Lens on 1st Half 2020 Post-Covid19 Investment With New Insight up to Sep 2020
OSEAI - Ezekiel Macharia (Day 2)
1.
2. Reaching the Uninsured
Making Life Insurance relevant in Africa
Ezekiel Macharia
Group Actuary - Jubilee Holdings Limited
Day 2, Thursday 25th August, 2015
3. AGENDA
• Africa Statistics
• Talking Points
– Where is insurance heading? Future of
Insurance
– Focus on the uninsured
– Role of Life Insurance
• Conclusion
4. Insert Pictures
no OESAI background
Africa Statistics
• Population: 1.1b (15% of world population)
• Real GDP per capita: $2.2k
• Premium per capita: $61
• Life Expectancy at Birth: 56 yrs
• Human Development Index: 0.502
Sources: Swiss Re, WorldBank, UNDP Ugandans on
International Youth
day via Twitter
@KagutaMuseveni
5. Insert Pictures
no OESAI background
Doing More
• Real GDP per capita:
Africa: $2.2k (World: $13k)
• Premium per capita:
Africa: $61 (World: $640)
17%
10%
70% growth?
6. Insert Pictures
no OESAI background
Spirit of
Insurance
• Life Expectancy at Birth:
Africa: 56 yrs (World:71 yrs)
• Human Development Index:
Index: Africa: 0.502 (World:
0.702)
Cheaper?
Need it
more?
8. African Consumer Trends?
• African consumers
are quick to adopt
to new
technologies –
African Insurers will be
more susceptible to
disruption
• Africans are ready
to buy insurance if
it is well packaged
and adds value
Source: GSMA.COM
Uptake of mobile money
highest by Africans (50% of
global share). The market is
willing to test new things.
9. Market Disruption
–Bypassing regulation: WhatsApp has captured 50%
of the active mobile subscriber base in Kenya
without a single local operating license.
–20 billions messages per day globaly.
To serve the
unisured we
must adopt
market
disruptions in
insurance?
10. Peer-to-Peer Technologies
•ZOPA is offering peer-to-peer banking – cutting out
the bank. $1b lent out to date.
Taking this concept
to insurance – will
this be appealing to
the uninsured?
11. Scaling up capabilities
•Traditional Competitors?
–Platform as a Service (PaaS):
»Startup insurers/MicroInsurers should be able to
reach scale without investing in millions of dollars
on technology
12. Market Entries
•New Competitors?
–Your competitor is in another industry:
–Apple/Samsung entered Mobile Phone Industry.
Nokia moves from 40% global market share (2008)
to near-exit
Too Big to Fail?
• Nokia Revenue in
2008 - $70.7b
• Total Africa
Insurance revenue
(2013) - $69b
13. Focusing on the uninsured
– Target Market
– Coping Mechnisms
– Key requirements for insurance
– Product requirements
14. Target Market
The insured African population is less than
5% but Africans earning above $20 per day
($7,300 per year) represent 19% of the
population
Income above $20 per day
(19% of Africa population ~200m)
$10-$20 (11% of Africa population ~121m)
$4-$10 (10% of Africa population ~110m)
Below $4 per day (60% of Africa population ~600m)
Low Hanging
Fruits
(potential of 200m
uninsured who can
afford insurance)
At 3%* of income
paid towards
insurance - $200 is
available annnualy
for insurance
(ILO Insurance Willingness to
Pay Statistic)
15. Coping Mechanisms
Coping
Strategies
(low income
market)
Self Insurance
(Retain Risk)
Salaries & wages
Borrow from family,
friends or money lenders
Social Protection
(Transfer Risk)
Public health services
Disability compensation
compensation
Informal Groups
(Share Risk)
Welfare associations
Burial societies
Church group loans
Fundraisers
Hiring of guards
Mutuals
Risk Management for the uninsured
16. Key requirements for
Micro-insurance
• Flexible Premium & readily available payment
solutions – e.g.,Mobile Money with SMS
confirmation
• Easy to understand & claim with limited exclusions.
Bulk rating for all ages, genders.
• Low ticket business – Catastrophic reinsurance
would be appropriate to support this
• Leverage current technologies:-
– Mobile phones – using voice recording to read policy
document
– Electronic submission of claim documents
– Using ICT to curb fraud
17. Role of Life Insurance
• Using Life Products (Funeral Plans) to target the uninsured
market?
– Easy to administrate claims
• Death claims are easier to verify than health or
property claims
– Can be bundled with other products
• Bancassurance – bundling with savings account
• Protection for micro-loans (micro-credit)
– Limits can varied easily to differentiate the market
• Technology can enable clients to select insurance
limits from a mobile menu
18. Conclusion
• The future is uncertain but disruption in
insurance is almost certain.
• There is a huge potential from the uninsured
African population ~ 200m lives.
• These groups already have coping mechanisms –
we should provide innovative solutions that will
entice this target market.
• Life insurance can be used to test the market
before introducing other insurance products –
agriculture, health, index-based, etc.
