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Agile Financial Times - September 2014

Internal quarterly magazine from Agile Financial Technologies

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Agile Financial Times - September 2014

  1. 1. Agile FINANCIAL TIMES Life Insurance in Africa Current Trends & Future Outlook ARTICLE CASE STUDY Expanding Insurance Coverage in the Middle East Star Assurance Company Ghana September 2014 INTERVIEW Mustafa Sachak CEO, TA Insurance Zimbabwe
  2. 2. Hello! What’s buzz got to do with it? There’s so much buzz on Insurance from Obamacare in the US to the new Health Care Law in the UAE. But as always, we bring forth the Agile Difference - refreshingly new stories and analysis to keep our Agilis customer community on top of the pack. In this edition, we unearth treasures from Africa to trends in the Middle East. Also as always, Agile FT stays ahead of the curve and as the thought leader in Bancassurance and Social Media technology, brings you its deep insights on these topics. We hope you enjoy reading this issue as much as we did writing it. Please keep the feedback coming as always - it’s what keeps us going. All that Buzz Jazz and more… Be Agile! Shefali Khera We would love to hear from you on September 2014 CONTENTS Editor’s Note COVER STORY 4 Life Insurance in Africa: Current Trends & Future Outlook CASE STUDY 7 Energizing Star Assurance ARTICLE 8 Expanding Insurance Coverage in the Middle East INTERVIEW 11 In conversation with Mustafa Sachak CASE STUDY 14 Increasing Market Share for Apollo Munich ARTICLE 17 Social Media in Financial Institutions NEWS 18 Agile FT and Zensar in Strategic Partnership
  3. 3. 4 There is high level of heterogeneity in the African market with regard to life insurance penetration. South Africa, an evolved market with high risk acceptance and high insurance penetration lies at one end of the spectrum. On the other hand, several other African countries have little or no markets with extremely low insurance penetration. A number of recent trends, though, are pointing to growing potential for the industry in many African countries, with specific opportunity areas emerging. The positive outlook is expected to lead to increasing competition and change in the business dynamics in the region. Insurance markets in most countries, with the exception of South Africa, are under-penetrated, with the main focus being on commercial lines of business in non-life and group business in the life insurance segment. South Africa currently accounts for more than 90 percent of the life insurance premiums in Africa. The life insurance market in most other African countries is particularly undeveloped. The demand for insurance has been affected by lack of awareness, low acceptance of risk and poor affordability translating into very low insurance penetration (see box). On the supply side, lack of insufficiently developed data on mortality and longevity and a shortage of specialised skills have hampered growth. African nations have demonstrated some of the highest economic growth rates in recent years. According to the African Development Bank, Africa’s economy grew an average of 4.8 percent per year between 2002 and 2011. However, poverty levels remain high, with more than 45 percent of the population in the region earning less than USD 1 per day. Life Insurance in Africa: Current Trends & Future Outlook
  4. 4. 5 COVER STORY Recent trends suggest that the size of the market is expected to grow in the near future on the back of changing consumer demographics and better targeting of insurance products. This has been substantiated by the foray of several regional and multinational players into the insurance industry in African countries. Increasing Competition In July 2013, Old Mutual acquired a controlling stake in Faulu Kenya, a microinsurance company. The deal offers Old Mutual entry into Africa’s financial market including banking and insurance. Earlier in 2013, Old Mutual acquired majority stake in Ghana’s Provident Life Assurance Company. The deal received approval from regulators in Ghana in September 2013. NSIA Participations SA Holdings, a Pan African insurance company based in Côte d’Ivoire, acquired a majority interest in ADIC insurance, a subsidiary of Diamond Bank in Nigeria. Sanlam, another South African insurance company, acquired a minority stake in FBN Life, a subsidiary of First Bank Nigeria. Local competition so far has not necessarily translated into an expansion in market. Kenya for instance, has around 46 insurance companies despite a low life insurance penetration of around 3 percent. In Ghana, a rise in the number of insurance companies from two in 2006 to more than 16 recently has in fact led to escalating price wars. The entry of multinationals is expected to drive better outreach and an improvement in technical know-how and knowledge resources in the insurance sector in Africa. Multinational companies are typically also capable of underwriting larger risks and will likely seek to differentiate the market and undertake a variety of strategies to increase acceptance, especially in the retail and micro-insurance sectors. Going forward, investment potential remains high and more foreign players are likely to participate. As competition intensifies, consolidation in the industry will be inevitable to achieve the required scale to sustain and grow. Evolving Distribution Channels The distribution channel for life insurance in most African countries has been broker dominated. In Nigeria for instance, brokers account for 70 percent of premiums generated, playing a significant role in the industry. So far, the focus has been on corporate deals with the retail market remaining relatively underpenetrated. However, as the retail market is assuming more prominence, underwriters are looking to reach out to consumers directly to market and distribute their products. Companies now seek to reach the retail market through a variety of means such as through community-based organisations, banks, non-government and religious organisations. In order to combat low affordability, as well as a lack of trust in insurers, companies are introducing tailored and innovative products into the market. The objective is to provide the consumer with low levels of premium, required customization, ease of use and understanding and simple collection and claims mechanisms. Insurance Penetration in some African countries (Swiss Re 2011 Report) South Africa - 16% Namibia - 7.3% Ghana - 1.06% Nigeria - 0.06% Kenya - 3.2%
