Presentation by Peter Gross, Africa Director for MicroEnsure, at Mobile Monday Maputo on 28th July 2014.

1. The Mobile Insurance
Win-Win-Win
Peter Gross
Regional Director – Africa
MicroEnsure
Nairobi, Kenya

2. The Mobile Insurance Win-Win-Win
Financial
Inclusion
Disruptive
Innovation
Commercial
Viability

3. Today’s Agenda
Ø Introduction and Overview: Mobile Insurance in Africa
Ø MicroEnsure Experience
Ø Mobile Insurance – Demand and Supply
Ø Mobile Insurance Case Studies
Ø Conclusion: Realizing the Potential of Microinsurance

4. Introduction and Overview:
Mobile Insurance in Africa

5. Micro Insurance: Growth in Africa
Growth in Africa
2010-2012: 200%
Outside SA: 17.2 M
lives covered
Coverage by Country
8 of 9 markets with >1m lives insured have
done so with mobile micro insurance
Is low penetration a function of
low demand?
Source: www.mfw4a.org/insurance/microinsurance-landscaping.html

6. Mobile Insurance: The “Freemium” Revolution

7. Mobile Insurance Freemium Model
Earn free life
insurance up to
$2,500 when you top
up $2
The more you top
up, the more you
earn
Pay $1 per month
and double the free
cover you earn
Earn up to $5,000 in
life insurance
Buy additional cover
for a family member
Buy additional types
of cover: health,
handset, travel…

8. Why are Telecoms Offering Free Insurance?
Telecom
Value
ARPU Uplift
(6-15%)
Churn
Reduction
(10-25%)
Direct Revenue
(US$0.05-0.20/
sub/month)
Competitive
Difference
(new product
class) New Customer
Additions
Brand and
Social Impact
(1,000s of
claims paid)
Lifetime
Customer
Value
(Stickiness)

9. Mobile Insurance Market Presence

10. Why do Customers Love Mobile Insurance?
Customer
Value
Reliable
Protection
from Risk,
FREE
Simple
Processes built
for Mass
Market
Products
address real
needs
Easy access to
services from
a trusted
brand
Lower cost risk
protection
than anywhere
else
Growing suite
of products
Policy
management
convenience

11. MicroEnsure Experience

12. MicroEnsure Introduction
§ MicroEnsure is the world’s first and largest company
dedicated to serving the mass market with insurance.
§ Fastest-growing insurance organisation in Africa:
q 11 million worldwide, 5.3 million in Africa
q 85% of our clients were never before insured
§ Track record of innovation:
q Winner of three FT/IFC Sustainable Finance Awards
q “One of Africa’s 20 Most Innovative Companies - 2012”
Financial Technology Africa Magazine
q “One of Five Development Innovations to Watch in 2013”
US Council on Foreign Relations
q Named a “GameChanger 500” Business – 2014
§ Shareholders: IFC, Omidyar Network, Telenor,
Opportunity Bank, Sanlam, Axa

13. Connecting Distributors and Underwriters
MicroEnsure Services
Product and Process Design
Pricing and Actuarial Assessment
In-Demand Product Features
Appropriate Benefit Levels, Terms and Conditions
Brand-Appropriate Marketing Content
Robust Training Content
Insurance Project Management
Business Case and Partnership Structure
Microinsurance Market Research
Value Chain Facilitation: Insurance and Reinsurance Arrangements
Insurance Regulatory Liaison
Legal, Commercial and Service Level Agreement Content
Operational Execution
Front-End Client Management Platform
Customer Care
Claims Management
Policy Administration
Monitoring and Evaluation
Key Performance Indicator (KPI) Management
Business Growth and Retention
Customer Perception
Financial Reporting and Premium Reconciliation
Claims Status and Payment Performance
Risk Management
Micro insurance requires a
holistic product, process and
operational integration

14. MicroEnsure
Footprint
Micro
Health
Insurance
-­‐ Tanzania:
KNCU
Primary
Care
Cover
-­‐ Philippines:
Triple
10
-­‐ Ghana:
Credit
Health
for
MFIs
-­‐ India:
Rural,
Cashless
InpaEent
Cover
Mobile
Insurance:
Life,
Accident,
Hospital
-­‐ Zambia:
Airtel
-­‐ Burkina
Faso:
Airtel
-­‐ Ghana:
Airtel,
Tigo,
MTN
-­‐ Kenya:
yuMobile,
Airtel
-­‐ Senegal:
Tigo
-­‐ Malawi:
TNM
-­‐ Bangladesh:
Grameenphone
-­‐ Malaysia:
Digi
-­‐ Pakistan
:
Telenor
Agricultural
Insurance
for
Smallholders
-­‐ Malawi,
Rwanda,
Zambia,
Ghana,
Uganda,
Kenya,
Tanzania:
Rainfall
Index
Cover
-­‐ Caribbean:
Hurricane
Index
Cover
-­‐ Philippines:
Typhoon
Index
Cover
Caribbean
AFRICA
Zambia
Malawi
Rwanda
Nigeria
Ghana
Uganda
Tanzania
Kenya
Mozambique
Senegal
ASIA
Bangladesh
Pakistan
India
Philippines
Malaysia

