MR Microinsurance_2012_03_29.indd - International Labour ...

New frontiers in microinsurance distribution
Products offered by the partners tend to evolve in two ways:
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– adjustments to the price, cover and exclusions to improve value or manage claims
ratios; and
– the introduction of insurance products that are unrelated to the primary product
offering of the distribution channel.
Examples of both these cases are found in Brazil where Casas Bahia adjusted
its insurance offering eight times over a five-year period and AES Electropaulo
moved from selling only financial protection policies (to protect itself from
default by clients in the event of disability or unemployment) to household
content insurance. An example of the product adjustment process is provided
by the Pep funeral insurance product underwritten by Hollard. The product
was changed and re-launched after an unexpectedly high mortality rate was
experienced in an unfamiliar segment of the low-income market.
The insurer, and in some cases the broker or administrator, will adjust the distribution
process once it has accumulated sufficient data on take-up and lapse
rates, and the costs associated with a specific channel. This usually involves adding
more, or different, distribution channels, while scaling back on others. This
assessment period before changes are made typically takes six to 12 months. For
example, Old Mutual initially distributed a funeral insurance policy through the
Shoprite Money Market Counter and later piloted distribution through other
channels, such as rural vendors, using third-party payment providers to collect
premiums.
Many of the cases reviewed in this chapter involve large multinationals, creating
the potential for an evolution to occur across borders (see Chapter 19). In the
case of Aon Affinity, a multinational brokerage firm, certain microinsurance
lessons were learnt in Brazil and exported to the rest of Latin America. Multinational
underwriters, such as Hollard, Mapfre and Allianz trading as ColSeguros
in Colombia, have multiple microinsurance products around the world. Lastly,
French retailer Carrefour offers insurance products through its stores in many
countries, including Colombia and Thailand.
22.3.3 Impact of regulation
A recurring theme in these case studies is the impact of regulation on the distribution
process. Regulation affects all aspects of distribution, but particularly
product development (e.g. type of cover and development of auxiliary benefits)
and sales, including the nature of the distribution partnerships and sales interactions
with clients. Regulatory hurdles often make it difficult for insurance companies
and their distribution channels to achieve a balanced distribution