  5. 5. Bancassurance is a model that is gaining rapid acceptance as banks enjoy relatively higher penetration in the region and are also an effective medium to reach out to micro-insurance customers. So far, bancassurance has been used for non-life products but more and more partnerships for selling life insurance are being forged. Sanlam, for instance, has a tie-up with Standard Chartered Bank to sell its life insurance products across Ghana, Botswana, Zambia, Tanzania, Kenya and Uganda. There have also been attempts to use channels such as mobile telephony, which now has more than 50 percent penetration in Africa, for the sale of life insurance products. Pan Life Africa, a Kenyan life insurance company has partnered with telecom provider Airtel Kenya to launch a life insurance product that is accessible to customers through their mobile phones. Going forward, to access and service the differentiated client base, companies will need to develop diversified distribution channels such as bancassurance, mobile technology, micro insurance, retail outlets as well as online avenues. Need-based, Customer-focused Products In order to combat low affordability, as well as a lack of trust in insurers, companies are introducing tailored and innovative products into the market. The objective is to provide the consumer with low levels of premium, required customization, ease of use and understanding and simple collection and claims mechanisms. Micro insurance has been envisaged to play a vital role in reaching out to the lower income classes who are disproportionately affected by natural calamities and accidents. Products such as agriculture and weather-based insurance products, funeral insurance are also gaining prominence in the retail markets for similar reasons. A study by Munich Re showed that microinsurance in Africa has grown manifold since 2008 and has very high potential in terms of improving risk coverage for lower income populations. Takaful insurance is being promoted by companies in countries where there is a significant Muslim population, such as in Nigeria. This helps insurers reach customers with lower acceptability for traditional insurance products. Going forward, better skills and resources brought in by multinational insurance companies is expected to result into better targeting of insurance products and services. Companies will focus on keeping distribution costs to the minimum especially for the low-premium paying products. Bancassurance and mobile telephony are two platforms that will likely meet this objective. Companies are expected to focus on building technologies and strategies to improve capabilities in these areas. Evolving Regulation The regulatory structure across Africa is relatively underdeveloped compared to that in Asia or the Middle East but has been developing in recent years. So far, regulation has focused on minimum capital requirements and solvency ratios for providers. Some countries have made fragmented progress in smaller areas but the economies as yet lack a comprehensive framework for insurance players. The CIMA (Inter-African Conference on Insurance Markets) is expected to provide more guidance and oversight in the coming years. Kenya, for instance, has introduced penalties on late settlement of claims as trust in insurance providers remains a key weakness for the industry. In Nigeria, the government has enforced compulsory healthcare professional indemnity insurance and statutory group life insurance. Zimbabwe has introduced the Micro Insurance Bill which will allow new and small-to-medium insurance players who cannot meet high capitalisation requirements to participate in the micro-insurance sector. Going forward, higher competition and market expansion will likely put pressure on regulators to introduce changes that will drive market depth as well as promote greater transparency. In future, better capitalization in the industry is expected to improve underwriting capabilities and allow companies to insure larger risks. 6 COVER STORY As competition intensifies, consolidation in the industry will be inevitable to achieve the required scale to sustain and grow.
  6. 6. 7 CASE STUDY Energizing Star Assurance Star Assurance Company is an insurance provider based in Ghana. It was incorporated in 1984 and headquartered in Accra, operating in seven out of ten regions in the country. The company provides a variety of non-life insurance products including motor, travel, personal accident, industrial and indemnity insurance products, among others. Star Assurance is now among the top three insurance companies in Ghana, and a member of the prestigious “Ghana Club 100” - a listing of the top 100 blue chip companies in Ghana. Project Background Star Assurance was facing a number of challenges in the areas of claims processing, policy administration, underwriting and management information. A technology upgrade was necessary to aid effective decision making and bring in scalability to meet the growth rate of the company. The objectives for Star Assurance were two-fold: To employ an application that would improve turnaround time in policy and claims administration To bring in scalability to reduce cost of operations and further growth. The decision to implement the solution Agilis General Insurance from Agile FT stemmed from these business challenges. Supplier Selection The company issued a Request for Proposal (RFP) and evaluated eight vendors. Agile FT scored at the top for its system capabilities, performance and ability to scale with the operations of Star Assurance. Agilis General Insurance , the solution by Agile was selected based on its capabilities to deliver on Star Assurance Company’s unique requirements. Implementation The project was initially scheduled to go live in eight months. However, Star Assurance required further of customization to meet the local market requirements. The project was fully implemented in 11 months. The key users of the application are the top management team for MIS reports and those involved in insurance and accounts activities. The application performs all key functions of the core insurance processes as well as accounts. Business Benefits After the implementation of Agilis General Insurance, the company’s service delivery has significantly improved. Quicker and faster customer service: The application has improved the turnaround time in delivering policies and Claims administration to customers. For instance, the time to issue a policy has improved from about 20 minutes earlier to about 5 minutes on the Agilis platform. Reduced fraud: All fifteen branches of the company became centralized within six months of going live with the application leading to automation in the Agents’ premium returns. This made it possible to monitor transactions closely and resulted in quicker turnaround of cash. Reduced cost: Because the application is lighter, it has reduced the amount of bandwidth that was required to access the previous application. This has led to savings in terms of WAN bandwidth requirement cost. Another non-quantifiable result has been that Star Assurance has been able to sign a binding agreement with four insurance brokers to use the application to carry underwriting on behalf of the company, which was not possible earlier. Conclusion The implementation of Agilis General Insurance has resulted into end-to-end service delivery capability for Star Assurance incorporating underwriting, policy administration, claims, reinsurance and accounting. The solution deployed includes a business intelligence tool which makes information readily available for accurate and quicker decision making processes. Enabling End to End Service Delivery for the Ghana-based Insurer... “The system (proposed by Agile) eliminated a lot of shortcomings that we had with our previous system and has enabled us to originate transactions faster and even settle claims in a timely manner. Agile FT’s team were professional and have been able to support us in a timely manner.” Toni JC Bakawu Head (IT) Star Assurance
