MR Microinsurance_2012_03_29.indd - International Labour ...

Is microinsurance a profitable business for insurance companies?
Working with partners and existing groups to access the market
All these insurers work with aggregators such as MFIs, SACCOs, NGOs, health
service providers and burial societies to access the market. Their experiences
illustrate the following benefits of working with partners to reach scale in the
low-income market:
– Working with a partner with a large number of branches or access points allows
the insurer to develop a broad, diversified customer base. ASR benefits from access
to four million BANRURAL customers and Malayan’s partnership with pawn
shops provides access to a large segment of the low-income market.
– The insurer can use the partner’s infrastructure to access the market as part of the
existing activities of the policyholders (e.g. making repayments on the loan to the
MFI). This reduces costs for the insurer and the customer. ASR is able to exploit
the large presence of BANRURAL in the country (around 750 sales points covering
80 per cent of the country).
– It is easier to achieve scale where products are compulsory and bundled with other
financial products provided by the partner (e.g. credit from MFIs). Compulsory
cover for all group members or selling the policies in bulk is used for CIC’s credit
life product, ICICI Lombard’s weather product and Old Mutual’s group funeral
product.
– The partners’ existing links to the market and relationship of trust can facilitate
expansion into the market. ASR uses the good image of the bank to promote its
microinsurance. ICICI Lombard works with the trusted Manipal Group, which
has been involved with the communities for a long time.
Insurers were able to build successful partnerships by employing the following
strategies:
– Existing relationships with partners of the same financial services group created a
competitive advantage for CIC, ICICI Lombard and ASR.
– First-mover advantage to lock in the relationship with the partners and maintaining
these relationships by delivering efficient service was shown to be important
in the longer-running initiatives of CIC and ICICI Lombard.
– Creating mutually beneficial relationships with partners, where the insurer is able
to negotiate lower fees with the partner. The credit life and index-based insurance
products directly benefit the partner by protecting the loan from default in the
event of death or crop failure. ICICI Lombard’s health insurance product offers
the healthcare provider a tied client base.
– Building and maintaining relationships with partners through good service levels
and the satisfaction of individual clients. High retention rates of partners of
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