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PROMISING STARTS IN MOBILE MICROINSURANCE: TIGO SENEGAL & TELENOR PAKISTAN INSURANCE MADE FOR THE MASS MARKET: TIGO & BIMA IN SENEGAL
S enegal’s insurance market is underdeveloped relative to the rest of the world and even within Africa. The total amount of insur- Designing a
ance premiums collected in the market (gross written premium) represents just 1.89% of Senegal’s GDP, well below the African
9
average of 3.57%.
Six life insurance companies operate in Senegal today. While microinsurance is offered in the market, none of the services have reached
scale and the companies focus primarily on the wealthier and easier-to-reach banked segment of the population. Insurers such as
10
UASen, Tigo’s current underwriter for Kiiray, have explored microinsurance offerings that would appeal to a broad segment of the popu- microinsurance product
lation, but were dissuaded by the unfavourable unit economics of offering small policies to the unbanked.
for the mobile channel
T igo, Bima, and UASen believe that the mobile channel completely changes the economic and product design constraints of a
typical life insurance product. With Kiiray, they set out to design an insurance product unlike any other in the market.
The golden rule: Keep it simple
Most insurance products in Senegal have relied on automated deductions from bank accounts, which is a reliable collections mechanism,
but one that does not work for Tigo Senegal’s largely unbanked GSM subscriber base. Tigo’s subscribers also tend to be new to insurance
and are not necessarily familiar with the intricacies of a typical product: beneficiaries, exclusions, lapse rules, and document-heavy enrol-
ment and claims processes.
To design an insurance product with broad appeal, the Kiiray team had to ask what could be stripped away from a typical life insurance
policy. Simplicity became the golden rule; all Tigo customers received the same coverage and pricing regardless of age or risk profile.
UASen required the minimum possible documentation to process claims and enrol subscribers. Premium collection would be small,
gradual, and non-punitive if a customer missed a payment.
FEATURE TYPICAL LIFE INSURANCE PRODUCT TIGO KIIRAY
Enrolment process • Long process for paperwork and eligibility verification • Instant registration by agent on mobile handset
with no paperwork
• Electronic signature on customer phone through USSD
Premium collection • Payment deducted from bank account monthly • Collection over airtime account in small daily
instalments (US$0.03)
• The policy lapses upon repeated failure to collect
• Ability to “catch up” on missed payments
Product complexity • Complex set of exclusions and terms and conditions • Very limited exclusions
• Terms and conditions sent over SMS in plain language
Pricing • Differential based on individual risk (age, medical exam, etc.) • Flat pricing and benefits for all customers
Claims payment • Process takes up to 15 days and requires • Claims processed in 48 hours on presentation
extensive documentation of death certificate
Figure 3: Stripping away a typical life insurance product
9. Swiss Re Sigma, “World Insurance in 2009.” Available at http://media.cgd.swissre.com/documents/pr_sigma2_2010_en.pdf.
10. Interview with Senegalese Insurance Expert
6 7
S enegal’s insurance market is underdeveloped relative to the rest of the world and even within Africa. The total amount of insur- Designing a
ance premiums collected in the market (gross written premium) represents just 1.89% of Senegal’s GDP, well below the African
9
average of 3.57%.
Six life insurance companies operate in Senegal today. While microinsurance is offered in the market, none of the services have reached
scale and the companies focus primarily on the wealthier and easier-to-reach banked segment of the population. Insurers such as
10
UASen, Tigo’s current underwriter for Kiiray, have explored microinsurance offerings that would appeal to a broad segment of the popu- microinsurance product
lation, but were dissuaded by the unfavourable unit economics of offering small policies to the unbanked.
for the mobile channel
T igo, Bima, and UASen believe that the mobile channel completely changes the economic and product design constraints of a
typical life insurance product. With Kiiray, they set out to design an insurance product unlike any other in the market.
The golden rule: Keep it simple
Most insurance products in Senegal have relied on automated deductions from bank accounts, which is a reliable collections mechanism,
but one that does not work for Tigo Senegal’s largely unbanked GSM subscriber base. Tigo’s subscribers also tend to be new to insurance
and are not necessarily familiar with the intricacies of a typical product: beneficiaries, exclusions, lapse rules, and document-heavy enrol-
ment and claims processes.
To design an insurance product with broad appeal, the Kiiray team had to ask what could be stripped away from a typical life insurance
policy. Simplicity became the golden rule; all Tigo customers received the same coverage and pricing regardless of age or risk profile.
UASen required the minimum possible documentation to process claims and enrol subscribers. Premium collection would be small,
gradual, and non-punitive if a customer missed a payment.
FEATURE TYPICAL LIFE INSURANCE PRODUCT TIGO KIIRAY
Enrolment process • Long process for paperwork and eligibility verification • Instant registration by agent on mobile handset
with no paperwork
• Electronic signature on customer phone through USSD
Premium collection • Payment deducted from bank account monthly • Collection over airtime account in small daily
instalments (US$0.03)
• The policy lapses upon repeated failure to collect
• Ability to “catch up” on missed payments
Product complexity • Complex set of exclusions and terms and conditions • Very limited exclusions
• Terms and conditions sent over SMS in plain language
Pricing • Differential based on individual risk (age, medical exam, etc.) • Flat pricing and benefits for all customers
Claims payment • Process takes up to 15 days and requires • Claims processed in 48 hours on presentation
extensive documentation of death certificate
Figure 3: Stripping away a typical life insurance product
9. Swiss Re Sigma, “World Insurance in 2009.” Available at http://media.cgd.swissre.com/documents/pr_sigma2_2010_en.pdf.
10. Interview with Senegalese Insurance Expert
6 7
