Responsible Finance Forum

The Emerging Global Landscape of Mobile Microinsurance

Camilo Tellez and Peter Zetterli
14 July 2015
Source:  CGAP

The number of MMI deployments is growing fast. Our scan documented an increase in the number of new products going to market every year (with the exception of 2009, which was at the height of the global financial crisis), from two in 2006 to 20 in 2012 and 15 in the first eight months of 2013. The products offered included life, health, accident, cattle, crop, and travel insurance. The lack of public data on uptake (e.g., number of policies sold) through MMI makes it difficult to compare its customer reach with that of conventionally delivered insurance or microinsurance. Anecdotal evidence gives a mixed picture, with take-up rates varying significantly. However data on policies sold from a few individual cases demonstrate that these products have the ability to scale up very quickly, potentially even eclipsing conventionally delivered products in just a couple of years (Zetterli 2013).

The locus of MMI deployments is shifting from middle-income countries to low-income countries. While the early MMI deployments were concentrated in South Africa and a few lower-middle-income economies in East Asia, since 2010 two-thirds of all new products were launched in low-income countries. MMI deployments in such markets are now both more numerous and spread across a broader range of countries than their middle-income counterparts.

In particular, most of the activity is in Sub-Saharan Africa (SSA). Fifty-four percent of the total number of products we found were in this region, compared to 23 percent in South Asia and 20 percent in East Asia and the Pacific. We found only three products in Latin America and none in North Africa, Central Asia, or Eastern Europe. Within SSA, South Africa had some of the earliest MMI efforts, but most never grew to scale. In contrast, our scan documented that the more recent expansion has taken place across more countries (14 in total), is more diverse in terms of models, and appears to have stronger momentum.

MNOs are increasingly driving MMI development, not just providing the delivery channel. Whereas most early MMI experiments were driven by insurers seeking new channels to expand their customer base, the recent wave appears to be largely driven by MNOs seeking to build customer loyalty and reduce churn in increasingly cut-throat voice markets. In total, MNOs now appear to be taking the lead almost as often as insurers, with around a third of deployments led by MNOs and insurers, respectively, and the remainder driven by banks, third parties, governments, donors, or consortia. As MNOs assume a more active role in branding, marketing, and shaping these products as well as the front-end relationship with customers, it is clear that they are becoming more than simply a channel.