“This is one of the solutions to the challenges involved in penetrating the low-income market and developing cost efficient insurance distribution and payment mechanisms,” said Nelson Kuria, the CIC Managing Director.
CIC customers will now visit ‘pay bill’ on M-Pesa, dial in the business number of their specific insurance product followed by the individual account or policy number to remit their premiums free of charge. Clients also will get regular SMS updates on their policies.
Mr Kuria explained that the success of any micro-insurance product depended on whether the premiums are designed to accommodate the policyholder’s irregular cash flows, choice of distribution channels that can manage the entire customer relationship, as well as policies that carry limited screening requirements that have kept customers away in the past.
“We want to go beyond the straight-jacket mode of selling microinsurance; when there is lack of expertise in product design and slow claims payment, the insurance product and the organisation lose credibility with the clients.”
Mr Kuria said M-Bima was part of CIC’s effort to establish effective ways to reduce distribution and management costs of microinsurance to ensure sustainability. CIC has invested about KES5m in developing and marketing the system.
Administering microinsurance is often an expensive business; many insurers use manual processes and have low volumes of business, making the idea of extending the service to low income clients untenable.
Effective administration processes and a reliable management system are extremely important for scaling microinsurance products, particularly in regard to claim payment speed – the test of an insurance product for the micro-entrepreneur.
“We can increase insurance uptake if insurance firms leave their offices and take insurance to people literally.” Mr Kuria emphasized the need for individuals and small and medium enterprises (SMEs) to consider insurance as important tool of financial management.” He said the platform is mainly focused on driving microinsurance such as domestic insurance packages, family covers and other individual policies that target SMES and low-income earners.
In the past financial year, micro-insurance accounted for KES400m or nearly 15% of CIC’s total business portfolio. By both local and international standards, this is a significant contribution.
After sustained high annual growth rate of 25% in the last decade, CIC insurance is keen to maintain its growth momentum by tapping into the micro-insurance niche and the under-developed life business to grow its market share.
CIC Insurance is undoubtedly the leading micro-insurance provider in the country, and is a case study of success in the development of micro-insurance—insurance to low income earners—internationally.
The insurer collaborates with multiple international agencies such as the International Co-operative and Mutual Insurance Federation in UK, the International Labour Organisation in Geneva and International Co-operative Alliance among others in its quest to develop microinsurance.
In a recent Insurance Forum, Bakary Kamara, the Managing Director of Africa Reinsurance Company, Nigeria, estimated that microinsurance in Africa has potential income of USD25bn.
He cited the need for governments, non-governmental organizations (NGOs), donors and regulated insurers to collaborate and leverage on their strengths to make inroads in microinsurance and tap potential returns. It is presently estimated that up to 70% of the entire African population can afford microinsurance.
Comments (0)
Subscribe to this comment's feedWrite comment
Show/Hide comment form