15. MicroEnsure Partners
MOBILE
BANKING
INSURANCE

16. MicroEnsure Results
Partner Revenue Growth
- Achieve ARPU growth, churn reduction, liabilities and asset growth, lifetime customer value
Best Claims Operation in the World
- Paid more than 50,000 microinsurance claims in last twelve months
- Pay claims in minutes in rural areas submitted on handwritten napkins
- 76% claims ratio in company history
Social Impact
- Never exclude HIV, pre-existing conditions, or other common exclusions; we build products to pay out
Speed to Market
- Largest group policy in African history (Zambia) – 8 weeks start to finish
Systems Capability
- 1.2 m new policies/hour, web-based, fully customizable for all classes of risk
Product Innovation
- Weather Index (2004) Enhanced Credit (2008) Credit Health (2011)
- EduSave (2012) Decongestion (2013) Mobile Three for Free (2014)
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

17. Example: Paying Claims at Speed
Loss
Incurred
First Claim
Report
Claim
Documents
Received
Claim Paid
MicroEnsure
Typical Claims
Experience
1-2 Days 3-5 Days 1-2 Hours
10-15 Days 40-45 Days 72 Hours
Policy terms aren’t clear,
report has to be made in
person at insurer office
Claimants go through
many rounds of document
review with insurer;
insurer keeps asking for
additional documents
Clock only starts when ALL
documents received; claims
processed through multiple
departments
Customer knows exactly
what cover she has, with
no fine print, and claims
are reported easily via
phone
A proactive customer
service process and clear
directions on document/s
required allows for
faster claims submission
MicroEnsure performs
most claims analysis
before final document
receipt, earns payment
authority from insurer
50-70 Days from Loss to Payment
4-7 Days from Loss to Payment Community
Impact
Claimant
Frustration

18. Mobile Insurance -
Demand and Supply

19. Do Low-Income People Want Insurance?
Low-Income Sector:
Sell core household goods or tools
Remove children from school
Change or add jobs, increasing risk
Move from city back to village
Take on high-interest debt
Middle/Upper Income Sector:
Use savings or liquidate investments
Raise money from community
Work an extra (temporary) job
Use employer coverage
Take on low-interest debt
• The poor face more risk than any other population; they may not know about
insurance, but they live with a persistency and variety of risks on a daily basis
• The poor have many insurance “policies” today: assets, informal loans, various
savings spots, community-based coping strategies
• The job of micro insurers is to offer more efficient risk mitigation tools, which are
simple, accessible, valuable and reliable

20. Assessing Demand for Insurance
Barriers
to
insurance
uptake
in
Africa:
Cost
• Typical
insurance
premiums
can
represent
8-­‐10%
of
a
typical
income
in
mass
market
popula8on
Trust
• Insurers
are
not
seen
as
trustworthy
due
to
product
complexity
and
poor
claims
payment
Access
• Insurance
agents
are
not
sufficient
to
cover
a
whole
country,
and
they
do
not
target
the
poor
Under-­‐
standing
• Clients
lack
financial,
legal,
health
educa8on
to
understand
coverage,
terms
and
condi8ons
Cost
• Offer superior value for money
– even “free” or low-cost
Trust
• …through trusted brands
Access
• …via mobile through Universal
Access (USSD, IVR, Apps)
Under-­‐
standing
• …and begin with simple
products
Our
Value
Proposition:

21. Mobile Insurance Demand: Anecdotes from the Field
• A chief of a rural village hired a coach to bring his people to
sign up for insurance
• Customer in Ghana: “I was suffering – but maybe God knew,
and that’s why God brought us this Tigo insurance”
• M-Insurance in multiple African countries has more than
doubled the insured population in the country within 12
months, compared 40 years of typical insurance via 20
companies
• Telecom: “Insurance will be core for us, like ringtones.”
• Microfinance Bank: “Our customers use loans and savings to
cope with risk; banking is really just expensive insurance.”
Demand is not the problem…

22. Supply-Side Considerations
Typical Insurance
Micro Insurance
Profit
Brokerage
OpEx
Losses
Core Problem:
How do you offer
insurance to people that
face more risk and
can’t afford to pay the
same premium?
Solution:
Reduce Complexity
Reduce Expenses
Reach Scale Quickly
The cost of delivery and operations puts many micro
insurance products outside mass market reach.

