Written by Peter Gross
In the past four years, MicroEnsure has grown its revenue and customer base tenfold in Africa, and has more than 9 million registered customers in ten markets in the continent.
With our growth, we are often asked how we’ve broken through the historically low levels of penetration. Typically, insurers say that low levels of insurance awareness and education are to blame for the low level of penetration.
We disagree we feel that the low penetration of insurance results from our industry offering products and services that customers do not value. To put it another way: low levels of awareness about M-Pesa or Coca-Cola didn’t keep them from growing to dominate their markets.
So, instead of blaming customers for not taking our products, we should ask, what did those industries do right, and how can we follow in their footsteps?
Customers across the world, in every product category, typically have three expectations: they expect value for money, they expect to understand what they’re buying, and they expect the product to be relevant to them.
In many cases, insurance products fail on all three counts.The worst part of this situation is that customers who need insurance the most the mass-market are the last to get it.
We’ve found that by listening deeply to their needs, re-shaping product terms and processes, and partnering with large brands, we’ve been able to provide millions of mass market customers with their first insurance policies.
We often start with freemium products, once those customers have a positive experience of insurance and they see that claims are paid easily and quickly, they are willing to buy more cover from us, starting with policies that cost less than $1 per month.
In the process of building this business, we’ve broken all sorts of rules in ways that benefits customers, but of course without risking the solvency of the insurer. We’re able to pay claims within 2 hours on mobile money, where the evidentiary document might be a handwritten napkin that has been photographed and sent to us via WhatsApp.
We don’t do these things because we’re nave: we’ve found that changing our business processes and products are essential for growing into the millions of customers. Like microinsurance, bancassurance is another hot topic these days and we see a range of approaches across the continent.
In some markets, the regulators are restricting sales to Western style referrals, and we feel that this model is not likely to be very successful. People do not wake up in the morning wanting to buy insurance; that fact is not going away.
However, millions of mass-market consumers wake up every morning worried about risk, and those are the customers we prefer to target, as they are the most likely to see the value of a product that protects them against risk.
The challenge, of course, is that mass-market consumers are not very liquid: even if they see value in a product, they may not have the cash to pay for it today. So in bancassurance, we use premium financing strategies to make the purchase decision easier.
Good bancassurance gets the attention of the CEO, driving customer volume and core business objectives; bad bancassurance just pads the bonus of an unproductive bancassurance manager.
Providing real value in insurance doesn’t mean the insurance company will lose money: we have found the opposite is true. I think we are growing because we simply believe insurance should play by the rules of other industries: providing consumers value for money.