  7. 7. Expanding Insurance Coverage in the Middle East Key Success Factors for Bancassurance The GCC region together accounted for just 0.4 percent of the world market for gross written premiums in 2012. The UAE and Saudi Arabia are the two dominant players in the region, representing nearly 80 percept of gross written premiums. However, overall insurance penetration rates at around 3 percent remain low compared to the global average as well as emerging markets averages . Globally, insurance penetration is seen to have high correlation with per capita GDP. Currently the Middle East is an outlier to this trend with significantly lower penetration compared to its GDP per capita, due to which significant growth potential is perceived for the insurance industry in the Middle East. Economic growth potential remains strong in the near future and a consequent rise in incomes is further expected to improve insurance penetration across the region. Distribution of non-life insurance in the Middle East region is dominated by direct sales and brokers, while life insurance is split between agents for individual business and brokers for group life insurance. Although the traditional channels continue to bring in the bulk of business, bancassurance is expected to play an important role in the Middle East region in terms of improving insurance coverage, both to existing customer, as well as to the section of the population hitherto outside the banking or the insurance network. The bancassurance model offers key advantages to banks as well as insurance companies in the Middle East. Compared to brokers and agents, bancassurance can reach out to a larger number of potential customers at a much lower cost. The success of the bancassurance model depends on longer Bancassurance is expected to become an important distribution channel for increasing insurance penetration in the Middle East region. However, for bancassurance to reach out to hitherto uncovered sections of the population, certain key enablers - such as innovation, training, compliance and technology - will need to be in order. 8 ARTICLE
  8. 8. term commitment and efficient relationships between banks and insurance companies. Banks are likely to opt for insurance companies who are able to demonstrate longer term commitment and resources as well as provide innovative products that can be customised to suit the bank’s product offerings. For insurance companies, banks with good brand equity and substantial customer base are lucrative partners. Banks in the Middle East are better entrenched and have much higher geographic coverage compared to insurance companies. Thus, banks are in a position to leverage extensive customer knowledge to generate insurance sales and to reach deeper into the wallets of existing customers. Going forward, some critical factors will ensure that the potential from bancassurance is fully exploited in the Middle East to expand the insurance market vis-a-vis merely taking away current business from other distribution channels, especially agents and brokers. Product Innovation Bancassurance typically starts with product lines such as protection products sold at the time of taking a mortgage or personal loan, which are simpler to integrate with the banks’ business. As the relationship matures, banks as well as insurance companies tend to move towards integrating the product suite of insurers - life, general and medical - across all lines of business of the banks, including retail, SME, corporate and wealth management. There are several such examples of maturing bancassurance partnerships. HSBC and Zurich Insurance for example, started their partnership in April 2012 as an exclusive tie-up to distribute life insurance products in the UAE, Qatar and Bahrain. In 2012, they extended the coverage to include general insurance personal lines products, offering the bank’s customers Zurich’s motor, home contents and travel insurance, as well as its suite of commercial insurance solutions. However, as the partnership becomes well entrenched, both the bank and the insurance company need to move a step ahead and focus on innovation that helps the bank achieve differentiation among other distribution channels of the insurance company as well as other banks in the market. Data mining of customer knowledge can help product innovation by targeting the right financial solution at specific stages in the financial planning maturity of the market and of the customer segment. Continuous improvement in the distribution systems could also create differentiation for the bank. Providing an online platform for purchasing and servicing bancassurance policies is the current trend among industry leaders. For instance, National Bank of Oman started to offer its Himayati range of bancassurance products in life and home protection online to customers in 2013. AXA is the insurance partner to National Bank of Oman in the country. Bancatakaful - the distribution of takaful insurance products through banks - is also gaining prominence as it allows outreach to customers who are reluctant to purchase conventional insurance. Banks as well as insurance companies are creating separate tie-ups in the bancatakaful space to exploit this channel. Motivation and Training of Bank Staff The bancassurance model depends on a proactive and perseverant, technically competent and result oriented sales force. There is typically a cultural difference in the sales philosophies of banks, which are demand-driven organizations, and insurance companies, which are need-driven and more aggressive. Consequently, without proper 9 ARTICLE Bancassurance Advantages Many industry leaders are embracing innovative tools to deepen existing relationships and improve new customer acquisition rates through bancassurance.
