Measuring financial inclusion the global findex asli demirguc kunt leora klapper
Insuring the Masses (March 2016) v 1 0
1. REACHING THE UNINSURED IN
AFRICA
EZEKIEL MACHARIA FIA
CHIEF ACTUARY & MANAGING DIRECTOR - KENBRIGHT
2ND ANNUAL AFRICAN INSURANCE FORUM
JOHANNESBURG 3-4 MARCH 2015
3RD MARCH - 15:00
1
3. IS INSURANCE EXPENSIVE?
3
Source: Pew Research
Buy insurance or a smart
phone?
• A smart phone costs $100 or more..
• 15% of Africans have a smart phone but less
than 5% have insurance
Smart phones are winning
4. WHO NEEDS INSURANCE?
4
Who needs insurance more?
Social Safety Net features
Low Human Development Index – 0.5
(0.7 World)
Low life expectancy at birth rates - 56 Yrs years
(annuities anybody?)
World
5. SCOPE FOR GROWTH
5
Real GDP per Capita
$2,500
Africa
Insurance Stats
Premium per capita
$66
Willingness to Pay
2.7% World
$13,000
$640
4.9%
6. AFRICAN CONSUMER TRENDS
6
• 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
Uptake of mobile money highest with
Africans (50% of global share). The market
is willing to test new things.
12. DISRUPTION
Unexpected – It won’t happen soon
Unconventional – Too poor to insure?
Resonates with the people
12
13. OR.. CONFIRMATION BIAS
Confirmation Bias is tendency to search
or interpret information in a way that
confirms one's preconceptions leading
to statistical errors
13
15. TOO BIG TO FAIL
15
Nokia
Revenue in
2008 - $70b
Africa
Insurance
Revenue
(2013) $69b
Source: Wealth inequality in America (Politizane, 2012)
16. PEER TO PEER TECHNOLOGY
16
•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?
17. PEER TO PEER INSURANCE MODEL
17
Reinsurer
Insurer
Broker
Capital Market (ART)
Peer
(Smart
Contracts)
Smart
Phone
InsurTech
BlockChain
Mobile
Money
Admin
Peer
(Smart
Contracts)
Customer
23. ELEPHANT IN THE ROOM
23
40% of
Africans are
living in
extreme
poverty
<$2 a day
Source: Institute of Security Studies. African Futures Paper 13
24. KEY FEATURES - TARGET MARKET
24
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)
Premium - $30b
At 4%* of income
paid towards
insurance - $300 is
available annually for
insurance
(ILO Insurance Willingness to Pay
Statistic)
25. POPULATION
25
50% of Africa’s Population (One
view)
Nigeria – 184m
EAC Block – 150m
Ethiopia, DRC & S Sudan (Joining EAC?) – 180m
South Africa – 55m
Ghana – 28m
Total 600m lives
26. COPING MECHANISM
26
Coping
Strategies
(low income
market)
Self Insurance
(Retain Risk)
Salaries & wages
Borrow from family, friends or money
lenders
Sell or pledge assets
Social Protection
(Transfer Risk)
Public health services
Disability compensation
Informal Groups
(Share Risk)
Welfare associations
Burial societies
Church group loans
Fundraisers
Hiring of guards
Mutuals
Risk Management for the uninsured
27. KEY REQUIREMENTS FOR INSURANCE
27
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
28. RISKS IN DEMAND FOR UNINSURED
28
Health – Illness Risk
Death Risk
Disability
Debt (Credit Risk)
30. CONCLUSION
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Future is uncertain but disruption is certain
Yuuuge potential for uninsured African population.
First 200m lives - $30b (40% growth)
The current insurance model may be disrupted
Africans already have coping mechanism –
Innovative solutions will entice the target market
31. THANK YOU
Ezekiel Macharia FIA
Chief Actuary & MD - Kenbright
ezekiel@kenbright.co.ke
+254 722 540 045
31
Editor's Notes
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin
Donald Trump Rise
Get SA companies revenue – compare with Startups
Talk about age in Africa
Population Pyramid
Google Charts for Africa
Whatsaup Track to Messaging Service
Photos of Uber in Africa
Trends in Africa
Impact of Bitcoin