For many in the third world, micro-insurance is where their protection purchasing history will start, and maybe this is where many should start in the developed world too? Greg Becker looks to Tanzania.
We take many things for granted in the first world. Protection products are purchased by those who understand their protection needs. Customers then purchase the product solutions which have fulfillment options that are quick and easy to complete in terms of both time and money.
In the developing world, things are more challenging, and innovative solutions are developing in response. In the UK, we would not think twice about asking people to read the policy documentation, provide their phone number and give us their banking details. In Tanzania, adult literacy is 72.9%, there is one landline phone for every 250 people and 11% have a bank account.
This has proven to be fertile ground for innovation, and disruptive solutions that work around these perceived barriers are common. Mobile telephony (m-telephony) has flourished to the extent that there are now more than 20 million mobile phones – or one for every two people.
Mobiles are used differently – although there is surprising levels of consistency between countries. The unmet need has been the necessary impetus for m-banking, and many of the m-banking world leaders are from the developing world. In TNS’s survey of 58 countries, Uganda had the highest level of mobile-wallet usage (36%).
Tanzania, however, was only surpassed by Uganda and some advanced countries in Asia (Hong Kong, Japan, Singapore and South Korea), that have higher levels of current mobile wallet usage. In all, 23% of Tanzanians currently use mobile-wallets, and a further 34% are interested in doing so, which is markedly higher than the UK, which currently has a penetration rate of 16%, with far fewer being interested (28%).
This level of interest in m-telephony and m-banking has been followed by m-insurance. A variety of companies with different strengths have combined efforts to form a successful partnership, Tigo-Bima, which has led to more than 220,000 subscribers signing up for a free joint life policy, covering more than 300,000 lives within the first year of operation. The partners include:
- Tigo: The first mobile phone network in Tanzania, with 30 million customers in 13 African and Latin American countries. It provided the customer base to target.
- Milvik/Bima: A micro-insurance service provider that is helping mobile operators solve the protection gap, helping its partners with product development, distribution, marketing and administration, and which has covered more than one million people. It provided the sales, distribution and technical support.
- MicroEnsure: A subsidiary of Opportunity International, founded in 2005, which has a mission statement to “empower the materially poor to transform their lives by insuring them against financial risk and its consequences”, using micro-insurance to give customers a positive insurance purchasing experience as a first step.