  9. 9. 10 ARTICLE training of staff and well structured commissions there is typically resistance to change and a danger of mis-selling, which has a significant long-term impact on both reputation and revenue streams for banks. Banks are in a position to leverage multiple channels for distribution through employees, specialized agents, advisors, direct marketing or former bank employees. While simpler products can be sold over the counter by bank employees, specialized products such as asset management or pension plans require trained advisors with high levels of sales training. Well trained staff can become adept at spotting new opportunities for sale as well as reporting existing gaps in customer demands which can be addressed by insurance companies to improve sales. Specific commissions and incentives structures targeted at boosting the motivation of the bank’s staff at various levels of sales complexity are critical to achieving targets. Technology support is also important in terms of providing lead management systems, fully integrated processing and delivery of policies and real time tracking to the sales staff at the bank. Technology Integration Many industry leaders are embracing innovative tools to deepen existing relationships and improve new customer acquisition rates through bancassurance. Technology will be needed to create improvements in the areas of channel efficiency, personalization and integration that banks offer their customers, through investments in systems, and operational and service infrastructure. Bankers and insurers are increasingly putting more emphasis on developing processes built around the customer such as improved data management and analytical tools that allow better assessment of customer needs and better matching of the bank’s services with customer expectations. Systems that provide easy reporting and compliance will also be preferred, depending on the type of products being offered by the bank as a part of the bancassurance tie-up. For example, life and pension products often require greater compliance and customer information as compared to motor or theft insurance. Regulatory Compliance Regulation is still evolving in the region and not all countries have as yet established clear guidelines for bancassurance. Countries such as Bahrain or Oman have, for example, issued decisions regulating the marketing of insurance products through banks. However, there is a lack of proper guidelines in the region in other areas, such as the required qualifications for bancassurance sales staff. Evolving regulatory requirements are likely to prompt insurers to amend their existing arrangements or form new ones to be in line with policy. In future, there may also be higher compliance requirements that may necessitate additional reporting or the creation of new roles or departments within banks and insurance companies to ensure conformity. Current partnerships in turn will need to be equally dynamic in order to respond to market changes accordingly. Going forward, regulation is expected to serve as a catalyst for bancassurance to be recognized as an efficient and cost-effective way to increase insurance sales and improve awareness as well as penetration in the region. As the relationship matures, banks as well as insurance companies tend to move towards integrating the product suite of insurers - life, general and medical - across all lines of business of the banks, including retail, SME, corporate and wealth management.
  10. 10. 11 INTERVIEW In conversation with Mustafa Sachak CEO - TA Insurance, TA Holdings Ltd, Zimbabwe sectors of insurance by focusing on providing par excellence customer service, risk assessment and management, underwriting discipline, loss prevention measures and liquidity management to pay claims in a timely manner in a market beset by very tight liquidity conditions. With the insurance industry in sub-Saharan Africa seemingly back on the recovery path, but with insurance penetration still hovering around 5%, what do you think are the critical success factors to lead the insurance industry to a sustained growth trajectory? With the introduction of the US dollar as the main currency in 2009, the insurance industry has registered significant growth with the short-term industry growing from $78M in 2009 to $194M in 2012 and the life industry growing from $35M in 2009 to $196M in 2012. On the back of economic stability, low inflation, growth in the economy and a stable currency regime, the industry came out of the doldrums in 2007/2008 and managed to grow much faster than the GDP growth during the 2009-2012 period. The critical success factors for sustained growth in the industry in Sub-Saharan Africa hinges on the following: a. Macroeconomic stability and economic growth in the region. b. Removal of infrastructure bottlenecks in order to promote intra-African trade, ease of travel and reduce the cost of travel. c. FDI inflows into the resource, energy and infrastructure sectors. Can you give us a brief overview of TA Insurance’ positioning within the financial ecosystem in Zimbabwe, its future plans and focus areas? TA Holdings Ltd is a regional investment holding company listed on the Zimbabwe Stock Exchange (ZSE) with its insurance interests located in Zimbabwe, Botswana and Uganda. TA Insurance, the insurance arm of the group is a leading player in the insurance industry in Zimbabwe with investments in short-term (general) insurance (Zimnat Lion Insurance), life assurance (Zimnat Life Assurance), reinsurance (Grand