MR Microinsurance_2012_03_29.indd - International Labour ...

416 Insurers and microinsurance
preferences to fi nd appropriate ways of interacting with the target group,
particularly with regard to technology (see Box 19.8).
Box 19.8 Meeting the market where it is
Cover2go, a subsidiary of Metropolitan Life in South Africa, developed an inno- inno-
vative commuter insurance product combining the use of agents at transport
centres and mobile phone technology. Th e product provided personal accident
cover of US$2 US$ US$2 2 140 for a one-off premium of US$1.40 US$ US$1.40 1.40 over a holiday period when
a large number of people are travelling. It was sold through agents at the trans-
port centre, with the premium being deducted from the mobile phone credit.
Confi rmation of purchase of the policy was sent to policyholders via SMS. Th e
research conducted prior to the launch suggested that there was much interest in
the product, but very few policies were actually sold. Investigations into the poor
sales of the product revealed that:
– Benefi ts and premiums did not match the market’s expectations. Th e product
seemed “too good to be true” and policyholders did not expect such high bene-
fi ts to be paid.
– Policyholders did not have suffi cient mobile phone credit to pay premiums.
– Policyholders were uncomfortable using SMS to provide information and
inform benefi ciaries of cover; they preferred tangible policy documents.
Th e Cover2go experience provides important insights into the need to bear in
mind the customers’ expectations regarding premiums and benefi ts, and meeting
customers where they are in terms of the use of technology.
Source: Smith and Smit, 2010c.
Building loss prevention techniques into the benefi t design can be
important to cover risks or market segments that were previously considered
uninsurable. Encouraging risk-mitigating behaviour also allows insurance
cover to be provided at lower premiums, which is important in the
low-income market. For example, a livestock insurance pilot by Mutual and
Federal in South Africa is linking with agricultural offi cers to ensure that cattle
are branded (for identifi cation when a loss occurs) and dipped (for protection
from diseases). Th is initiative introduces risk management into the insurance
process. Th e farmers benefi t as their cattle are protected from diseases and they
have access to insurance cover. Th e insurer can provide cover at more
aff ordable levels because the risk is lower. Working with the community in this