Writer: Matthew Staff
Project Manager: Callum Philp
MicroEnsure has enjoyed an unprecedented rise in registered customers over the past 12 months as a result of its innovative product and distribution approaches, and is already setting its stall for the next 12 months in the low-income insurance bracket across the continent.
The increase to seven million customers served in Africa, from the one million accounted for at the beginning of 2014, provides the answer to a question the Company asked itself prior to inception in 2002: “Is it possible to insure the low-income mass market?”
A resounding “yes” has been the response from Ghana and Kenya initially, and now from a further eight markets across Africa, through its partner Group model comprising telecoms, banks and other aggregators.
With a global headquarters in the UK, MicroEnsure provides a turnkey solution portfolio from its regional headquarters in Nairobi - in partnership with its distributors - for brands looking to use insurance to drive their business: its offering including innovative product design; customised, customer-facing mobile technology; back-office operations; risk management; policy and claims administration; customer engagement; and ongoing product performance management.
Marketing Director, Peter Gross adds: “Low-income customers can’t afford to pay the same premium as typical insurance customers, and yet they face greater risk. We found that we could serve this market sustainably by lowering administrative costs, reaching scale quickly, building great products, and preserving trust through fast claims payment.
“In the process we uncovered dozens of new ways to provide insurance and we’ve become the fastest-growing provider in Africa by outreach.”
An additional four million customers around the world in 2015 alone epitomises the freshness and uniqueness of the offering to this segment of the market; something which Gross attributes largely to the high levels of innovation found within the Company.
“We’re very much market innovators, in as much as we don’t design products and services in a boardroom,” Gross continues. “We go out to slums, villages and towns to talk to the individuals there to find out what they really need from an insurance product and design it around them.
“We also look to provide value to our partners. How can we help their retention levels by developing solutions that their customers really want? What this has done has really put us at the forefront of our market and we’re really proud that we’re being recognised for our efforts.”
Unprecedented insurance products
While the aforementioned segment of customers is one that large, turnkey insurance specialists have traditionally bypassed, it certainly isn’t a small segment, with MicroEnsure accessible to the middle 70 percent of consumers outside of the top and bottom rungs.
Subsequently, the Company has managed to not only change the dynamic, but has done so in an extremely lucrative domain following a strong a positive response from the majority of prospective customers existing under this umbrella.
Once again though, simply entering the market was never going to work without bringing something equally dynamic, different and ultimately tailored along with it.
“Over the years, we’ve created a number of unprecedented insurance products to meet the needs of the mass market,” Gross says. “What we found was that the mass market is very well-educated about the risks they face, and they have many ways of coping with those risks. As a result, our best product ideas have always come from our customers.
“Today we offer a range of products that are easy to use, from hospital cash products that provide cover at any hospital for any medical reason, property insurance products that protect against any natural or manmade disaster, to life insurance that covers any one at any age, without all the terms and conditions and restrictions that typically lead people to mistrust insurance companies.
“We can provide these useful benefits because of the massive scale we reach. We find that scale requires simplicity, but also that scale justifies simplicity as well.”
MicroEnsure compounds this collaborative influence via a product design approach which actually encourages change among its customers’ behaviours for its partners also.
Gross explains: “For example, Barclays Africa uses our products in four African markets to increase salary accounts. Airtel Africa uses our products in eight African markets to drive customer loyalty and spend, as well as direct revenue.
“What we’ve found is that, due to the low penetration of traditional insurance but the high demand for valuable protection from risk, mass-market consumers will reward a brand that protects them in the course of their normal customer relationship. We have shown that insurance does not have to be a “grudge purchase” as is commonly assumed.
“The result is a win-win for the brand and the customer. The brand receives increased patronage and the customer receives access to valuable insurance, often for the first time.”
Barclays is just one of the numerous globally-renowned brands who have partnered with MicroEnsure in recent years, epitomising the rapid growth experienced by the Company over a relatively short period of time.
