“Unless we can understand that — unless we can start from the viewpoint of what the customer needs,” explains Richard Leftley, CEO of MicroEnsure, “then it’s not sufficient to just provide access to these financial services, they actually have to be tailored around the needs of the customers.” (Photo credit: MicroEnsure)
>>Authored by Richard Leftley, CEO, MicroEnsure
A period of reflection
When considering our commitments for the Microcredit Summit Campaign last year, I wanted to address the very real key issues faced by middle-to-low income families across Africa when bad things happen to them. I wanted to work towards providing some kind of safety-net to help ensure they don’t fall into poverty when these events occur.
With that in mind, we committed to reaching 10 million customers with insurance services and expanding our reach into 15 countries over the course of the year. This, I felt, would be a suitably significant commitment to make, one that would show just how serious we as a company take this issue and reflect the level of work we are putting in.
Twelve months on and I’m reflecting on some astonishing numbers. MicroEnsure is now serving over 15 million customers and has a presence in 17 countries globally; this is no mean feat by any stretch of the imagination, especially when you consider that we are growing at a rate of 1 million new customers every month.
Needs, not assumptions
At MicroEnsure we’ve been really lucky to work with some large organisations — some really large partners — organisations like Airtel. We found that partnership is the best way to provide access to the working poor because it enables us to significantly reduce the costs of selling and administering these policies on behalf of the poor.
I think a lot of us have assumed that people just need access to financial services and that if as “an industry” we come along and provide access, then that that’s sufficient — it’s enough just to provide access.
Actually, if you think about the way it’s presented, “the financial inclusion landscape” is about including people and that, somehow, that will meet the needs that they have.
In reality, I think that we have to go one step further than that; we need to understand what it is that consumers need, what are the risks that they face in their everyday lives, and how do they want to deal with those risks?
Unless we can understand that — unless we can start from the viewpoint of what the customer needs — then it’s not sufficient to just provide access to these financial services, they actually have to be tailored around the needs of the customers.
Reflecting on these numbers, it prompted me to think about how all this has been possible in what really is such a short period of time.
What’s certain is that access to the products we offer is a need and not a wish. When we visited the countries and the communities we were trying to help, we started to understand what low-income customers can afford, and started to get the costs in line with that price point.
We immediately thought of distribution via mobile networks, eliminating the high cost of insurance sales reps and making our offering more obtainable. Mobile telecom is ubiquitous in Africa and Asia, and telecommunications companies (or “telcos”) have “mobile wallet” apps like M-Pesa, Easypaisa, and Airtel Money that allow users to transfer money to one another via mobile phones. We figured that if we put our product in the mobile wallet — and made it even more affordable by offering payments in small installments– low-income families would enrol. Not so. One potential customer even told us, “It’s easier to sign up and pay in small installments, but I don’t trust insurance!”
Furthermore, it was hard to figure out which mobile wallet to appear in, as most mobile users had multiple SIM cards for multiple networks and spread their airtime minute purchases, or “top ups,” across them all.
Another access issue cropped up early: the need for product adaptation. We had to make sure that there were no complicated instructions or processes, but intuitive ones that fit with the way low-income people proceed about their lives. And, the benefits have to be readily apparent if someone is risking scarce resources on them.
In our case, we noticed that even when we did get insurance into the hands of a low-income family, they weren’t taking full advantage of it. We had to strip down the typical insurance process — filling out detailed forms, providing personal information — and create a simpler, easy-to-follow process for enrolling, which meant registering via text rather than a paper form. For claims, we decided to accept an imam’s word as proof of a death, or a claim written on a napkin, and we had to turn them around fast. We paid health insurance claims, via mobile transfers, in as short as one hour. Once initial customers saw the product working — quickly receiving benefits when they filed claims — word travelled.
Photo credit: MicroEnsure
Whilst we know that no one really wakes up in the morning thinking about — or wanting to buy — insurance, they do wake up worrying about the risks and problems they face should something happen to them. We also know that mobile phone companies have a problem in terms of customer loyalty in these markets, with many consumers often switching between different mobile phone networks.
The opportunity therefore presented itself for us to develop relationships with key telco companies in Africa and Asia, relationships that allowed us to try the idea of giving away free insurance in return for customer loyalty; if the customer remains loyal to the network, then they get access to free insurance.
We used behavioural economics to help us understand why someone would change their behaviour; what would be the driving force to make someone decide that actually now is the time to buy insurance, usually for the first time in their life. We needed to understand what the alternatives are, and understanding that actually the alternatives — indeed our greatest competitor…is doing nothing.
So, in many of the markets we work in, we have been able to provide something more compelling to consumers than just doing nothing, and this has really helped us to rethink the way in we’re going to engage with the consumer.
We realised that mobile phone companies actually had an issue with loyalty, so we convinced them that they should give away free insurance alongside airtime purchases so that the more customers spent with their network, the more free insurance they received.
What happened was that customers really enjoyed these products. They do wake up worrying about the risks they face, and if someone was willing to mitigate those risks, for free, then they were willing to change their consumer behaviour.
We found that customers started spending more and more of their airtime reload on those networks that offered free insurance. So when people come along with very simple products that are easy to understand, easy to access through a brand that customers trust — whether that-s their bank or their mobile phone company — and that financial access is made extremely easy, as easy as buying a ringtone, then there is a phenomenal demand and interest in having insurance.
This is especially true if this insurance can be offered free of charge, as a promotion that shows people how it works, that claims will be paid and paid quickly, and that the products do work for them. We’re finding that millions of people are coming forward and saying that, now they see that the product works, then they are willing to pay a small amount to keep that product and even add members of their family to it.
For the mobile phone companies, this not only increases customer volumes, but more importantly, it improves customer retention rates, creating a rewarding relationship for all involved.
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