Three critical success factors for inclusive insurance
CRITICAL SUCCESS FACTOR 2: TRANSACTION CAPABILITY
Innovative types of technology-enabled insurance structures can also reach new markets. Peer to Peer (P2P) models such as Friendsurance in Germany, allow customers with the same type of insurance to connect and “share” premiums and to assess risks and claims. If no claims are made by the customer or any of their connections, a pre-agreed maximum amount of cash is re-distributed, which can reduce costs. TongJuBao in China operates in a similar way and offers insurance that includes cover for “uncommon social risks” such as marriage cover. 12 In South Africa, Cenfri has pointed to the role of “cell captives” in creating trust and enabling an insurance framework. Cell captives are entrenched in the new South African Insurance Act of 2017, allowing smaller businesses to participate in the insurance sector and earn dividends from their investments.
Collecting premiums and paying claims remains a challenge in inclusive insurance, and transaction costs can be high in cash- driven markets. Insurers may work closely with mobile network operators (MNOs), collecting premiums using mobile phone airtime and paying claims via digital payment channels or mobile wallets. For example, Remedinet in India 13 has pioneered cashless health insurance through a cloud-based platform connecting hospitals directly to insurers. Tigo Family Care Insurance in Ghana, is provided by MNO Tigo to its customers without charge as a loyalty product for Tigo’s prepaid airtime package. Customers can double their insurance coverage by paying a premium using Tigo airtime. 14 Client on-boarding can be difficult and/or costly. Insurers have to collect, validate and verify proof of identity, proof of address and proof of birth.
12 See:http://fintank.net/2016/02/01/tong-ju-bao/and https://www.independentagent.com/Resources/ AgencyManagement/ACT/Pages/planning/NatureOfRisk/Peer%20to%20Peer.aspx 13 https://www.forbes.com/sites/abehal/2016/07/26/why-an-indian-tech-company-is-digitizing-health-insurance- claims-processing/#2aa1b1625a4e 14 IAIS - Issues_Paper_on_Conduct_of_Business_in_Inclusive_Insurance.pdf
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