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

546 Infrastructure and environment for microinsurance 24.6 Conclusion Technology promises to increase efficiency and enable providers to attain scale by integrating various operations across the value chain, including the insurer and its distribution partner. It promises to lower administration costs, reach remote clients, collect premiums and pay claims, but can also fulfil other functions such as product development or communications. The spread of mobile phones has had a massive impact on the communication function fulfilled by technology in microinsurance. Insurance companies can communicate instantly with their clients through every step of interaction, from policy initiation to policy adjustment and claims, through text messages as well as voice communication. Furthermore, money transfer in both the premium collection and claims payment processes has been revolutionized by smart card and mobile wallet technology. It is important, however, to emphasize that technology is no panacea when it comes to microinsurance. The ability of technology to impact positively on microinsurance business is directly dependent on the strength of the business model, the relationship between the risk carrier and its distribution partner (where applicable), and existing internal systems and operations. In this context, microinsurance can learn valuable lessons from microfinance. For example, some MFIs had been under the impression that technology would assist in solving their problems, but neglected to map and clean up their business processes before installing the systems. This decreases the efficacy of the MIS and its impact on their overall business, and may lead to a view that it has not delivered the benefits it promised. In the absence of strong and efficient backoffice systems and processes, interesting or “sexy” customer interfacing technology is unlikely to be successful. While technology can make the life of a microinsurer easier, it also poses a variety of challenges. Once the investment in certain technology has been made, it is difficult to overturn the decision. It is thus important for the microinsurer or its distribution partner to take a forward-looking perspective when making the investment; otherwise, there will be a risk of technology becoming a business constraint. Furthermore, while technology has the potential to lower costs throughout the value chain, in certain cases it can actually end up increasing costs, as in the example of insurance premiums paid through mobile phone airtime. In making the technology purchase decision, it is therefore important to seek a balance between the improvement in customer service and overall efficiency on the one hand, and the cost of purchase on the other (Fuller, 2011).

The technology revolution in microinsurance 547 Technological innovation has the potential to revolutionize the delivery of microinsurance. In achieving this goal, it is important to bear in mind that the selected technology does not necessarily have to be complex, but should merely be able to respond flexibly to the needs of the microinsurer, its distribution partner and clients. This will require intelligent diagnosis of areas where technology can best make a contribution, followed by focused implementation.

The technology revolution in microinsurance<br />

547<br />

Technological innovation has the potential to revolutionize the delivery of<br />

microinsurance. In achieving this goal, it is important to bear in mind that the<br />

selected technology does not necessarily have to be complex, but should merely<br />

be able to respond flexibly to the needs of the microinsurer, its distribution partner<br />

and clients. This will require intelligent diagnosis of areas where technology<br />

can best make a contribution, followed by focused implementation.

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