Distribution is king – selling microinsurance in Africa
BIMA was founded in 2010 to provide microinsurance products – tailored for those living on low incomes – such as life insurance and hospitalisation insurance, to emerging markets worldwide through a network of sales agents in the field and via call centres and strategic partnerships with mobile operators - including the likes of Vodafone. The company pioneers a business model allowing it to leverage mobile technology to provide insurance to a diverse new customer base across the African continent that has never before had access to financial services.
The BIMA name derives from Sanskrit and translates into many languages, including Swahili, Urdu and Hindi, as ‘insurance’. BIMA’s CEO Gustaf Agartson is proud of the company’s achievement in reaching out to more than 34mn global customers, but he’s keen to emphasise the customer-centric mantra behind its success: “Our model is all about selling insurance to people buying for the first time and as a result we need to be careful with what we are offering. Our conclusion after educating consumers about insurance products for the past seven years is that you need to keep the offering simple. If you meet a BIMA sales agent and buy a product, but don’t know the fundamental basics of how an insurance policy works, we need to explain the specifics and what it covers.
“Given that the interaction with a customer will be for a short period of time, there’s a limit to the number of elements you can have in a product and still be able to have high productivity among the sales agents. We started our product offering on the continent in Ghana with life insurance policies. We simplified everything from the number of exclusions through to the registration process to allow sales agents to feel it was a policy they could comfortably explain to the customer.”
It’s this adaptable approach to its offering that has seen BIMA expand its product line, building on successes in Ghana where the company’s largest African market boasts more than 1.5mn life insurance customers (half of the continent’s total). “When we expanded the product, we realised there was a demand from our customers for hospitalisation insurance,” explains Agartson. “This was our second product offering (taken up by 70% of BIMA’s Ghana customer base) giving cover to customers who need to spend at least one night in hospital.”
A pairing of life and hospital cover was BIMA’s basic product portfolio until it looked beyond insurance in 2015. “We thought about what it was our customers really needed and how we could create a product where we could leverage technology,” remembers Agartson.
“With life and hospitalisation cover we partner with mobile operators and harness their billing platforms for cost efficient premium collections. We wanted to use other tech, driven by increasing smartphone saturation, so we leveraged that because, if you look at it from the customer’s perspective, what they’re really after is access to healthcare. You can either provide that through an insurance policy or you can look at other ways to connect people with healthcare professionals, which is why we developed our tele-doctor services. You don’t have to go to a hospital, you can speak to a doctor on the phone and via video calls. In some markets a doctor can prescribe medicines this way as we utilise partnerships with pharmacies so customers can have their drugs delivered to their home.”
Agartson believes BIMA’s ability to overcome the technical challenges of providing its services is down to building a flexible platform capable of integration with a range of mobile operators. “When using mobile tech for customer registration, you need to bear in mind the low bandwidth and differences in network quality agents will face when selling the products out in the field, so we create app solutions to capture data and register customers even if they’re out of a coverage area,” he explains. “Even though smartphone penetration is increasing across the developing market, you can’t assume people will always have access to data. When providing a doctor’s consultation product, you have to allow for voice calling as well as video calls. We are experimenting with video telephony to provide the best consultations and therefore we’re starting to partner up with pharmacy chains where we can set up a booth with an iPad connected to the internet for a video consultation.”
On a practical level, BIMA maintains distribution is the key challenge to overcome in the quest for achieving scale, particularly on the African continent. “A traditional above-the-line marketing campaign doesn’t work here as you can’t expect people to understand what insurance is when they’ve never been exposed to it,” says Agartson, who emphasises the need to develop distribution networks that include agents in the field, call centres and partnerships. “We’ve seen other companies fail, even when they’ve had the opportunity to partner with a mobile operator, because they haven’t invested in distribution. We now have more than 3,000 full time agents in Africa. Before we got to that level we tried to leverage other distribution networks with mobile operators and those selling SIM cards and air time, but it doesn’t work because they don’t have the experience to sell financial services. You also need to invest in quality follow up so you can verify the customer received the right info. We can audit the sales process at the call centres and on the street, we take a sample of the customers and contact them to measure their understanding so we can achieve a high-quality service.”
A commitment to a high-quality service, and pride in its delivery, is inspiring Agartson and BIMA to deliver life-changing benefits to its customers. “We looked at the overall risk people on low-to-middle incomes faced in developing markets and this was one of our over-riding concerns when we founded the company in 2010,” recalls Agartson. “There was a demand for our services as people face more risk here in Africa than we do in Europe or the US, particularly both in terms of transportation and in the workplace. The majority of people (75%) now have access to insurance for the first time. When you have one person who is responsible for the income of a family, it’s crucial for that person to have life insurance. Across the market we see a significantly lower ratio of doctors per capita; and more restricted access to healthcare than in Europe or the US where it’s between five and 10 times higher. Our doctor’s consultation product gives unlimited access for the whole family, and if you’re living in a rural area that’s incredibly valuable.”
BIMA’s customers typically live on less than $10 per day and are at high risk of illness and injury. The company believes insurance can be a powerful tool to prevent families from falling back into poverty, but, in emerging markets, insurance penetration is generally less than 3% of GDP. BIMA is confident that mobile technology holds the key to unlocking the mass market potential of microinsurance where mobile penetration has surpassed 80%.
So, if the market is wide open, why should companies choose to bring their customers to partner with BIMA? “We offer an end-to-end solution,” says Agartson. “Once an agreement is signed we take care of all operations – everything from product development, distribution, customer education, technology, customer service, claims and underwriting (in terms of arrangements with local insurance companies). Companies don’t have to access anything themselves, they just have to give us access, but we realise this comes with acute responsibility for us to ensure there’s no miss-selling. We can guarantee to our partners a high quality in our sales. This combination becomes very powerful.”
Cynthia Gordon, former CEO of mobile operator Tigo Africa, praises the partnership enjoyed with BIMA: “The success of Tigo’s mobile microinsurance initiative proves the vast commercial potential of MFS (mobile financial services). As well as contributing to our commercial growth, microinsurance is now a cornerstone of our MFS business and delivers on our social impact mission.”
Armed with the right partnerships, and its distribution network, Agartson sees an opportunity for BIMA to sell more than 10mn policies per year across Africa in the next three years. “This will be driven by entering into larger markets. Across our footprint today Ghana, Tanzania and Senegal are big, but we’re also aiming for penetration in Egypt, Nigeria and Kenya.
“Looking to the future, geographic expansion is important for BIMA to concentrate on new markets,” he adds. “We also plan to expand the product portfolio with holistic health bundle coverage and scale in the markets we’re already in through outside partnerships with mobile operators where we sell directly to the customer. That’s possible thanks to the penetration of mobile money since 2009. It took some time for the mobile operators to get it right, but now it’s booming in markets like Ghana.
“Electronic payment options allow us to sell directly to end users outside of co-branded partnership structures. Long-term we will gain from the partnerships, but in parallel with that we will have an opportunity to establish ourselves as a standalone brand.”
Agartson believes the best way to continue to provide financial health services in emerging markets is to build something financially sustainable. “By keeping faith in our social mission, we can provide good value to customers with a high-quality product via a tailored sales service, which can change lives for the better.”