Value addition and new innovations in Micro Insurance by H.M.R.M.Herath, Senior Manager –IR, Sanasa Insurance Company Limited, AOA 30th Anniversary Seminar Colombo, Sri Lanka, August 2014

1. Value addition and new innovations in Micro Insurance
Presentation by
H.M.R.M.Herath,
Senior Manager –IR
SanasaInsurance Company limited,
At
AOA 30thAnniversary Seminar
26thAugust 2014
at Cinnamon Lakeside Hotel Colombo.

2. Contents of the presentation
•Definition of added value.
•Objectives of value addition.
•Types of value added.
•Necessity of added value in micro insurance.
•Application of value additions in Agricultural Insurance of SICL.
•Conclusion..

3. Definition of value addition
The enhancement a company gives its product or service before offering the product to customers. Value added is used to describe instances where a firm takes a product that may be considered a homogeneous product, with few differences (if any) from that of a competitor, and provides potential customers with a feature or add-on that gives it a greater sense of value.

4. Objective of value addition in Micro insurance
•To improve performance of insurance products or services in order to make happy the customer.
“any activities that do not add value to the customer are considered waste”.

5. Types of Value addition
•There are two types of added value
1.Value-added (VA) Activities/Processes:Any activity or process the customer will be willing to pay for.
Eg: Customer can receive insurance policy at the same time it is filled. (issuing policy in the field)
2. Non-value-added (NVA) Activities/Processes: Any activity or process the customer would not want to pay for, but which cannot be eliminated in the process of value added.
Eg: Regulatory processes may be considered business-value- added.

6. Basic requirements of value addition
•Identifying Customer perception about product and services.
•Identifying and eliminating root cause of the problems of the Company.
•Cost benefit analysis (it is affordable to the customer and at the same time company can run with profit).

7. SICL-Value addition and new innovation in Micro insurance.
“Insurance is an abstract concept about an intangible promise to pay, which makes it difficult to convince clients of its value.”
To address this issue,
SICL is bundling value-added services along with risk protection to make products tangible and to provide more frequent “benefits”.

8. SICL-Value addition and new innovation in Micro insurance. Cont..
•Introduction of Weather Index insurance (WII) to the Paddy and Tea farmers as a new innovation.
“The weather insurance products are very specific to the area, the season, crop and peril insured. Payouts for the decreased revenues from cultivation of the specified crop happening due to excess or deficit in rainfall in the specified location are made to the customer.”

9. SICL-Value addition and new innovation in Micro insurance. Cont..
Special features of Weather Index Insurance
Automated Claim calculation
No claim request
Farmer can receive Rainfall data of their weather station though the insurer
100% transparent

10. SICL-Value addition and new innovation in Micro insurance. Cont..
WII Tea has been bundled with 4 rider covers.
Value addition
Hospitalization cover
Personal accident cover
Funeral aid insurance
Property cover

11. SICL-Value addition and new innovation in Micro insurance. Cont..
Progress of weather Index Insurance for Paddy
-
500,000.00
1,000,000.00
1,500,000.00
2,000,000.00
2,500,000.00
Premium Collected
LK
0
500
1000
1500
2000
2500
3000
3500
4000
Number of Farmers enrolled

12. SICL-Value addition and new innovation in Micro insurance. Cont..
Progress of weather Index Insurance for Tea
0
2000
4000
6000
8000
10000
12000
2012
2013
2014
Number of Farmers enrolled
Number of Farmers
-
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
5,000,000.00
6,000,000.00
7,000,000.00
2012
2013
2014
Premium collected
LKR

13. SICL-Value addition and new innovation in Micro insurance. Cont..
SICL-livestock insurance
1sttime in Sri Lanka SICL introduced the RFID microchips Trace a specific animal and ultimately prevents fraudulent claims
Technical training programs for Livestock farmers
Fast claim settlement

14. SICL-Value addition and new innovation in Micro insurance. Cont..
•Added value in Crop insurance -claim settlement
In the event of Crop damage, settlement of claim to be done on the recommendation of a village based claim committee consisting SIClAgriofficer and 3 other members nominated by the farmers organization.
Advantages;
-No complains after assessment.
-Estimation is transperentand easy.
-High renewal percentage.

15. SICL-Value addition and new innovation in Micro insurance. Cont..
•Value added in SICL funeral expenses Insurance.
Fast claim settlement for funeral expenses insurance.
All the Sanasaprimary societies are advised to settle the cash payment to the insure after verification by society and reimburse from Insurer.

16. Conclusion
1.Valueadditionsincludeeasily- operatedstrategy,freefromdefectsofdelays,lackoftransparency,presenceofhumanerror,freefrombureaucracyandeasyproceduresinclaimssettlement.
2.Microinsuranceproductslinkedtolargepackageofriskmanagementstrategiesandservicesaremoreeffective.

17. Thank you