Encouraging financial inclusion through technology-led microinsurance services

By Dipak Patel - Senior Manager Presales, Panamax 

The insurance industry constantly needs to evolve and address the critical needs of their existing and potential customers. As such, tailored services are the talk of the town and are highly attractive to customers. In order to encourage financial inclusion in regions such as Africa, insurance companies need to adapt and introduce an insurance that people can afford. This is where the microinsurance model can be hugely beneficial.


Understanding microinsurance
Microinsurance is an insurance that is tailored to suit the specific needs of low-income groups or the urban poor in developing economies. Saying that microinsurance will reduce poverty might sound like an overstatement, yet it's not erroneous to suggest that microinsurance would undoubtedly help those with a limited income cope with unforeseen expenses in the areas of health, property, automobiles and agriculture, amongst others. It will also aid in including more people in developing countries into the financial ecosystem.


The ramifications for businesses

First of all, businesses need to understand that this is not a CSR activity or a charity model. On the contrary, there are many business benefits tagged to microinsurance. Introducing microinsurance will help insurance services penetrate more deeply into the market and cover all those potential customers who cannot afford huge premium payments. This, in turn, generates profits for insurance companies. In addition to profits, the insurance providers can tap into a larger, more diversified risk pool and also earn a more solid reputation. Additionally, these insurance providers enjoy the 'first mover' advantage and can fortify a sustained growth in developing markets.



Driving microinsurance deep into the ecosystem using mobile finance technology

In order to facilitate sustainable growth, to include more people who actually need microinsurance into the fabric, and to tap into the emerging opportunities on the continent - innovation, agility, and collaboration are important. These should be applied to see how microinsurance can be distributed across Africa.

Distribution drives microinsurance and without it, even a high quality product is rendered irrelevant. Therefore, it is important to select a distribution channel that is appropriate for your target market. When there is the lack of proper mass distribution channels, then reaching out to people who need microinsurance can be a huge struggle.

Mobile microinsurance (MMI) is the savior in this instance. MMI is successfully used by agent-led models, bank-led models, MNO-led models and business models to run successful insurance services. While agent-led models are popular in Asia Pacific, and bank-led models in emerged markets, in Africa we have seen a surge in the popularity and success of an MNO-led model. 

The MNO-led model - A success story in Africa

MNOs in Africa lead the way to the mass adoption of microinsurance. According to The Landscape of Microinsurance in Africa report (2015), mass market channels (specifically MNOs) are common for microinsurance distribution. The report indicates that more than 200 providers from 36 countries, out of the total 52 countries in Africa, reported some kind of microinsurance activity. A total of USD 647 million was spent on microinsurance premiums. Around 5.4% of the total population was covered and about 61.9 million people were insured.

Today MNOs are not merely providing a delivery channel, they are driving MMI development. Previously, MMI was used by insurers only as a tool to expand their customer base, but today mobile microinsurance is largely used by MNOs to build customer loyalty and reduce churn in an increasingly competitive voice market.

Mobile network operators (MNOs) are taking charge, as often as the insurers. Around one-third of deployment (equal to insurers) is led by MNOs. The remaining is driven by banks, governments and third parties. Today, MNOs are actively involved in the branding, marketing and development of MMI products and establishing a front-end relationship with customers, thus playing a role that is more etched and evolved than simply being a distribution channel.

Clearly, mobile finance technology is the driving force behind deep penetration of microinsurance amongst the low-income and urban poor population. Mobile microinsurance solutions enable insurance companies to offer a wide range of services and products over mobile, with or without agent intervention. This also offers customers the convenience to choose options that will cover them, yet still not force them to pay for deductibles they will probably never use.


About Dipak Patel:



Dipak has been in the telecommunications sector for more than 10 years. He currently serves as Sr. Manager Pre-sales at Panamax. Panamax is a leading technology company offering innovative & market-proven telecom switching, carrier business automation and mobile financial solutions. Dipak has shouldered various responsibilities, in Support, Operations, Training, & Pre-sales departments in the organisation.

Dipak is passionate about mobile finance solutions, and providing expert guidance to team members, customers and partners has always been his expertise. His penchant for cutting edge technologies, together with his passion in delivering outstanding solutions, is what drives him forward.

Dipak is visiting East Africa Com as a representative of Panamax Inc. Meet him at booth number 9. You can also send him an email at sales@panamaxil.com to schedule a meeting at the event.


Webisite: www.panamaxil.com
Twitter: www.twitter.com/panamax_inc
LinkedIn: www.linkedin.com/in/dipak1432003


East Africa Com will be taking place in Nairobi between 18 -19 May, 2016.

