Providing affordable mobile-based life and health insurance globally
UK-based microinsurance specialist MicroEnsure, a member of the Business Call to Action (BCtA) since 2012, has made an ambitious new pledge to insure 5 million additional low-income customers while producing three groundbreaking, scalable new products by 2020.
Consumers in emerging markets face disproportionately high levels of risk, but have little access to insurance products that can mitigate them. Only minute fraction of the 4 billion people living on less than US$4 per day has insurance, leading to financial ruin when major life events such as illness, death and accidents occur. Yet low-income communities face restricted access to formal risk-mitigation mechanisms. Mainstream insurance products are too complex and costly, and are not tailored to the vulnerabilities of low-income consumers.
The estimated US$40 billion market in microinsurance products has been largely untapped: penetration of microinsurance is estimated at less than 10 percent globally. Africa has one of the lowest insurance penetration rates in the world, with less than 2 percent of world market share. The need for innovative and inclusive business models to fill this gap presents a huge challenge, but was seen as a significant opportunity for MicroEnsure.
No insurer had ever been successful in the low-income market before MicroEnsure’s founding in 2002: major insurance companies were hindered by high administration costs for low-value policies, and failed to earn consumers’ trust. By innovating and remaining flexible, MicroEnsure has developed a range of tailored affordable products and an inclusive model for delivering its low-cost solutions to those in need.
Not a traditional insurer, the company partners with insurance and reinsurance companies that can underwrite risk, and mobilizes distribution partners equipped to deliver its products to low-income customers. These include mobile network operators, microfinance institutions, banks and NGOs.
One such MicroEnsure product, Telenor Suraksha, provides life insurance free of charge to mobile network operators, which benefit from the increased customer loyalty that comes from added value. Suraksha made headlines as the fastest-growing insurance product in the world when launched in 2015. Another product piloted by the company is Fearless Health, a comprehensive health financing package sold in health clinics, which allows underserved consumers to access outpatient care without the need to save the $8-12 usually required for medical consultations, drugs and tests. Fearless Health was recognised as a top-20 global health innovation in 2016 by the World Innovation Summit for Health in Qatar.
Since its founding, MicroEnsure has grown into a global company serving over 40 million low- and middle-income customers in 20 countries; 85 percent of them have never before accessed insurance.
In late 2016 MicroEnsure renewed its BCtA commitment with plans to expand into three new markets and add 5 million new customers by 2020. Serving these new customers with affordable products tailored to fit their needs is expected to increase the company’s annual revenue by US$1 million.