Reinsurance), asset management (Zimnat Asset Management), microfinance (Zimnat Financial Services) and medical aid administration (Sovereign Health). TA Insurance is one of only 2 companies in Zimbabwe that have operations in all three sectors of the insurance space - short-term, life and reinsurance. The investments in asset management, microfinance and medical aid administration are through the life company. The operations in Botswana (Botswana Insurance Company) and in Uganda (Lion Assurance Company) are in the short-term insurance sector. The market in Zimbabwe is currently characterized by intense competition as evidenced by the huge number of players in the various sectors. For the short-term market there are twenty three operating companies with a market size of US$194M, nine reinsurance companies and nine life assurance companies with a market size of $196M. TA Insurance’s plan is to grow its market share in all three
  11. 11. d. Availability of long-term mortgage for housing development and long-term capital for investment in existing businesses and creation of new businesses. e. Favourable policies that encourage savings and investment. f. Development of micro insurance products for the lower end of the market. g. Deployment of cost effective mobile and web based technology platforms for distribution of products and payment of premiums and claims. h. Strong regulatory environment that promotes a viable insurance industry coupled with skilled professionals working in the regulators office. i. Investment in developing the technical and leadership skills base of the industry in all areas. j. Educating the public on the importance of insurance as an income protection and risk mitigation tool. This is vital in low income countries where insurance is seen as a product tailored only for the needs of the upper and middle income brackets. Do you believe that claims fraud is an industry issue currently, and if so, how is this being tackled? Claims fraud is a major issue within Sub-Saharan Africa and it is estimated that anywhere between 20%-30% of claims in the short-term industry within Sub-Saharan Africa could be fraudulent. To curb claims fraud an increased level of cooperation is needed amongst insurance companies and the other stakeholders including brokers, agents, claims assessors, panel beaters, the regulator, loss adjustors and finally the law enforcement agencies. In Zimbabwe the issue of claims fraud is unfortunately not being tackled seriously at an industry level but more at an individual company level. The motor business is the most susceptible to fraud followed by fidelity guarantee and it would make sense to start by having a central database that records the names of the individuals and organizations that have committed fraud. The industry is currently scouting for a system that will allow companies to input stolen vehicles, names of the perpetrators and other pertinent information that can be accessed by the relevant stakeholders. Is the insurance industry faced with a shortage of qualified human resources, and if so, in what areas of specialization? How is the industry gearing up to mitigate the risk caused by this shortage? During the tough economic period of 2000-2008, Zimbabwe lost a large number of qualified and experienced insurance professionals to the region and to the UK. Presently the industry is faced with a shortage of skilled professionals in the following areas: a. Risk assessment and mitigation b. Loss adjustment c. Specialized underwriting skills in engineering, liability classes and marine d. Reinsurance There is no coordinated approach by the industry to address the shortage of skills in the country. However, the Insurance Institute of Zimbabwe (IIZ) an industry training body offers courses in insurance qualification starting from Certificate of Proficiency (COP), Diploma in Insurance and Associateship in Insurance. Additionally the local reinsurance companies conduct training classes in different areas to enhance skills. Zimnat Lion Insurance Company has taken a deliberate approach to recruit a few skilled Zimbabwean insurance professionals from the diaspora to enhance the team. Can you elaborate on some of the product/service innovations launched by your group companies in the recent past? Some of the innovative products that the group has launched over the last two years are: Insure Go - the first of its kind third party motor insurance product that is mandatory in Zimbabwe and can be bought from selected supermarkets, fuel stations and banks. The customer purchases an Insure Go package which contains the insurance cover note and a scratch card. To initiate insurance cover, the customer scratches the card and uses the pin code on the card to register his/her personal and vehicle details via SMS. Using SMS cellphone technology and a mobile network gateway, insurance cover is accepted upon client receiving an SMS confirmation from Zimnat Lion Insurance. Pundutso Weather Index Insurance - is a groundbreaking weather insurance product introduced by Zimnat Lion Insurance that gives farmers a cash payout in the event of bad weather resulting in a poor harvest. The policies will compensate the client for their input costs in the event of adverse rainfall experience. The product is an innovative way in which farmers can lessen the effect of unpredictability of the weather. 12 INTERVIEW TA Insurance is one of only 2 companies in Zimbabwe that have operations in all three sectors of the insurance space - short-term, life and reinsurance.