OffComm News talks Slumming IT in Africa

Nic Rudnick, CEO, Liquid Telecom 

which has built the largest single fibre network in Africa.

In January 2014, OffComm News visited the Mathare slum, outside the city of Nairobi, Kenya. Mathare is one of the country’s oldest slums with a population of 180,000. Not only does it have its own football team, it’s a pretty well connected sprawl of dwellings. But how is that connectivity managed and who’s enabling this culture? We caught up with Nic Rudnick at Liquid Telecom to get his take on enabling IT in Africa.

What are the challenges with providing broadband outside the main cities in Africa? 

In Africa, about 700 million people out of about 1 billion live outside the urban areas. The dispersion of the population is such that the terrestrial telecommunication infrastructure is, today, only able to get close enough (about 25km) to about 480 million people.

The economics of telecommunication services are based on density of population around focal points (such as a town centre), except for satellite services. This means that a mobile operator will find it extremely difficult to finance a new base station in an area (relatively small around the new site) where an insufficient number of people dwell or are able to reach daily.

Moreover, densely populated town centres that are too far away from the nearest telecommunication node (another base station or a fibre optic cable node) may not be serviced as new backhaul to connect this new node could be uneconomical.

Finally, the population that lives too far (e.g. over 1km) from a focal point, assuming they cannot afford satellite service, may find that the service they receive is of poor quality, due to the weaker wireless signal in their area.

Universal service and access funds have been designed to remedy some of the economic issue. However local governments are still facing great difficulty to make an efficient and effective use of these funds for IT in Africa.
The migration of analogue TV signal to digital will free spectrum in the sub-800GHz bands. The use of this spectrum extends the area around focal points where the signal is good enough for populations to receive a broadband service. However this transition is slow and complicated and the efficient attribution of freed spectrum to operators is another difficult task for telecommunication regulators.

Liquid Telecom will continue to invest in long-haul and cross-border fibre optic infrastructure, as well as WiMAX, LTE and satellite technologies, to help all players in the industry to service the next 500 million African people that live too far away from the nearest fibre node.

With fibre creeping into inland Africa, is satellite on the way out?

Fibre optic networks are being built, for example by pan-African backbone network operator Liquid Telecom, to bring broadband services to as many people in Africa as possible. However it is likely that some areas, given the size of the African continent and the dispersion of the population in rural areas, will remain, for a long time, far away from Liquid Telecom’s fibre infrastructure. Here satellite can fill the gaps. Also satellite continues to play an important role in providing a backup solution.

READ THE FULL ARTICLE VISIT HERE

Jonah Fink, Senior Vice President of IDT Telecom Solutions talks on key trends and prospects in the African VAS market...

Jonah Fink
Senior Vice President
of IDT Telecom Solutions

Informa Telecoms and Media caught up with Jonah Fink, Senior Vice President of IDT Telecom Solutions, ahead of his presentation at VAS Africa 2014, to find out Jonah’s thoughts on key trends and prospects in the African VAS market...

Com World Series: What business do IDT have in Africa?

Jonah Fink: IDT supports a strong channel partner program in Africa that supports System Integrators, Internet Service Providers and internet-related VARs that sell IDT Hosted and branded Voice over IP Solutions under the IDT Beyond’s portfolio. Services include – call shop, broadband telephony, mobile app and SIP Trunking.

Com World Series: What are the three key challenges for the African Voice Market now?

1. Commerce  2. Awareness  3. Focus

Jonah Fink: As “Cash & Carry” is still the dominant behavior in African consumer commerce, finding key distribution partners with a strong footprint of point of sales is essential.

Awareness of alternate voice solutions is a key ingredient for both the consumer and business client. As Africa may be the leading continent of opportunity, there is so much to do and focus on. IDT is looking to establish partnership whose sole focus is voice and its delivery to their respective markets. Teamwork, Collaboration and Hands on Workshops or seminars can help drive the awareness and necessity of IDT Beyond’s Over the Top Solutions.

Com World Series: How do you see those challenges changing in the next three years?

Jonah Fink: I believe the single remedy to the above stated challenges is internet penetration. As Africa will continue its rapid and robust deployment of Internet around the continent all three of the above stated challenges will be appeased. Internet will start enabling POSA networks around the Horn of Africa to produce real time transactions no matter how the remote a location will be. Internet penetration will allow for real time webinars & “GotoMeetings” hosted by IDT Beyond to attract key decision makers to join and learn about alternative voice solutions for the home, business and enterprise. Thirdly, IDT is prepared, encouraged and motivated to share best practices with African operators to showcase case studies that have yielded mass success to our key partners around the globe. Gaining such awareness and knowledge will drive the Operator’s confidence in regaining the share of the market that belongs at home. 