As a for-profit social enterprise, a shareholding structure comprising the likes of AXA, Omidyar Network, International Finance Corporation and Sanlam has set the tone for a partner portfolio which features Airtel, FINCA, Advans and Opportunity International among its network.
“By establishing large partnerships with Airtel and others, and then delivering on those partnerships with fast implementation, we’ve seen our customer base expand faster than any other insurance organisation in Africa,” Gross emphasises. “We were only able to establish those partnerships because we provide unique products supported by the best service in the market, whereas many of our competitors see insurance as a commodity business and compete primarily on price.
“We’ve found that the biggest consumer brands on the continent aren’t interested in a commodity offering, insurance or otherwise. They want something new that addresses their customers specifically, and they want to see an insurance provider deliver a service that is helpful and easy to use, and that is key to our value proposition.”
Ultimately, MicroEnsure’s positive reputation has derived from a ‘golden rule’; to serve customers in the way that you would want to be served, on a local level in each country of operation.
This has been rewarded as such, and becomes a pivotal aspect of the Company’s continuous improvement strategy which requires the business to keep expanding and diversifying in the same way it expects its partners to do.
From a capital expenditure perspective, “we have invested heavily in the past several years in our back-office technology, to ensure that our quality, speed-to-market, and customer learning engines are up to standard as compared to other mobile VAS (value-added-service) providers”, Gross notes. “We don’t spend money on flashy offices; we’d rather spend money to improve our service offering.
“As a result, we were able to launch last year in Zambia with only ten weeks from the first meeting to the launch of the product, and we covered more than two million people overnight. Mobile operators expect that kind of speed when bringing a product to market, in contrast to most insurance offerings which often take months or years to see the light of day.”
As well as the Company’s presence in Ghana, Kenya and Zambia, MicroEnsure has also penetrated into Burkina Faso, Niger, Madagascar, Nigeria, Tanzania, Uganda and Malawi over the past 13 years; ensuring strong local support in each case as a key facet of its commitment to sustainability.
People and skills development and corporate social responsibility efforts further enforce this dedication to long-term enrichment both inside and outside of its core industry operations; laying the perfect foundations for the next stage of MicroEnsure’s rapid rise to prominence.
Assessing the Company’s evolution thus far, the Marketing Director says: “When we started, we weren’t sure what would be possible from a product perspective, so we started small with credit life insurance.
“Once we learned that wider and deeper forms of coverage were in demand and made business sense, we started to expand our offerings, and we aren’t finished yet. We’re committed to ongoing innovation from year to year.”
In terms of services, the Company has expanded into becoming fully mobile in recent times, addressing the latest trends and the realisation that mobile is the future of financial services.
“We feel we are on the leading edge of where the industry is headed,” Gross continues. “Looking forward, we already have 10 products to roll out in our telecom markets and over the next three-to-five years I would expect this number to be increasing year on year.
“We are constantly innovating and looking at how we can do things better and maybe in a different way to how they are done now, so it’s a very exciting time.”
The health domain will form a particularly concerted focus for MicroEnsure in the coming years, while the Company is also looking to capitalise on smartphone penetration and an enhancement of its technological processes.
All of this will help to not only build upon the market significance already enjoyed by MicroEnsure, but will set the business up for a drive into the vast potential that still lies untouched around the world.
Gross concludes: “Although the industry serves 500 million people today, there are another 5.5 billion to reach, so much work remains to be done, and our approach will continue to focus on ongoing enhancements to product and service offerings, and new areas of innovation in distribution.
“We were selected [by the FT/IFC to receive their special 10-year anniversary award for excellence in transformational business] as being the best of the best from the past decade: the Company that stands head and shoulders above all the other winners of the awards; a list that includes most of the world’s largest banks and leaders in inclusive finance.
“This is as a result of the monumental effort put in by the MicroEnsure team across the globe and the award really does go to show that we are making a real difference to the people we serve, and is testimony to the phenomenal effort and hard work that everyone has put in over the past 10 years.”