Mobile Life Insurance: Innovations From Pakistan

Providing life insurance to the poor is a good idea. However, any provider aiming to venture into this territory should not expect returns during initial business years, making the commercial viability difficult to define in short term. But once a service provider decides to take this initiative, it opens its doors to a host of new and innovative possibilities in terms of product offerings, technology, pricing, marketing and communications, customer relationship management, underwriting, operations and portfolio management.

The nature of this business dictates that management should be ready to do away with traditional customer acquisition methods, which are very costly for a comparatively low-ticket product. Not doing so would result in net losses from the very beginning. The strong penetration of mobile phones and the surge in popularity of branchless and mobile banking platforms in the target market in Pakistan provide an alternate, more cost-effective method of acquiring customers. Offering life insurance coverage through these platforms also facilitates a one-window operation for the customer, who could then manage her insurance services through either the mobile operator or the branchless/mobile banking platform.

Women reviewing pamhlets with information about financial services.

Although many life insurance companies in Pakistan are watching this space, few have actually dared to venture in. MCB Bank (ranked amongst top Pakistani Banks) started mobile-tested product distribution by offering life insurance plans as part of the mobile banking services suite, however with low volumes, the venture primarily contributed in the form of comprehending the space. Some recent projects initiated through the mobile and branchless banking platforms include the Zong Mobile insurance, whereby Zong (China Mobile’s Pakistan venture) subscribers can get life insurance coverage between PKR 100k – 300k for a daily premium deduction as low as PKR 2. The subscription is entirely SMS-based where information is captured via four short messages. The information is instantly verified and the customer is provided confirmation of the coverage for 30 days.

Another unique offering is the recently launched EasyPaisa Khushaal scheme. Under this plan, branchless/mobile account holders are provided monthly life insurance coverage based on the average monthly balance in their mobile accounts. This concept promotes a culture of savings and offers insurance coverage ranging from Rupees 50,000 to Rupees 1.5 million depending on the amount saved. This product is designed to cater to all segments maintaining branchless accounts.

The primary challenge of offering any such service is customer awareness and education. It is important that the business partners (the insurance company and the telecom/branchless service provider) choose the right tools and medium to communicate with the customer. Product awareness should be research-based, and highlight particular situations, scenarios and needs of an individual’s life and how life insurance coverage can directly support those needs. Another important challenge is providing a smooth subscription process where all the required details are obtained from the customer in seamlessly. The frontline staff of the telecom/branchless service provider can play a pivotal role in selling the product while simultaneously earning a sustainable commission income. It is therefore imperative that the retail staff members are thoroughly trained about the business and its benefits. Business partners must also ensure that the best possible technological solution is backed by strong operational procedures for an enhanced customer experience.

Once the customer is on board, special attention needs to be paid to relationship management. The customer should be constantly reminded that he is safe and secure with the insurance subscription. Multiple value-added services can be provided to the subscribers during their insurance tenure with the company. In the long run, customer lifecycles can be managed through insurance offerings by linking products to needs that arise during life of a customer paired with branchless banking.

In addition to the above-mentioned focus areas, product design and pricing remains at the heart of making life insurance offerings attractive for customers. Challenges begin indevelopment, as products are designed on microinsurance principles due to potential volume; however, risk mitigation is done through minimum restrictions and underwriting, keeping in mind the selling dynamics. The possibilities in terms of this service are endless, as the product can either be offered by itself or embedded within any of the current offerings in order to increase stickiness.

The potential to use mobile or branchless channels for offering insurance services is formidable. Companies with the right strategies can explore the opportunity and reap the benefits in years to come as mobile channels become a parallel business line alongside conventional insurance models. Success lies in balancing the approach and buy-in between banks, telcos and insurance companies as the revenue from insurance will subsidize the cost of acquisition for branchless service providers.

------Jehanzeb Zafar is the founding member of Adamjee Life. Muhammad Khalid Qureshi heads the alternate business distribution at Adamjee Life.