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What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More
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What Have We Learned about the Most Effective Ways to Use Micro-Insurance to Reduce Vulnerability: Health, Life, Disaster and More

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  • 1. Insuring the Poor and Vulnerable Helping the poor weather life’s storms Richard Leftley - CEO, MicroEnsure
  • 2. The poor do not buy insurance – why?
  • 3. Microinsurance landscape • Market estimated to be 3bn people by Swiss Re of which only 3% have access to any insurance products • Most dominant product is credit life for borrowers of MFI’s; limited benefit for the poor, it protects the lender • Strong demand for a “safety net” from the poor • Increasing interest in the market from insurers • Issue is how to cost effectively provide access, education and claims servicing whilst generating profit across the value chain
  • 4. Insert Title Here Framework for Microinsurance
  • 5. Microinsurance challenges • Risk carrier: relatively easy to find willing risk carrier for life and property, weather index and health are harder. • Back office: key driver to cost but more importantly a key driver to level of service and hence “success” • Front office: we have to “white label” with companies that have existing client bases. Why will they partner with us? Are microfinance companies the best fit?
  • 6. 2The economics across the value chain for health insurance USD/ policy 10.0 MicroEnsure: 1 MicroEnsure provides enrollment admin services as part of their service fee, and sometimes supports salary of TPA staff MicroEnsure does most of the product design MicroEnsure’s revenues are supposed to cover cost of developing products, supporting distribution and administration 8.0 6.0 MFI: 1 0.4 0.6 0.5-0.6 0.6-0.7 14.0 -13.4-13.3 Price to end customer Percent 100 Distribution Risk fees premium paid to insurer 20 Claims 1 80 Based on target claim ratio of 60%; however, claim ratio varies depending on state/ partner and stage of product maturity 60 Marketing other acquisition costs 4 MicroEnsure’s reduces insurers’ distribution costs (from 25% to 24%) and increases their control over cost Admin fee to TPA 6 Other overhead costs 3-4 Margin to insurer 6-7 Currently often not Margin to insurer sufficient to cover negative if claim costs of servicing ratio too high policies Economics of other players in the value chain are tight, in particular for TPAs and (depending on claims) for insurers 1 Based on target claim ratio of 60%. Actual claim ratios vary from 25% to 300% Source: Interviews McKinsey & Company | Working Draft - Last Modified 11/19/2010 5:39:50 PM Printed 11/19/2010 5:39:09 PM Insurer TPA Distribution partner MicroEnsure Impact from higher claim ratios Typical insurer economics for a MicroEnsure health insurance policy in India (USD) MicroEnsure will split marketing costs with insurers (e.g., printed materials, ads) INDIA
  • 7. Profit drives scale • MicroEnsure works with a range of “front office” partners • Started by partnering with microfinance lenders • 67 MFI’s together serving 12m active borrowers • To date, less than 1m insured with MicroEnsure – why? • Economics: loan = $10+, insurance = $0.20 • MFI’s happy to introduce credit life to protect themselves but launching more complex products requires investment of core personnel who could be used more profitably elsewhere in the operation McKinsey & Company | Working Draft - Last Modified 11/19/2010 5:39:50 PM Printed 11/19/2010 5:39:09 PM • Strong brand, accessible points of sale and ability to transact cash are all key attributes for a “front office”
  • 8. If not MFI’s; then who? • Need partners that are trusted, accessible and can transact payments for premiums and claims • We tried using VSLA groups and churches – trusted and accessible but the cost of implementing a cash transactional system made them not viable • We asked our clients who they trusted; the most common answer was “Coke” and “my mobile company” McKinsey & Company | Working Draft - Last Modified 11/19/2010 5:39:50 PM Printed 11/19/2010 5:39:09 PM • MFI’s provide loans to circa 150m families out of the 3bn available market; how else can we reach the poor?
  • 9. Using mobile networks • Aim is to get millions of people using insurance for the first time and for them to see that claims are paid quickly • Second stage is to offer a “freemium” product; for example increase your benefit or include your wife for a small fee • Third stage is to sell a stand-alone complex product, like health, with premiums deducted monthly from mobile wallet McKinsey & Company | Working Draft - Last Modified 11/19/2010 5:39:50 PM Printed 11/19/2010 5:39:09 PM • Typically start by embedding simple product into the sale of airtime. Increased loyalty pays for the “free” product
  • 10. MicroEnsure growth Growth in Lives Insured 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
  • 11. Thank you for your attention For more information please visit: www.microensure.com email: info@microensure.com

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