“Mobile Insurance” – A good deal for Africa!
“Mobile Insurance” – A good deal for Africa!
Mobile Insurance meets with great success in several African insurance Markets such as Kenya, Nigeria, Ghana and even Tanzania.
This success helps boosting the insurance penetration rates in several African countries generally under 3% which is still low compared with the worldwide penetration rate of 6.5%.
The success of mobile insurance in Africa is mainly due to the huge part of African population living in rural areas but with high penetration rate of mobile subscriptions.
Insurance companies based in African countries with high mobile phone penetration rates and high rate of rural population such as Nigeria, Kenya, Angola and Ghana, developed a strategy based on distribution partnerships with telecom companies such as:
- “Hollard Insurance” inking a distribution partnership with :
- “Callsure” in South Africa in 2008,
- “Trustco” in Namibia in 2008,
- “MTN” in Ghana in 2011.
- “NSIA” that signed a partnership agreement with””MTN” to launch a mobile insurance product in Ghana in 2011.
These partnerships allowed telecom companies to sell insurance policies and get commissions after each payment done by a customer via mobile banking or through airtime communication credit, while:
- Insurers get their insurance products sold,
- Customers get covered for a small price as this new distribution channel is generally less expensive than the traditional distribution channels like brokers or agents.
In Summary, the mobile insurance is a good deal for Africa because:
- It’s an inexpensive distribution channel that contributes to reducing the price of insurance products and deepen insurance penetration rate.
- Through mobile phone insurers can reach people located in rural areas.
- Insurers can benefit from the synergy emerging from alliances with powerful telecommunications companies.
El Mehdi Amid, Senior Analyst, Infomineo
Sources:
WorldBank
Swiss Re