Com World Series: What makes the African market different from the rest of the world?

Jonah Fink: Its diversity, topology, demographics and culture require IDT to study and learn each country as its own entity. Customization is a key ingredient to IDT’s voice offers. One size does NOT fit all. IDT works intimately with each and every partner on their requirements. IDT listens to the operator’s need for brand awareness, uniformity and seamless integration of IDT’s solutions into their respective portfolios. 

Com World Series: Are OTT operators’ a threat or an opportunity for African Telcos?

Jonah Fink: Cleary, OTT operators such as Skype, Viber and WhatsApp are threats against African Telcos revenues. In particular, international long distance is on a decline for most operators in the region. In fact, there are many supportive studies and articles which say that VOIP originated international traffic has surpassed the traditional voice minute in key markets in Africa. At the same time, these applications have created a very strong awareness down to the consumer. As each day goes by, African consumers are embracing new methods of communication. There was an eye opening article published some months back which conducted a survey posing the question: If the local operator would launch its own OTT solution such as Skype in their market, would the consumer continue to purchase from Skype or would they buy directly from their local Operator…. And the overwhelming response to the article was the consumers would buy from their home based operator. Loyalty, nationalism, brand and a single bill rather than a swivel chair approach to another foreign OTT based provider is the appeal.

Com World Series: How can African operators make money from voice when so many calls are free now?

Jonah Fink: The world is all about mobility. Mobile penetration into Africa is going at lightning speeds. As Africa, becomes mobile and customers are taking their lives on the go, off-net traffic is growing. It’s funny, when one thinks about Skype or Viber services, they immediately think about P2P (Peer to Peer free services). It is worthy to note that IDT’s flagship mobile calling solution in the United States just enjoyed its strongest month of March producing tens of millions of dollars in international voice revenue. There is certainly Skype and Viber in the USA… So why is IDT’s retail voice business growing? Isn’t everyone talking for free? Absolutely not! We forget too easily, that particularly in the developing markets, where international voice corridors are so important, consumers are either getting their first mobile phone for the very first time, enjoying new cellular networks which are reaching remote communities for the first time and yes the smartphone is making customers smart. All of these ingredients mean more billable minutes which can go in either of two ways – yours or theirs…

Hear more from Jonah at 14.20 on 24th June, in his presentation at VAS Africa! Download the full agenda here!

Cloud takes Africa by storm...

Increasingly industry commentators are talking about Africa as the perfect market for cloud.... Whereas lack of capacity and unreliable connectivity had previously been seen as detrimental to the launching of cloud services, it now seems that the tide has turned and these characteristics actually make the African markets an ideal Cloud launch pad.

Safaricom launched the ‘’largest native Cloud’’ in the past week, and they intend to lead not only the Kenyan market, but the rest of the continent as well. They’re putting their money where their mouth is and have joined the Cloud Africa conference & exhibition’s Advisory Board. This event is the first of its kind – bringing together the telecom operators and enterprise CIOs, offering the full story around Cloud in Africa.  No other event organisers can offer 19 years of successful learning and networking in Africa – as the Com Series can.  What is more Safaricom’s George Makori, Senior Manager for Cloud and Managed Services is joined on the Advisory Board by other experts and Gurus from Microsoft, HP, Ericsson, Ovum & CxO Advisors, and TM  Analysts.  No other conference and exhibition will bring advice and case studies at this critical point, where Cloud has the potential to take off in Africa./

 www.cloudafricasummit.com

Middle East face European competitors at home and go hunting for new markets worldwide

I expect the discussions and the audience profile at our annual GSM>3G Middle East event in Dubai to reflect the flow of strategic telecoms investment monies into and out of the Gulf region.

Vodafone is entering the Qatari market and is set to offer both mobile and fixed-line services. Turkcell has been interested in extending its footprint into the Middle East for some time. After an abortive attempt to enter the Iranian market in 2005-06, the Turkish MNO has more recently been rumoured to have an interest in Syria. Both of these companies are represented at CxO level at our conference.

Telcos headquartered in the Middle East, meanwhile, have been shopping for opportunities in emerging markets in other regions. For example, the African mobile scene is now dotted with subsidiaries of Zain, Etisalat and Comium.

