MobileMoney and the future of insurance in Nigeria

 

Emmanuel  Okoegwale

Principal Associate, MobileMoneyAfrica 

 

With growing incidences of natural disasters, crop failures, investment uncertainty, growing population and dwindling natural resources, Africans are more than ever before exposed to the effects of global recession, environmental degradations with negative effects on incomes during active duty and beyond. Africans that are covered by any form of protection in form of insurance are minimal across the entire population of Africa.

Around Africa, mobile networks, governments, independent organizations, micro finance providers are joining forces to provide low cost insurance to millions of people through the ubiquitous mobile phone. In Most African countries, insurance penetration is low while mobile phone is available to more than half of the adult population across different segments of the economy.

Why is mobilemoney powered life insurance gaining momentum and appeal across Africa? Mobilemoney powered life insurance is quite easy to use with minimal form filling, cost effective, convenient, with flexibility and the trust in brand of the Mobile network and insurance partners.

Regulations 
As mobile network and nontraditional micro insurance providers and innovators begin to see benefits of providing low value insurance services to currently undeserved and uninsured low segments of the society, how will the regulators deal with these innovations and players? How is the insurance regulator positioned to understand the impact of mobile financial services on the industry? What is the wiliness of the insurance regulator to allow innovations influence new radical thoughts while balancing risk and ensuring certainty in the industry.

What level of cross regulation knowledge sharing is available for the insurance regulators across Africa from the primary mobile financial services regulator of Banking services and telecommunications?

Providing low value transaction systems and applications is a technology play for Mobile network operators but the major drawback for them is that they are not primarily providers of insurance services, with limited understanding of the processes of managing premium and investments. While the traditional insurance providers are hampered with limited understanding and management of technologies and applications necessary for mass market products like micro insurance. Developing the right partnerships and credibility are the foundation for building a successful mobilemoney based micro insurance product.

Mobile money micro insurance services adequately addresses the shortcomings of traditional channel of deploying insurance services since potential customers can be directly engaged and educated via the mobile phone, instant provisioning of services, payment systems that is efficient and available anywhere and anytime, cost effective methods of premium collections and reduced policy enrollment cost per cover.

South Africa
Over the counter availability like the Old Mutual’s offer though the shoprite stores is one of such initiatives that is bridging the gap between the mass market and the insurance cover.

 

 

KENYA – MICRO ENSURE, YuMobile
There is an on- going effort in Kenya where a “private-private-NGO” partnership between Safaricom (the parent company of Kenya’s mobile money transfer service M-Pesa), an insurance company, fertilizer and seed companies and an agricultural foundation has produced an innovative micro-insurance scheme in Kenya. The crop insurance scheme, called “Kilimo Salama” (safe farming in Kiswahili), collects insurance premiums using M-Pesa when farmers purchase seeds and fertilizers, and in the event of adverse weather, makes payouts directly into the M-Pesa mobile phone accounts of the farmers which then visits any local agent to cash out the amount without visiting a Bank branch.

Last week in Kenya, a micro insurance product called Yucover, was launched by yuMobile and underwritten by Jubilee Insurance and powered by MicroEnsure in a country with current insurance penetration rate that stands at 3.02 per cent and projected to double the cover likely within one year of deployment of this innovative product.


Ghana

International insurance group Hollard Insurance, independent mobile financial services enabler MFS Africa and microinsurance intermediary MicroEnsure had also launched the West Africa’s first mobile money insurance service, mi-Life in Ghana.

Mi-Life insurance provides money in the event of death of the subscriber or the next of kin. The Premium payment for insurance is deducted from the Mobile Money wallet once per month. The subscriber will receive an SMS to inform when the monthly premium is deducted and insurance cover is renewed.

Once the premium is deducted, the insurance cover lasts for one month until the next monthly premium is deducted. If there are insufficient funds in the wallet, Subscriber will receive an SMS reminder so that He / She can top up wallet and keep life insurance cover active. Users will also be able to initiate claims, queries and make premium payments using their handsets.

 

 

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