By invitation: Simon Schwall explains why innovative partnerships are key to growth
As part of our ongoing interview series with inclusive insurance leaders, we spoke to Simon Schwall, co-founder and CEO of OKO, an insurtech company. OKO provides crop insurance to smallholder farmers in Sub-Saharan Africa, primarily in Mali, Côte d’Ivoire and Uganda. We spoke to Simon about partnerships and innovation as crop insurance evolves beyond enabling smallholder farmer resilience, and OKO’s place in Luxembourg’s inclusive finance ecosystem.
Earlier this year, we learned that the key to OKO’s weather index insurance product in Mali is the partnership with the Micro-Institution Income Growth (RMCR) Network – VisionFund Mali. How does OKO typically target partnerships?
OKO’s partnership with RMCR (VisionFund Network) has been successful. Farmers taking microfinance agricultural loans via VisionFund Mali agents can purchase OKO’s crop insurance product at the same time. This venture has allowed us to distribute insurance to farmers who can pay premiums because of the bundled loan. Farmers have benefited from easier access to loans, which do not require collateral, leading to a lower risk of indebtedness. However, not all partnerships are as successful. We typically look for partners who understand how insurance could benefit their business, increasing the chance of them promoting our products.
OKO recently launched an insurance product that allows diasporas (such as in France) to purchase insurance for relatives in Côte d’Ivoire and Mali. What inspired this idea and what type of partnerships has this required?
Most of our farmers receive international remittances from relatives overseas, so we realised that this could become a payment channel. The concept fits well with our aim to share the cost of insurance between different individuals who would benefit from the farmers becoming more resilient. For instance, there could be a low risk of loan default for microfinance institutions.
Our objective with this product was to ensure that farmers’ family members in the diaspora no longer have to send money home to cover the losses caused by a bad harvest. Our partners for this product include ADA (a Luxembourgish non-governmental organisation), who co-financed the pilot, and Flutterwave (a Pan-African payment service provider), through whom we can accept global payments.
OKO has put technology at the heart of its product innovation. How do you use technology for your partnerships?
Technology is at the core of our solutions and drives our approach to tackling partners’ pain points. Insurance companies and brokers can’t manually design products for each crop and every location. To help them, we developed digital tools to automate the design process and quickly create new products.
This approach was inspired by some of the agribusinesses, financial institutions and non-governmental organisations (NGOs) we have worked with. The workload that traditional registration processes require is simply too much for many partners. Our aim was to simplify and gamify the agent distribution model.
Different partners have varying levels of digitalisation. To overcome this challenge, we created application protocol interfaces (APIs) for partners to integrate our services with their existing interfaces – where a partner has an interface. This has worked well for partners who have invested in training their staff well.
Much effort within the industry is still devoted to overcoming the distribution challenges. What are some of the best examples of distribution that you have seen?
Several of us working at OKO were previously at BIMA. From this experience, we learned that a dedicated network is necessary for efficient distribution. Our time at BIMA showed us that using mobile technology is key to improving access to insurance and optimising our costs.
However, with agricultural insurance, there is the added difficulty of long distances and low customer density. We need to train and equip an existing network of agents that are already trusted by their local community. These include farmers’ union representatives, extension officers and NGO field agents.
Our staff and agents use the same distribution tools, which means that all users can benefit from the incremental improvements we routinely make. This includes lessons we learn from the field. This gives us a competitive advantage as distribution is key to the commercial success of parametric agricultural insurance products.
Innovation is often confused with digitalisation or technology, but there is more to it than that. Where do you see new types of innovation emerging?
Innovation and digitalisation are indeed mistaken for each other. There is a difference. For example, technology cannot yet fully replace the human interaction that farmers need to trust a new financial service. The key is to develop an innovative business model that works for everyone involved and promotes widespread, inclusive adoption.
Innovation can apply to partnerships too. The microinsurance world needs to look beyond our industry to learn about new ideas and different ways of approaching challenges. For instance, bundling insurance with solar pumps and clean stoves. Both of these assets are often sold to the same, large audience we might be targeting.
Finally, OKO is part of Luxembourg’s inclusive finance ecosystem. What advantages are there for being part of this community?
Luxembourg’s government is focused on promoting sectors where the country can lead by example. One is the space industry and the other is green and inclusive finance. Being in the climate resilience space, OKO benefits from access to different programmes and organisations.
Several organisations here can either support our work or are already supporting us. For example, the Luxembourg House of Financial Technology (LHoFT) runs an annual inclusive fintech programme. The Microinsurance Network hosts many microinsurance players for an annual summit. ADA, our partner, is a key supporter of the type of work we do. Our proximity to France, Germany and Switzerland gives us access to many large insurance and reinsurance companies.