23. Supply-Side Considerations
Revenue per policy is lower, but microinsurance creates
markets for current and future growth opportunities.
Typical Insurance
Micro Insurance
Profit
Brokerage
OpEx
Losses
Reducing OpEx:
- Pricing
- Product Design
- Training
- Marketing
- Policy Administration
- Loss Adjustment
- Underwriting
- Reinsurance
- Policy Reporting
- Claims Processing
- No Excess “Costs”

24. Supply – A Problem of Perspective?
Insurers are used to winning business with relationships;
Telecoms are used to sophisticated business cases
Insurers think in hundreds or thousands of customers;
Telecoms think in hundreds of thousands of customers
Insurers usually launch 2 or 3 new products per year;
Telecoms usually launch 100+ new products per year
Insurers see the low-income market as difficult to serve;
Telecoms see the low-income market as ideal to serve
Insurers are worried about fraud and anti-selection;
Telecoms are worried about talk radio and competition

25. Mobile Insurance –
Three Case Studies

26. Example 1 – Tigo Ghana/Tanzania
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2011 2012 2013
Tigo - Paid
Tigo - Free
Rest of Ghana
Lives Assured – Tigo Free, Paid, and Rest of Ghana
94% of clients can explain the product
42% of Ghanaian public aware of product
60% eventually bought an “upsell” product

27. Example 2 – Airtel Burkina/Ghana/Nigeria
Free
life,
accident
and
hospital
cash
insurance
if
you
top
up
$2/mo
Top
up
more,
earn
more
insurance
Hospital
cash
covers
inpaEent
care
at
any
hospital
for
any
reason:
no
exclusions
Launched
January
2014,
3
countries
so
far
Dozens
of
claims
paid,
average
70
minutes
Claims
raEos
stable;
fraud
is
kept
low

28. Free Product Impact – 2014 Data
Increased ARPU and decreased churn leads to an excellent return for the MNO…
While financial inclusion & insurance penetration skyrocket as claims are paid…
-
100,000
200,000
300,000
400,000
500,000
600,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Jan Feb Mar Apr May Jun
Oct Nov Dec Jan Feb Mar Apr May June
Average Recharge per User (ARPU)
Control All Insured
Insurance
Launched

29. • 1 million subscribers purchased in 9 months
• Demonstrated demand for insurance
• But: product features were a problem
• Complicated purchase process, 12-page brochure
• Subscribers not aware of cover amount
• Constant ‘3111’ messages led to critical Facebook
group with 8,000 members
• 6-month waiting period led to loss ratio of only 0.9%
• And partnership value wasn’t shared equally
• Trustco charged $1.11 per user per month for
insurance product – 25% of African telecom revenue
• Trustco & EcoNet went to court July 2011
• EcoLife canceled by EcoNet in February 2012
Example 3 – Ecolife Zimbabwe

30. Conclusion:
Realizing the Potential of Mobile
Insurance

31. How is the Chief Marketing Officer’s annual bonus determined?
Step 1 – What’s in it for the Telecom?
Revenue
• Acquire new
customers
• Sell more widgets
• Achieve higher per
ticket sales
• Up-sell products
Footfall
• Increase
transactions per
customer
• Increase store visits
per month
• Cross-sell new
products and
services
Loyalty
• Reduce churn
• Consolidate
spending
• Build brand
• Enhance trust
• Show social
responsibility
Tip
1:
This
is
not
tradi8onal
affinity
insurance
-­‐
it’s
placing
insurance
at
the
front
of
a
product
as
a
marke8ng
tool.
Tip
2:
This
is
not
a
mobile
money
product
at
first.

32. Test operations for scale, or find scalable partners:
Step 2 – Dive into the Details
Marketing Education Enrolment
Premium
Collection
Customer
Service
Claims
Payment
Can we serve 5
million customers in
each of these
stages? If we can’t,
who can?
Can technology
help us to do
any of these
things faster and
cheaper?

33. Step 3 – Plan for Staged Growth
Maintain client value by connecting to
business intelligence or analyst departments
in telecom: conduct market research, analyze
loss ratios, and make revisions where
necessary
Stage 1: Simple Life/Accident
Market Creation
(6-12 Months)
Start with “free” loyalty
product to generate fast
uptake and introduce
customers to insurance
Stage 2: More Complex; Hospi-Cash/Education Fees
Market Development
(9-24 Months)
Respond to demand for
more product offerings as
insurance scales up
Stage 3: Mine the database
Full Service Provision
(18-36 Months)
Target customers with
data: telecom now the
customer's insurance
provider of choice for all
risks

34. MicroEnsure –
Bridging the Gap
peter.gross@microensure.com
Regional Director, Africa
+254 786499100
@microensure