The document discusses reaching the uninsured population in Africa through insurance. It begins by looking at trends showing Africans are quick to adopt new technologies like smartphones but insurance penetration remains low. There is significant potential for growth given Africa's large uninsured population and GDP growth. New technologies and peer-to-peer models could disrupt the traditional insurance model. Focusing products for the 200 million African lives with over $20 daily income could attract a $30 billion premium market. Insurers must offer flexible premiums and payment options to effectively reach the uninsured masses in Africa.

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

2. AGENDA
Where is insurance heading
Disruption
Focus on the Uninsured
Conclusion
2

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.

7. AFRICAN CONSUMER TRENDS
7
Mobile money
transactions as a
share of GDP
In Kenya
 Mobile Money - 55%
vs
 Insurance – 3%

8. AGENDA
Where is insurance heading
Disruption
Focus on the Uninsured
Conclusion
8

9. INSURANCE ECOSYSTEM
9
REACTION TO UBER
IN KENYA

10. INSURANCE ECOSYSTEM
10
DISRUPTION
IN POLITICS?
INSURANCE?

11. INSURANCE ECOSYSTEM
11

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

14. MARKET DISRUPTION
14
 30b messages per
day in 2016
SMS invented in
1992.
Disruption will
sudden

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

18. KEY INGREDIENTS FOR DISRUPTION
Capital
Technology
Change in Behaviour
18

19. WHERE IS THE CAPITAL?
19
Top 1% now
own 50% of
the world’s
wealth
Source: Wealth inequality in America (Politizane, 2012)

20. TECHNOLOGY
20
PaaS – Platform as a Service – reduced cost for
market entry & admin expenses

21. BEHAVIOUR CHANGE
21
SSA has a
median age
of 18 years
Instagram
generation?

22. AGENDA
Where is insurance heading
Disruption
Focus on the Uninsured
Conclusion
22

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)

29. AGENDA
Where is insurance heading
Disruption
Focus on the Uninsured
Conclusion
29

30. CONCLUSION
30
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