The next target looks to be India. Telecoms.com yesterday reported Etisalat's agreement to buy 45% of Indian mobile operator Swan Telecom for $900m in cash, with the UAE telco's Chairman Mohammad Hassan Omran, commenting: "Our entry in India, one of the largest and fastest growing mobile markets in the world today, marks an acceleration of our expansion strategy and brings to us an opportunity which matches the scale of our ambitions."

Etisalat, leading sponsor of our December conference and exhibition in Dubai, will doubtless field many questions from participants about this and other elements of the company's international expansion strategy.

Russian telcos heading for Africa?

While I still have my hands full preparing for our GSM>3G Middle East conference in December, I will shortly be turning my attention more fully to Russia and the CIS. We host two gatherings in the first half of the year which are designed to draw together telecoms execs from markets across the former Soviet Union. The first, Eurasia Com, takes place in Istanbul in March, a natural travel and business hub for the Caspian and Central Asian regions the event serves. Further, Istanbul-headquartered Turkcell is a major player in these markets. The Turkish cellco is co-owner (with TeliaSonera) of Fintur Holdings, a company which manages MNOs in Azerbaijan, Georgia, Kazakhstan, Uzbekistan, Tajikistan as well as Moldova. It's therefore important for the event that we get high-level support from Turkcell. In 2008, the company's Chief Strategy Officer Tayfun Cataltepe was among our speakers - and has gone on to become a valued supporter of the wider Com World Series. The previous year, we welcomed Turkcell's Chief Investment Officer Ms. Tulin Karabuk.

Coming up in June, we have another CIS-focused meeting: Russia & CIS Com in Moscow. This gets a different crowd - delegates mainly from the Russian Federation itself, as well as from Ukraine and Belarus. Regarding the latter country, we really boosted the level of the participation. Belarus's incumbent carrier Beltelecom was represented by General Director Konstantin Tikar, who made some very kind comments abou the usefulness of the trip.

At the last two iterations of Russia & CIS Com, we've heard more and more about the plans of some Russian cellcos in terms of exploring the growth potential of markets outside their usual CIS footprint. Earlier this year, a delegation from Iran was very visible, clearly hoping to remind prospective strategic investors of the impending sale of a 3rd national mobile licence in the Islamic Republic. We've also seen Russian telco people showing up at a conference we used to run in Vietnam, clearly interested in that particular market.

It wasn't, therefore, a big surprise to see a news item this morning which indicates that Russian telecoms investment firm Altimo has expressed an interest in Nigerian operator M-Tel/NITEL. We'll encourage Altimo and other Russian groups to get involved at our huge annual pan-Africa event in November: www.ComWorldSeries.com/africa.

Millicom CEO: scale is not the key in Latin America, Africa

During the long run-in to next week's Americas Com conference in Rio de Janeiro, I naturally look fairly closely at the competitive landscape in most the countries of Latin America. In the mobile space, this can be summarised in many markets as a battle between varying combinations of three companies. Two of these are telecoms giants - America Movil and Telefonica. The third is a smaller business headquartered in Luxembourg, Millicom International Cellular.

Millicom, whose services across Latin America are branded Tigo, is present in El Salvador and Guatemala and Honduras, where its local operations are market leaders. In South America, the company is present in Bolivia, Colombia. and Paraguay. Millicom has the largest market share only in the last of these three South American markets.

Earlier this week, in an interview with Investor's Business Daily, Millicom CEO Marc Beuls denied that larger competitors enjoy overwhelming competitive advantages: "Size isn't a reason for any of our competitors to be more successful in these markets than us. In Latin America, we compete against two giants, America Movil and Telefonica. This industry has more to do with innovation and launching new products and services, not so much technology, because much of that is the same among operators."

Having visited two Tigo-branded cellcos' HQs back in April (in Paraguay and Bolivia), I was disappointed not to have secured the participation of either for next week's conference. Frankly, across the group (in Latin America, Africa and SE Asia) we find Millicom subsidiaries to be a little wary of speaking or otherwise having a very visible presence at our conferences. We hope to resolve that in 2009.

Beuls says that "it was only three years ago that we started focusing on Africa and began investing substantial amounts of money. We've been able to improve our market position in most markets, the only exception being Sierra Leone. In Ghana, our largest market in revenue, we're No. 2 out of four operators. We're No. 3 in Tanzania, with 22% share, and gaining ground on the two largest operators."