  12. 12. 13 INTERVIEW Diaspora Funeral Cash Plan - It is a funeral protection plan introduced by Zimnat Life Assurance targeted at Zimbabweans living in the diaspora. The plan allows for the principal member to also cover his/her spouse, children, parents parents-in-law living in the diaspora or in Zimbabwe. The policy makes a lump sum payment of the sum assured upon the death of any of the lives covered under the policy. What role do you see technology playing in the growth of your company and also that of the industry? Technology can play a huge role in the growth of the industry and in our group, especially in relation to making insurance accessible and affordable to the uninsured and underinsured segments of the population. Globally for the insurance industry, new technologies are significantly enhancing operational efficiencies, increasing revenue opportunities and improving the customer experience. Some of the technological developments that can be a catalyst for growth of the industry and TA Insurance Group are: a) Proliferation of smart phones and tablets coupled with cloud computing which provide instant access to the internet. b) Adoption of mobile and web-based technologies to distribute products and settle premium and claim payments. c) The explosion of computing power and storage enabling the accumulation and analysis of data - a trend often referred to as ‘big data’. Insurers who can exploit this information for better pricing, underwriting and loss control will have a distinct competitive advantage over their peers. d) The growth of active sensors and devices connected to the internet which is projected to reach 50 billion by 2020. Commercial insurers are already using connected devices and sensors to develop risk and loss management and improve productivity. It is also envisioned that by 2020 life and health insurers will be using them propelled by a number of biotechnologies available at the nanoscale level. What role can the insurance industry play to contribute towards healthy growth of the economy in sub-Saharan Africa ? Do you think there are any policy changes required for this to happen? The insurance industry can play a vital role in the growth of the economies in Sub-Saharan Africa as evidenced by the correlation between the premium levels and penetration rate in South Africa and the level of development. The life industry in South Africa generated premiums of $22B in 2011 which accounts for close to 80% of African life premiums. With the right policies, the insurance industry in Sub-Saharan Africa can become a large pool of domestic funds just as in South Africa for investment in much need areas such as infrastructure (roads, rail, airports, ports, and water), housing and energy. Some of the following policies could be enacted: a. Tax incentives for savings and investment products which would encourage the purchase of these products. b. Pension regulation making occupational pension contributions mandatory. c. Tax deductibility for employee and employer pension contributions. d. Provide incentives to financial services firms to expand into rural areas. TA Insurance’s plan is to grow its market share in all three sectors of insurance by focusing on providing par excellence customer service, risk assessment and management, underwriting discipline, loss prevention measures and liquidity management to pay claims in a timely manner in a market beset by very tight liquidity conditions.
  13. 13. Increasing Market Share for Apollo Munich This meeting of minds has given birth to a new era in health insurance in India, bringing with it the double protection of preventive health added to insurance cover. It is a venture to bring in a paradigm shift in health insurance from ‘post care’ to ‘prevention and wellness’. This ultimately is the core of the Apollo Munich’s unique brand positioning - ‘Lets Stay Healthy’. Towards this attempt, it has implemented AGILIS, an integrated web-based software offered by Agile FT. Through AGILIS, Apollo Munich has been able to sign up new customers thereby gaining incremental revenue. It has also achieved fast turn-around-time, a critical success factor in the travel insurance industry. Apollo Munich has provided Indian domestic/international travellers a powerful on-line tool by which they can purchase travel insurance in a variety of ways. Corporate customers can issue policies at their end from the corporate portal. Travellers can purchase their insurance policies either from travel agents who have been given access to AGILIS or from travel portals like Branch office employees of Apollo Munich at branch office can issue insurance policies to walk in customers from the employee portal. In all cases, the insurance policy is immediately processed, can be printed and made available to the customer in real time. Health insurance is a highly competitive line of business since it is a part of every general insurance company’s portfolio. Travel insurance forms an integral part of the health insurance portfolio. Travel is a high-growth segment with international leisure travel expected to grow three times while the domestic travel market is currently growing at about 35%. The value of the Indian travel insurance industry is estimated to be $236 million in 2009, according Apollo Munich Health Insurance, the association between Apollo Group and Munich Health, is a strategic alliance to meet common goals in healthcare and health insurance.’ ‘It complements Apollo’s philosophy of ‘Prevention and wellness’ and Munich Health’s dedicated mission of ‘providing affordable and innovative health insurance solutions’. 14 CASE STUDY
  14. 14. to Euromonitor International. Domestic and international air travellers typically buy insurance cover after they have purchased their travel tickets. This is usually at the proverbial last minute when they have very little time to seek an agent and buy travel insurance. Even if they find a travel agent or visit a general insurance company, it normally takes a few hours before the policy document is provided. In addition, the application forms are time consuming with details such as medical history, passport and other identification details to be filled. This affects the turn-around- time, a factor that is critical for the success of the business, as well as the convenience of purchasing the insurance cover. Background In its endeavor to become a first-choice partner in the health care sector, Apollo is determined to increasingly automate processes, reduce human intervention and increase quality and speed. Apollo Munich currently offers several insurance plans - Easy Health Insurance, Personal Accident Insurance and Easy Travel Insurance. It chose Agile FT as its partner to automate its Easy Travel Insurance Plan, a Short-Term travel insurance plan, with the main target population being young people who are very familiar with the existing travel insurance schemes available in the market. The Individual Travel Insurance Plan covers an individual of age between 6 months up to 70 years, against any medical or non-medical emergency while travelling and is valid for a specific number of days. Apollo Munich offers the Easy Travel Insurance Plan in four different ways: A secure travel insurance portal through which corporate customers can issue their own policies. The issuing company has to maintain a deposit with Apollo Munich, which gets debited every time a new policy is issued. Through the Agents Portal for travel agents. Through travel ticketing websites like, where travellers can buy the insurance policy along with the air ticket by just click-checking a box. Through branches which provide service to walk-in customers. The policy is valid either for the duration of the round trip travel or 30 days from the date of booking. The decision to use travel web sites as a distribution channel was to provide an extended solution to airline clients. This has given the company a new dimension to the already existing on-line airline booking system. 