MR Microinsurance_2012_03_29.indd - International Labour ...
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MR Microinsurance_2012_03_29.indd - International Labour ...

MR Microinsurance_2012_03_29.indd - International Labour ... MR Microinsurance_2012_03_29.indd - International Labour ...

ilo.org
10.12.2012 Views

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

Teaching elephants to dance way can be onerous, but the insurer benefi ts from developing a relationship with the community and gains access to a market that was previously untapped. Getting the sales process right and building relationships of trust A relationship of trust is very important in the sales process. Th is starts by establishing trust with the people selling the product, who may be as unfamiliar with insurance as their customers. On-going communication with the community is also important to assure the market that the insurer understands them. Insurers also need to focus on service in order to retain business. Some insurers have chosen to build a relationship directly with clients through agents. Others, such as India’s ICICI Lombard and CIC in Kenya (see Chapter 18), exploit the relationships that partners have established with the market. In this case, the reputation of the insurance product therefore relies on the service that the partner provides to customers (see Box 19.9). Box 19.9 Building a cascade of trust In Senegal, Allianz works in partnership with the MFI CAURIE and PlaNet Guarantee (a specialized microinsurance intermediary – see Chapter 23) 23 23) ) to pro- pro- vide credit life life cover. Th e MFI’s clients need to be confi dent dent that the insurer will pay a claim in the future. future. Th is is achieved through through a “cascade of trust”. Th ere is a mutual relationship of trust between Allianz Allianz and PlaNet Guarantee. CAURIE trusts the advice of PlaNet Guarantee, the the loan offi cers trust CAURIE, CAURIE, and the borrowers trust the loan offi cers. Source: Gradl et al., 2010. Many commercial insurers are also taking a longer-term view of investing in the market and are building awareness and understanding of insurance in the low-income market through investment in consumer education campaigns (see Chapter 14). Managing transactions with customers In time, the transactional scale for microinsurance becomes completely unlike what most insurers handle within their traditional segments. Moreover, existing systems and processes are built for highly customized individual products, whereas microinsurance is mass-produced. Many insurers are thus exploring new ways to use technology to access the market, increase effi ciency and cut costs (see Box 19.10 and Chapter 24). Tech- 417

Teaching elephants to dance<br />

way can be onerous, but the insurer benefi ts from developing a relationship<br />

with the community and gains access to a market that was previously<br />

untapped.<br />

Getting the sales process right and building relationships of trust<br />

A relationship of trust is very important in the sales process. Th is starts by establishing<br />

trust with the people selling the product, who may be as unfamiliar with<br />

insurance as their customers. On-going communication with the community is<br />

also important to assure the market that the insurer understands them. Insurers<br />

also need to focus on service in order to retain business. Some insurers have chosen<br />

to build a relationship directly with clients through agents. Others, such as<br />

India’s ICICI Lombard and CIC in Kenya (see Chapter 18), exploit the relationships<br />

that partners have established with the market. In this case, the reputation<br />

of the insurance product therefore relies on the service that the partner provides<br />

to customers (see Box 19.9).<br />

Box 19.9 Building a cascade of trust<br />

In Senegal, Allianz works in partnership with the MFI CAURIE and PlaNet<br />

Guarantee (a specialized microinsurance intermediary – see Chapter 23) 23 23) ) to pro- pro-<br />

vide credit life life cover. Th e MFI’s clients need to be confi dent dent that the insurer will<br />

pay a claim in the future. future. Th is is achieved through through a “cascade of trust”. Th ere is a<br />

mutual relationship of trust between Allianz Allianz and PlaNet Guarantee. CAURIE<br />

trusts the advice of PlaNet Guarantee, the the loan offi cers trust CAURIE, CAURIE, and the<br />

borrowers trust the loan offi cers.<br />

Source: Gradl et al., 2010.<br />

Many commercial insurers are also taking a longer-term view of investing<br />

in the market and are building awareness and understanding of insurance in the<br />

low-income market through investment in consumer education campaigns<br />

(see Chapter 14).<br />

Managing transactions with customers<br />

In time, the transactional scale for microinsurance becomes completely unlike<br />

what most insurers handle within their traditional segments. Moreover, existing<br />

systems and processes are built for highly customized individual products,<br />

whereas microinsurance is mass-produced.<br />

Many insurers are thus exploring new ways to use technology to access the<br />

market, increase effi ciency and cut costs (see Box 19.10 and Chapter 24). Tech-<br />

417

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