Noting Vodafone's move on the Ghanaian market, the interviewer asked Beuls whether bigger operators have an edge because they can purchase mobile phones in large volumes and sell them in retail stores priced as low as $20. Beuls responds: "We don't play the handset game. We don't sell any handsets in Africa. The handset supply is there. A lot of the phones you find at (retail) dealers are second-hand, used phones. You can get a mobile phone at any price, a used one for $10 or a new one for $200. There is no need to get involved in that part of the market, whereas in Latin America operators are involved in the phone business."

Buels was asked whether bigger groups enjoyed advantages around roaming. Zain's promotion of services across national boundaries was mentioned, something which is now more relevant for Millicom given the Kuwaiti-headquartered cellco's presence in some 15 African countries.

Beuls argues that in the prepaid segment in Africa there is not much value in roaming: "Those customers are not mobile, they're not traveling. Maybe they're going from town to town, but not out of the country."

I am not closely involved in our Africa-specific events. These are managed by my colleague Julie Rey. However, I am close enough to the action to say confidently that October's Africa Com conference in Cape Town looks set to be bigger, busier and more exciting than ever. I daresay some of the questions mulled over this week by Millicom's Beuls will be discussed on stage and offline at the event.

Vendors and operators show one-size does not fit all across the Middle East

This morning I had the pleasure of meeting a marketing contact with responsibility for the Middle East, Pakistan and Africa, representing one of the major network infrastructure vendors. The purpose of the meeting was to work out the timing and topic for the presentation to be made by the company's speaker at our December "Towards a Broadband World" event in Dubai.

It is always gratifying when a sponsor's thoughts about selecting a value-adding topic are not too far from my own. In this case, we wanted to urge our customer to talk in quite broad terms about the range of competing and complementary broadband wireless access technologies being evaluated by mobile, fixed and integrated operators in the region. I felt this was important for a number of reasons. Firstly, we are working hard to broaden the focus of the conference well beyond issues concerning either pure-play mobility businesses or the mobile-specific business units of carriers with both cellular and wireline assets. I am confident we will be successful, so I was keen for our customer to take advantage of speaking in a plenary sessions, when the themes addressed need to be broader than the issues tackled in technology-specific breakouts. Secondly, I felt that a more holistic look at all forms of broadband access made sense in the light of what I was told by a colleague who represented me a few weeks ago in face-to-face meetings with a number of operators in the Middle East.

Aaron Boasman, who works in our Networks & Infrastructure team, came back from a quick tour of the region armed with interesting insights. He was told by the GM of Corporate Affairs at one country's incumbent operator told Aaron that the company was more bullish about the prospects for fixed broadband access than the mobile version on the grounds of the robustness of the service. Certainly at the time of that meeting, the company had not deployed WiMAX, unlike its principal competitor in the mobile space. On another leg of the journey, Aaron was told by one operator that WiMAX deployment has been signidficantly delayed mainly as a result of the country's unsatisfactory regulatory regime. In that particular meeting, HSPA was given a very favourable review due to the country's poor quality copper network and very under-developed FTTx.

These snippets confirmed for me that when telecoms industry watchers attempt to speak in broad terms about trends in a given world region, they need to be mindful that these regions are not always neatly homogenous. A look at Zain, whose footprint extends across and beyond the Middle East, support this view.

Matthew Reed, writing for our fortnightly Middle East & Africa Wireless Analyst research service this month flagged up Zain's imminent market entry in Saudi Arabia. Matthew writes that this new market's huge potential for high-speed Internet-access services is sparking interest in the group's wider wireless broadband strategy. The MEAWA story reports that Zain has had Nokia-Siemens Networks and Motorola deploy HSPA in key cities in anticipation of high demand for beoadband services with mobility, the pent up appetite for which has possibly been frustrated by slow DSL rollout by incumbent STC.

The MEAWA story goes on to note that Zain has embarked on a number of different technology paths across its footprint. For example, in Kuwait, Zain's original 'home market', the operator has launched a 7.2Mbps HSPA network that enables video calling, streaming TV and sports footage and movie-clip downloads. Customers there use a Huawei HSDPA dongle. This seems to work well in tiny Kuwait, which accounts for only 3% of the group's subscription count but one-fifth of its revenues.

MEAWA notes that in Suadan, Zain has launched a 3.5G network in the capital capital, Khartoum, and runs both HSDPA and WiMAX networks in the tiny Gulf state of Bahrain.

In the longer term, writes Reed, Zain plans to deploy wireless-broadband services in many more countries, and is looking out for WiMAX licenses in several African countries.

It is proving very enjoyable to navigate my way around these varied market. I am confident that those of you who join us in Dubai in December will see the diversity of market conditions and operators' technology choices fully reflected in a compelling conference agenda.