15 CASE STUDY Krishnan Ramachandran Chief Operating Officer, Apollo Munich Health Insurance, shares his views exclusively with Agile Financial Times. What is your vision for Apollo Munich? Apollo Munich was licensed by the regulator in August 2007 and launched its first product in November 2007 on the retail side. We now offer a bucket of products in areas such as health, travel and personal accident insurance for both retail and corporate and our goal is to become a health insurer of choice. At Apollo Munich, our core philosophy is ‘manage health’ and our vision is to become a significant player in the health insurance industry, with our value proposition being the ability to combine health care access and delivery. What is the rationale behind the on-line health initiative? Very few insurance companies currently offer on-line health insurance with processes automated from application to policy distribution. By providing this service, we have actually been able to increase the market size of the insurance industry as this user-friendly facility has roped in many first-time customers, many of whom have now made it a practice to purchase insurance on-line whenever they travel, which is something they would not have thought of earlier. What was the main reason for selecting Agile FT? We chose Agile FT as a partner as they possessed both, the technology expertise as well as people who had a deep knowledge of the insurance industry. Agile FT offered us a blend of technology and domain expertise. Without AGILIS we would not have been able to enter into a partnership with
  15. 15. While the primary focus of travel agents is on overseas travellers, the focus of is on domestic as well as international travellers. Supplier Selection During the launch of the Easy Travel Insurance Plan, Apollo Munich had time constraints and was unable to custom-build a solution to cater to the travel insurance product. The company was therefore seeking an ‘off-the-shelf ’ product. “We already had a system in place which we customised to suit our business needs. We decided to go for AGILIS since there was no time to add a separate module to the existing one,” says Ravinder Zutshi, Chief Technology Officer, Apollo Munich. A key differentiator that separates Agile FT from its competitors is its domain knowledge. Apollo Munich selected AGILIS over similar products because of Agile FT’s proven expertise and domain knowledge of the insurance sector. Technology AGILIS is an integrated on-line IT solution designed to automate all the functions of a general insurance company. It acts as a decision support system for underwriting, claims, reinsurance and accounting and, as a result, directly enhances the business processes of an insurance company. The solution is flexible in terms of defining new or revising existing insurance products and facilitates dynamically altering the process in time with the market conditions. AGILIS has the ability to cater to all classes of the general insurance business. The front end interface is used to provide a choice to travellers booking through of whether or not they would like to purchase an insurance policy. It also includes the facility of emailing the policy to the subscriber’s email address. The back end runs a validation engine and checks the information (such as age, length of travel, countries of travel) of the traveller. Most of the information is picked up from the data provided on the tickets and compared to set values. For example, the Easy Travel Insurance Plan is only provided to customers who are less than 70 years old. Anyone at and above the age has to go through the underwriting process by visiting an Apollo Munich office. After the validation, the application is passed through a payment gateway, where the payment is extracted from the customer’s credit card. In case of cancellation of a policy, the refund is made to the customer using the same forms, while the final transaction is settled between the travel agents or and Apollo Munich at the company’s website. Business Benefits Within a few months of the launch of AGILIS, Apollo Munich received encouraging feedback from travel agents as they found the product easy to use. Their feedback has been that AGILIS is customer friendly, easy to integrate into the existing system, cost-effective and performs well on underwriting and claims. AGILIS also helped Apollo Munich decrease the turn-around- time for issuing a policy to 2 minutes as compared to 15 minutes earlier. Purchasing travel insurance was suddenly made very simple for travellers who were earlier used to filling out lengthy application forms. For travellers who fit the policy underwriting criteria, all they have to do is to fill in their personal information on-line and the policy document is sent to their email account, without any human intervention. Apollo Munich garnered significant incremental business with the addition of as a sales and distribution channel, especially because it was one of the early movers. The unique feature of this channel is that it creates an impulsive buying decision for the travel portal user who can avail an insurance policy by just click-checking a box. Conclusion Apollo Munich gained significant benefits due to the AGILIS implementation. In addition to simplifying internal processes, using AGILIS also reduced the turn-around-time for the issuance of policies, thereby setting an industry benchmark which few insurance companies have achieved. Being one of the early movers in providing travel insurance policies in real time gave the company a substantial advantage over competition and helped it to increase incremental revenues significantly. 16 CASE STUDY “We chose Agile FT as they possessed both, the technology expertise as well as people who had a deep knowledge of the insurance industry.” - Krishnan Ramachandran Chief Operating Officer Apollo Munich Health Insurance
