comprehensive apartment insurance” since 2005. As of the first six months of this year, this product has been responsible for the highest number of people covered and has continued to be our most successful product since we launched it.
Our company consists of finance, operation and insurance departments that contribute to our overall mission and goals. In insurance, we have two sub-divisions - corporate and retail insurance. Most of our insurance products are delivered through agents in order to provide more active communication and try to enhance the knowledge and education of the end-consumer. UBCI always aims to provide flexible and affordable insurance products to the uninsured, while providing more comprehensive and suitable insurance products to existing clients.
MiN: How would you say your organisation has played a role in supporting inclusive/micro insurance in your regions of operation? Highlight your current ongoing projects and initiatives specifically relating to inclusive insurance.
Mr. Enkhbold: In the Mongolian market, there are 15 general insurance companies, one life insurance company and two reinsurance companies currently, but only a few that offer microinsurance products to the market, which shows that micro is still in its initial development stage. We were one of the first companies that took the initiative to launch microinsurance products in the market and as a sustainable standalone product.
We have over 75,000 policyholders of this product which covers a third of the total apartment owners in the country. Basically, we bundled two insurance covers into one product - liability and property insurance. The policyholders will get one-year coverage for their own apartment and are responsible for covering their neighbours from risks such as plumbing, fire, earthquake and water risks from snow or rain.
The monthly premium is US$ 0.80, bur coverage is up to US$ 1,100. The product covers damages to the ceiling, walls or floors of the policyholder’s apartment and that of their neighbour’s. The claim is settled within 10 days and the policyholder pays the premium monthly with their electricity bill, which our clients found very convenient. Aside from the capital, we also have customers from the next biggest cities in Mongolia, such as Erdenet and Darkhan as well.
MiN: Your organisation has been present at the recent Consultative Forum in Panama and the latest JMM in Luxembourg. Give us your key takeaways and highlights from the discussions at these events that you’ve been a part of.
Mr. Enkhbold: Yes, we were fortunate to participate in these two amazing international insurance forums and meetings. We found both of them truly effective and beneficial and we gained a lot from these discussions. It goes without saying, that the events have enabled us many valuable networking opportunities and the chance to connect with true experts in the inclusive insurance industry, as well as providing us with a platform to exchange perspectives and experiences with fellow members and access to valuable data to insurance markets in different regions all over the world. We are very much looking forward to participating in the 15th IMC this November in Bangladesh.
MiN: What excites you most about being part of the MiN? Where do you see untapped opportunities for the MiN to make a difference?
Mr. Enkhbold: For us, one of the most significant aspects of being part of the Network is being able to share our experience and success stories, as well as our failures and lessons learned with members while exchanging knowledge and learning from them also. We believe that finding out more about market situations in other countries and regions, and their best practices and business models is the type or learning you can’t get outside the Network and is hugely beneficial to our work. I think the MiN can really make a difference with regional activities. This would facilitate and increase interaction with members and other players in emerging markets. Every region has its own qualities and similar challenges, and having a presence in each region would only lead to more fruitful outcomes. Then, at the end of each year the members could come together and discuss the outcomes, achievements and progress in each region.
MiN: Talk about your general view of the current inclusive/micro insurance market in Mongolia. What do you see as the main obstacles and challenges and where do the opportunities lie?
Mr. Enkhbold: As I mentioned earlier, there are 15 general insurance companies in Mongolia who earn most of their premium income from corporate insurance. There is lower interest in bringing microinsurance products to market, because they are thought of as less profitable, but we need to realise that at the heart, insurance is about protecting people from as much risk as possible. The main difficulties we are facing in the market currently are a low rate of financial literacy, high operation expenses and distribution channels due to a large coverage area. But, we have many opportunities, such as an open market and an incredible number of smartphone users in Mongolia – total of 2.4 million (69.1% of the total country’s population) – increasing in the last eight years and the total number of mobile users is now at 3.8 million people, with the mobile telecommunications network covering 95 percent of the population. The insurance sector has yet to benefit from using technology as a distribution channel and/or in other operations, however.
MiN: The theme of climate and disaster risk has been massively prevalent in the inclusive insurance space conversations and events for this year. In your view, how do you see insurance as a mechanism to help address this huge issue affecting our planet?
Mr. Enkhbold: Mongolia is prone to many natural disasters, including earthquakes, Dzuds, floods, wildfires and droughts. Our inclusive home insurance product protects against earthquakes, as well as water risks caused by flooding and condensation of snow.
Also, we all know that not only the insurance industry but all human beings should be more careful about their daily decisions that are influencing our planet. UBCI has also launched an online insurance product for lawyers, while developing a chatbot as a distribution channel in order to cut down on paper policies.
MiN: Is there anything else that UBCI would like to share with other members of the Network and the inclusive insurance community at large?
Mr. Enkhbold: Understanding customer needs is a key component of inclusive insurance product design. Before we launched the product, we worked in partnership with a public utilities organisation from whom we found out that there were a high number of complaints related to frequent damages to apartments. From there, we conducted surveys and research to design the most desirable product for the end-customer. The surveys proved valuable and confirmed the high demand for such a product in our market and the product is a success.
Also, we aim to develop our next insurance products and services based on the development of InsurTech, in order to bring things to a whole new level. Mongolia is a good place that has a great market for fellow members interested in collaborating – we are widely open! We are facing some regulatory challenges in delivering online products, as there is conflicting legislation – there is no regulation directly focused on the use of technology in the insurance industry, but some provisions in the Civil Code mean that there are issues with electronic validation of insurance policies. The good news is that there is a committee working on solving these challenges and other insurance regulatory issues in the Ministry of Finance of Mongolia.
MiN: In your view, going forward, how can the MiN and UBCI best collaborate to develop the inclusive/micro insurance market?
Mr. Enkhbold: We think it’s most important to keep and sustain our collaboration for a better future. UBCI and the MiN could initiate a regional project in order to raise the awareness of the benefits of financial education and creating a successful business model for the uninsured. Lastly, we would like to express our gratitude to the MiN for giving us the chance to be part of this amazing Network and to meet so many great people.