MR Microinsurance_2012_03_29.indd - International Labour ...

410 Insurers and microinsurance
corporate culture that creates an open and unbureaucratic approach. Nevertheless,
it emphasizes that this does not imply any compromise of basic business
principles, and that new ideas need to be backed by a sound business
proposition.
Expansion into the low-income market is often an iterative learning process,
where initiatives are fi ne-tuned as the insurer gains experience. A big part of
learning is the willingness to get things wrong, whereby new tactics are
attempted and failure is tolerated as long as the company learns from the eff ort
it makes (see Box 19.5).
Box 19.5 Creating space for errors and learning
At the outset of Zurich’s global microinsurance initiative, the Chief Executive
Offi cer (CEO) was asked, asked, “We aim to do some some new things things and eventually we will
‘stub ‘stub our toe’. Are you ready for that?” that?” He answered, answered, “If the mistake is strategic –
we we didn’t know something that was was unknown – – I have a lot lot of tolerance. But I
will not tolerate sloppy execution.” execution.”
Using experiments and pilots
Experiments and pilots are two approaches that form part of the learning process
that can be used to refi ne models.
Experiments are one-off projects with clearly defi ned hypotheses, meant to
confi rm that it is possible for the company to achieve its microinsurance goals.
As far as possible, the core business should be sheltered from these one-off
projects and costs should be limited to the minimum required to learn the
results.
Experiments can be invaluable in developing initiatives and learning about
customers’ needs and preferences, potential partners, local conditions, and regulations
without major up-front resource commitments or liabilities. Systems
requirements can be kept low with data often being handled in spreadsheets or
with readily available software solutions. External funding during this phase may
be especially helpful if those who make resource decisions are not rewarded for
achieving the goals supported by these experiments.
Clear evaluation criteria for experiments need to be established and the
projects regularly assessed against these criteria. By eliminating or clarifying certain
variables, initial fi ndings from the experiment stage help to build the case for
pilots. Insights from experiments form the basis for the innovation necessary to
secure the long-term success of a project.
Pilots to start the business are initiated after experiments provide answers to
prove the hypotheses. By the pilot stage, most of the key questions about how
the business will eventually work have been answered. While pilots need to be