  16. 16. 17 ARTICLE Social medium can be leveraged to track how the institution is perceived and ancillary analytical tools are available to enable them track trending topics and blogs mentioning their institution. Since the medium is viral in nature, it is imperative for the institution to include the tracking of such perceptions in their overall CRM strategy. Consider this. It is likely that most comments that a consumer would put out there would be negative. Very rarely does a consumer go out of the way to post a positive comment, unless the service experience was exceptional. Either way, the communication process needs to be captured and responded to by either isolating the dissenter by educating them in a public forum or advocating a supporter by spreading the good word. Customer’s who use the institution’s online services will also be more likely to adapt to a new trend that is emerging - where banks and insurance companies are integrating their channels with social medium platforms. Take the example of ASB Bank from New Zealand, which is credited for opening the world’s first virtual branch on Facebook . You can interface with them on Facebook on any topic ranging from your account administration to originating an enquiry for a new loan. Social media platforms that provide you with the capability of building applications that enable interaction are untested waters, but a surefire way of ensuring that you are an interactive click away from your clients. Interestingly enough, we have also come across Insurance Companies offering advisory services to their clients and curtailing insurance fraud by simply checking out activities of insurance claimants who had put in fraudulent claims. Fraud detectives are scouring the social media for evidence as a process of validating claims. A case in point was reported by LA Times in January of 2011, of a disability claim on account of a bad back being refused because the claimant had boasted about completing a marathon on Twitter and Facebook. Financial institutions have their work cut out whilst they figure out their communication and channel integration strategy for social media platforms. At the very least, security policies and systems will have to be re-examined once channels are extended onto social media platforms. Financial institutions will soon have to formulate their customer relationship, communication, technology and channel integration strategy around the functional building blocks of social media platforms - identity, conversations, sharing, presence, relationships, reputation and groups (Kietzmann’s Honeycomb Framework). It will not be long before we hear an outcry from CTO’s saying “just when we had learnt the answers, they went ahead and changed the questions”. Social Media in Financial Institutions Kalpesh Desai CEO Agile Financial Technologies Just when you had learnt the answers, they changed the questions. Social medium is still an unchartered territory for banks and insurance companies - where the fear of the unknown has restricted their leverage of the technology and limits their ability to reach out to a new generation of customers who view these platforms as a window to the world. The way we communicate has changed with the advent of social media and community forums becoming the channel of choice for the customer to voice their opinions, seek advice and post feedback. Collaborative tools and content dissemination tools have to adapt to this shift in behavior to equip the institution to better manage their communication process. How many of us now rely on Twitter, Facebook or LinkedIn to find out breaking news, pose queries and even post customer service issues? It is this shift in behavior that is prompting financial institutions to examine how the medium will impact customer relationships. Though untested, social medium is definitely a channel that can be leveraged to deal with customers. Institutions will have to review their practices and also examine their processes considering that social media interaction will bring forth a convergence of their technology, customer relationship and corporate communications teams.
  17. 17. 18 NEWS Agile FT and Zensar in Strategic Partnership Global software solutions and services provider Zensar Technologies (Zensar), has formed a strategic partnership with Agile Financial Technologies (Agile FT) to strengthen its position in the Banking, Financial Services and Insurance (BFSI) sector. This partnership will optimize Zensar and Agile FT’s proficiency to meet the rapidly growing needs of the sector and continue to remain customer centric by providing them with their industry leading solutions and strong domain expertise. According to Shefali Khera, COO-Designate for Agile FT US, both companies have already begun engaging deeply in multiple accounts and at various levels of demand generation, solution architecture and market penetration. The Middle East is one of Zensar’s key emerging markets where it has a market leading position in the Enterprise Application space in both Oracle and SAP solutions and has created a strong footprint over the last seven years by engaging with some of the region’s most prestigious Manufacturing, Retail, Real Estate and Healthcare companies. Zensar’s business operations for the Middle East stem out of their office in Dubai and will have multiple centres across the Middle East to ensure that they are able to capitalize on the major role the region plays in the overall growth strategy. Harish Lala, Senior VP-MEA, Zensar Technologies says that the partnership is of significance as the global experience and delivery skills brought in by Zensar, combined with Agile FT’s best of breed products for the BFSI sector, will provide superior value to customer organizations. “This partnership is an important step towards re-emphasizing the significance that the Middle East market plays in Zensar’s growth strategy.” - Ganesh Natarajan CEO and Vice Chairman Zensar Technologies “The partnership while adding enormous value to our potential customers will also help us generate a significant thrust in the market.” - Kalpesh Desai CEO Agile FT
  18. 18. AMERICAS Agile Financial Technologies Inc. 626 RexCorp Plaza, Office No. 708 Uniondale New York 11556 Toll-Free: +1.800.641.8030 Tel : +1.917.722.1252 Fax: +1.917.722.0977 Email: EUROPE, MIDDLE EAST AFRICA Agile FinTech FZ-LLC 808-A, Business Central Towers Dubai Internet City Dubai, UAE Tel: +971.4.433.1825 Fax:+971.4.435.5709 Email: SOUTH ASIA Agile Financial Technologies Pvt Ltd Tex Centre, N Wing, 3rd Floor Chandivili, Andheri (E) Mumbai 400 072, India Tel : +91.22.425.01200 Fax: +91.22.425.01234 Email: ASIA PACIFIC Agile Financial Technologies PTE Ltd. 20 Cecil Street, #14-01 Equity Plaza Singapore 049705 Tel: +65.6438.8887 Fax: +65.6438.2436 Email: Views expressed in this publication do not necessarily represent the views of Agile FT and the information contained herein is only a brief synopsis of the issues discussed herein. Agile FT makes no representation as regards the accuracy and completeness of the information contained herein and the same should not be construed as legal, business or technology advice. Agile FT, the authors and publishers, shall not be responsible for any loss or damage caused to any person on account of errors or omissions.