Issue 578

Dream
my Little
Dream
74
Queenie Chow
TranslatorPolly Chung
......
2015 FSDT
450 18
MNO
50 36
MNO - Tigo –
MNO
MNO
MNO
70
Undoubtedly, the invention of the mobile phone and mobile
technology was revolutionary. Mobile is now a channel which allows us
to communicate – order a meal, manage our bank account, hail a cab,
meet a new friend…In Tanzania and many emerging markets, mobile
phones has also opened a new channel for insurance distribution. In
the latest research conducted by the Financial Sector Deepening Trust
in 2015, an estimated population of 4.5 million people is covered by
insurance, that is 18% of the adult population. This makes Tanzania
with the 4th highest insurance penetration rate across Africa. As
in other growing microinsurance markets around the world, mobile
network operators (MNO) are driving the increase in scale and
coverage in Tanzania. They currently account for 50% of themarket
while banks contribute to only 36%.
So how has the mobile phone disrupted the insurance market
in Tanzania? A free trial is generally recognized to be establishing
goodwill and trust with new customers, same with insurance! The
freemium and loyalty insurance products distributed via a MNO– like
the case of Tanzania Tigo – is one solution which has emerged to
address the distrust challenge. Under such business model, the Telco
pre-paid customers are awarded a free insurance benefit as a loyalty
benefit based on the amount of airtime they purchase. That is, the
more airtime customer top-up, the greater the free insurance coverage
they will earn. After the trial period, customers will be also be sold
on paid insurance products. In turn, MNOs can create brand loyalty
and retain customers in an increasingly cut-throat market. In some
instances, MNOs can also earn an additional revenue stream through
a profit-sharing model. By simply dialing a short code, Tanzanians
can easily become insured with simple supplementary health, life and
accident covers.
Through leveraging the established brand name, network of
distribution points and large client base of an MNO, insurance
company can build trust through such partnerships. Moreover, there is
a strong correlation between the frequency of transactions and levels
of trusts. However, no one business model is without its weakness. The
success of partnership is highly driven by the marketing and customer
education efforts made by the MNO giving little control to insurers.
More importantly, the customer value and variation of insurance
products offered through the MNO models have often been questioned.
Perhaps these are some of the reasons as to why mobile insurance
hasn’t boomed at the expected magnificent speed in Tanzania over the
past few years.
Nonetheless, with a mobile subscription rate of 70% in Tanzania,
the use of mobile has undoubtedly revolutionized customers’ experience
in buying insurance!
SAMEWAY ISSUE 577 P. 39 21.12.2018