NAIROBI, Kenya, Nov 5 – Insurers are urging mobile phone companies to harmonise their services so that Kenyans can use mobile money products across all networks and promote number portability to increase the distribution of insurance products.
Mobile number portability (MNP) enables mobile telephone users to retain their mobile telephone numbers when changing from one mobile network operator to another and CIC Life Assurance Managing Director David Ronoh said MNP could enhance access to micro-insurance products by the low income market.
Speaking at the Sixth International Co-operative and Mutual Insurance Federation (ICMIF) conference, Ronoh said, “The choice of a particular distribution channel is based on its proximity and the trust relationship to the low income market, in addition to cost efficiency and this is why we started the M-Bima to leverage on mobile technology.”
“M-Bima leverages on mobile money technology for distribution of the Insurance products, premium collection and agents commission payments, while also using the technology for claims and commission processing (reporting, tracking & payment), customer service and policy administration,” he explained.
Ronoh added that frequent network and data outages experienced by mobile telephone companies are also threatening the success of mobile technology as a platform for access to financial and insurance services.
“Mobile technology has helped enhance distribution of insurance products among low-income earners, but outages are eroding policyholders’ trust in the system,” he noted.
According to a recent World Bank report on Africa Region Poverty Reduction and Economic Management Unit, the mobile revolution has transformed the lives of Kenyans through communications and basic access to financial services.
Currently, 93 percent of Kenyans are mobile phone users, 73 percent mobile money customers while about 23 percent use mobile money at least once a day.
“The M-Bima platform was developed by CIC based on information from clients that they would like to be able to pay their premiums in a mode that fits their lifestyle,” he said.
“It is a payment platform that allows clients to interact with the insurance company from a touch of a button and at their convenience,” he added.
He explained that the new potential for mobile money has come with the rise of interest-earning bank-integrated mobile savings systems, beginning with the launch of the M-KESHO system in March 2010; a banking service by both Equity and Safaricom where a customer’s money can earn interest from as little as Sh1.
However, Ronoh blamed lack of insurance awareness for the low demand for micro insurance services in the country.
He noted that the cost of acquisition is high as policy holders are often living in remote areas and are not reachable by the conventional distribution networks.
“The lack of available data, which is needed for risk assessment and premium calculations, is another significant challenge when entering the micro-insurance market,” he said.
Speaking at the same function, the Chief Executive Officer of ZimoSewa in India, Oman Oza, challenged insurance firms to simplify products and claim settlement processes to widen the penetration of their services among low income earners.
He told delegates that insurers need to educate the public and focus on the social performance of their products to increase uptake levels.
“Education is necessary to translate the intrinsic product values into perceived value for the clients,” he said.
He added that the major challenge facing the insurance industry is balancing short and long term interests and urged players to measure customers’ satisfaction along the way to succeed.
“There is a need for community participation to create sense of ownership and belonging in clients,” he said.