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The key to reach scale with insurance products in mass emerging markets

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Jan 30, 2022

Create Impact’ is what the core message is of the DIA Impact Series is. Last time, we took a look at one of the game changers that developed an inclusive insurance model: Acre Africa. This week, we present the first 3 of 5 levers game changers like Acre Africa are turning. And illustrate them with another social enterprise which is changing the lives of low-income people.

Did you know that insured farmers increase their income with 16% and invest 20% more in their farms (source: ACRE Africa)? That is showcasing the importance of financial inclusion for these farmers. In our last editorial of the DIA Impact Series, ACRE Africa showed how delivering insurances should be integrated into the daily lives of low-income farmers. It should be offered at the moment they need it and at the place where they need it.

‘Expanding the playground to daily life’ is the first of 5 levers game changers in the insurance industry are turning to overcome the flaws in the current system. They combine unique new ways of organizing, with their inclusive insurance models. And the beauty of it is: they do not do it alone, in isolation, they team up with insurers and other strategic partners, and operate in eco-systems. So, there’s an opportunity not to miss.

A different way of bundling in the value chain is how ACRE Africa was able to do what they do, selling agricultural guarantees attached to the seeds, in the shop of agricultural supplies next to where the farmer buys fertilizer. Which brings us to the second lever: ‘Linking all players’. New markets can be discovered by just combining forces with existing players in the chain. Like ACRE Africa did, teaming up with a re-insurer and a seed selling compnay. Many last-mile infrastructures come into being by “simply” differently bringing together the existing players.

Let’s take a look at another game changer that turns these two levers and also beautifully demonstrates the third lever: ‘Everybody plays’.

Game Changer: BIMA
BIMA is offering insurances and prevention to millions of lower-income people. By joining forces with mobile phone network providers and insurers, BIMA offers protection. Through phones. BIMA provides protection against accidents for health and hospitalization, anticipating high funeral expenditure, from policy all the way to claim. They are linking existing players into the playground of Financial Inclusion. Gustaf Agartson, Founder of BIMA, explains what has been absolute key for BIMA’s success and ability to reach scale.

What is key to deliver insurances to lower-income families?

Gustaf: “From the beginning we took an approach where we basically said that it is not enough to just have digitalized processes. You cannot just reach scale with financial services or insurance products, targeting the mass markets in emerging markets, purely through digital channels.

What you also need in order to provide education and build trust around your product, is to have a human touch. So, what that means is, BIMA’s employees are dedicated to sell our products in call centres and out in the field. That interaction between customer and agent that has been critical.”

So where does the mobile phone come into play?

Gustaf: “So, next to the human touch our digital side is equally important. We cannot have cash collection, or paper work, that makes the processes inefficient. What’s been key for our ability to reach scale is: we have had a mobile approach from the beginning.

Customers sign themselves up through the mobile phone: they pay through the mobile phone and all communication happens through the phone. That’s been made able through integration with mobile operators. Partnering with them or other kind of new emerging payment platforms that we see across the markets where we are.”

Why did you include prevention in the mix?

Gustaf: “The way we look at it was that we’re going design a product portfolio that is attractive for our users and makes sense for our users. We are not going to limit our product portfolio to what is legally defined as insurance. We are going to look at what it is what customers want.

Customers wanted access to doctors. Well, you can either provide access to doctors, by saying: “You have an insurance policy and you are covered if you go see a doctor”, ór you provide a way that is more convenient for the customer. That is to say to the customer that “You buy an insurance product from us, but you also get unlimited access to doctor over phone.” – so by bundling the two products.

It makes sense for several reasons. One is that it is a cheaper way of providing access to customers to doctors. Next to that, it’s also creating an opportunity for us to have a more engaging product portfolio. That is also key for us, as we want to drive up engagement. Finally, as a result of providing access to doctors, people stay healthy and we have less claims as a result.”

This editorial is part of The DIA Impact Series. Interested in learning more about this subject? Click here to read the book Reimagining Financial Inclusion or check out the panel discussion Financial Inclusion For All presented by Erlijn Sie on DIA TV.

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