Issue Digest-Microinsurance

6 | Issue Digest: January 2013
03
Distribution
strategies
Case studies—distribution
innovation
HDFC ERGO’s rainfall index insurance
product in India covers the diminished
agricultural output/ yield resulting from a
shortfall in the anticipated normal rainfall.
It uses technology-enabled distribution
and along with a messaging service for
policy and claims data updates.
Codenso, the largest power distribution
company in Colombia, leverages its client
base to target microinsurance products
in partnership with Seguros Mapfre.
Max New York Life insurance in India
uses handheld terminals, mobile phones
and portals to manage flexible payments
that are small and irregular.
Hollard in South Africa teamed up with
PEP stores to distribute funeral insurance
products. The monthly premiums can be
paid at the store.
In Ghana, MicroEnsure’s mobile
insurance product called Mi-Life –
distributed by MTN (Metropolitan
Telecommunications Network) – allows
premium payments to be deducted from
the “m-wallet” monthly. Customers
receive an SMS notifying them that the
premium has been deducted and their
insurance cover renewed.
Sources: Company websites, FactSet and
press releases
8. Succeeding at microinsurance through differentiation innovation and partnership, 2012
9. The landscape of microinsurance in Latin America and the Caribbean, 2012
10. 7th International Microinsurance Conference: Making insurance work for the poor, 2011
Distribution of microinsurance products is dependent on factors such as
collaboration, relationship and trust with the low-income group as well as holding
down associated costs. Microfinance institutions and cooperatives are the
most-preferred distribution channels led by their vast established networks and
proximity to the target market. Existing microinsurance channels also include
NGOs, community, retail/ departmental stores, trade unions, utility companies,
religious faith groups, post offices and commercial banks.
The selection of the right channel mix primarily depends on the region and product
segment. In India and the Philippines, MFIs are predominately used to distribute
microinsurance products, while, in Brazil, utility and telecom companies are
increasingly used. Distribution through retailers is being increasingly utilized in Latin
American markets as well as in South Africa. Funeral insurance continues to be
largely sold by informal burial societies, funeral parlors and cooperative societies.
However, insurers are continuously innovating and introducing distribution channels
that are not only cost efficient but also have a wider reach. Technology is being
extensively used to distribute microinsurance products more efficiently and
effectively. For example, mobile banking is gaining prominence as it is not only an
enabler of client communications, but is also helpful in premium and data collection.
However, the channel has limitations where face-to-face interaction is required.
Insurers also face challenges in terms of the regulatory norms and licensing
requirements of informal distribution along with the right balance of value and
8, 9, 10
impact on cost and innovation.
In India and the Philippines, MFIs
are predominately used to distribute
microinsurance products, while, in
Brazil, utility and telecom companies are
increasingly used.
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