MR Microinsurance_2012_03_29.indd - International Labour ...

The technology revolution in microinsurance
While Kilimo Salama’s success is mostly attributable to the use of a familiar
trusted technology, the mobile payments platform, to sell a less familiar and lesstrusted
product like agricultural insurance, the use of technology has also posed
certain challenges:
– While weather station technology allows for the design of a viable insurance
product, it also makes the product more complex to understand. Farmers are on
average 20 kilometres away from the nearest station, which could lead to a misunderstanding
by farmers as to whether they are entitled to a payout if the rainfall
recorded on their farms differs from the local weather station. This basis risk
(see Chapters 4 and 11) increases the need for appropriate and extensive client education.
– Multiple technologies are required to minimize the error margin in constructing
weather indices. Reliance only on weather station data is unlikely to provide an
accurate picture of the rainfall patterns experienced in a particular area. This is all
the more difficult if weather stations are few and far apart. To overcome this challenge,
Kilimo Salama is experimenting with satellite mapping systems, and devising
better ways to collect and track yield data. This will allow for the cross-validation
of weather data and the selection of more accurate product parameters.
Property
Stand-alone property cover is not a common microinsurance product. It is often
added as a rider for other products, such as fire insurance for microenterprises
linked to credit life (see Chapter 9). In South Africa, Hollard is trying to use technology
to make a stand-alone version viable, selling it through call centres and
using a network of “pre-assessment runners” that survey the assets covered by a
household structure and content insurance product. The runners are equipped
with mobile and spatial mapping technology to capture the state and location of
the insured house and its contents. The pre-assessment of claims and data collection
on policyholders’ assets (i.e. confirming that the assets actually exist and
recording the quality and nature of the building) helps to reduce fraud and the
overall cost of claims management, while also overcoming the challenge of some
clients not having formal addresses.
Health
In health insurance, where benefits are provided in kind in the form of healthcare
services, technology has a very different role in facilitating claims. One way is to
use technology to extend those benefits to remote areas. For example, instead of
rural villagers spending time and money to go to a clinic to seek treatment, some
schemes include a “dial-a-doc” benefit that provides some initial filtering to prevent
unnecessary travel expenditure.
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