CIMA FANAF WORKSHOP ON MOBILE INSURANCE ———————

CIMA / FANAF WORKSHOP ON MOBILE INSURANCE -------------------------Abidjan, 16 -17 June 2016 FANAF’s Contribution Presented by Saliou BAKAYOKO 1

PRESENTATION OUTLINE 1. CURRENT STATE OF MOBILE INSURANCE (MI) IN THE CIMA ZONE 2. COMPARISON WITH THE MI MARKET IN GHANA 3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS 4. FANAF’S RECOMMENDATIONS

1. CURRENT STATE OF MOBILE INSURANCE (MI) IN THE CIMA ZONE 1. 1 - Brief Description of the Main MI Models in the Zone 1. 2 - Comparison Table of the Main MI Models in the Zone 1. 3 - MI Market Production Figures in the Zone to Date

1. CURRENT STATE OF MOBILE INSURANCE (MI) IN THE CIMA ZONE 1. 1 - Brief Description of the Main MI Models in CIMA Zone The MI models in use within the zone can be divided into two main groups: q Models centred around the insurer; and q Models centred around a mobile network operator (MNO) and/or technical service provider.

MI Model Insurer-Centred Models The MNO or possible technical service provider plays a relatively passive role in distribution and management. Models Centred around an MNO and/or Technical Service Provider The insurer has a relatively passive role in distribution and management. Distribution Model Enrolment Process Products sold in the MNO’s agencies by the insurer’s agents or by the MNO. - Client fills out an The client pays his or her enrolment form and a policy recurring premiums via is delivered to the client mobile money: later. § either voluntarily - Client enters a USSD code on his or her mobile phone § or by automatic to pay the 1 st premium withdrawal from the using mobile money account. • Classic management by the insurer. The client enrols using his or The client’s premiums her mobile by entering a are paid using the USSD code or by calling. client’s phone credits or paid for the client for The 1 st premium is paid free by the MNO using the client’s phone depending on whether credits or paid for the client or not the client has for free by the MNO reached a consumption depending on whether or threshold. not the client has reached a All service management is done by the technical service provider that has an appropriate IT platform. Distribution is done by the MNO (who offers the product under its brand) or by the technical service provider. Premium Payment Method Service Management • Payment via mobile money by the insurer or via a platform.

1. CURRENT STATE OF MOBILE INSURANCE IN THE CIMA ZONE A few remarks: a) MI is offered in mainly 3 markets (Côte d’Ivoire, Senegal and Burkina Faso) b) A pilot is reported to be underway in Cameroon. We have not received data on it. c) The pilot in Niger has been suspended. The provider later withdrew. d) The insurer-centred model is in place in Côte d’Ivoire. e) The only life insurance company in Senegal to offer MI uses the MNO-centred model. f) Only two technical service providers are known in the market to date.

1. CURRENT STATE OF MOBILE INSURANCE (MI) IN THE CIMA ZONE 1. 1 - Brief Description of the Main MI Models in the Zone 1. 2 - Comparison Table of the Main MI Models in the Zone 1. 3 - MI Market Production Figures in the Zone to Date

1. CURRENT STATE OF MOBILE INSURANCE (MI) IN THE CIMA ZONE 1. 1 - Brief Description of the Main MI Models in the Zone 1. 2 - Comparison Table of the Main MI Models in the Zone 1. 3 - MI Market Production Figures in the Zone to Date

Estimated 2015 Production Figures Number of Clients 380, 000 Sales Revenue 1, 000, 000 CFA francs Products Sold Savings & Death + Hospitalisation - 380, 000 clients, of which 300, 000 (approximately 80%) in MNO-centred models. - MNO-centred models mainly sell death insurance products. - Insurer-centred models sell savings products (necessarily non-micro).

PRESENTATION OUTLINE 1. CURRENT STATE OF MOBILE INSURANCE IN THE CIMA ZONE 2. COMPARISON WITH THE MI MARKET IN GHANA 3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS 4. FANAF’S RECOMMENDATIONS

2. COMPARISON WITH THE MI MARKET IN GHANA The two markets will be compared in regard to the following topics: a) The mobile insurance activity launch period b) Regulation of mobile insurance activities c) The types of products sold via mobile phones d) The mobile models in use e) The number of people insured

COMPARISON CRITERIA CIMA ZONE GHANA MARKET MI Activity Launch Date 2012 2010 No specific regulations until 2015. But a relatively detailed study involving all MI stakeholders was done by a consultant at the request of NIC. State of Regulations No initiatives to date in this area Products Sold Death + Savings + Hospitalisation Death + Invalidity + Hospitalisation (non essentially micro products) Existing Models Insurer-centred models and models The same models as the CIMA centred on the MNO and technical market, with a large preponderance service provider of MNO-centred models with payment using phone credits or by the MNO. One can see a strong presence of technical service providers. Estimated number of insured as at 380, 000 31/12/2015 2, 700, 000

PRESENTATION OUTLINE 1. CURRENT STATE OF MOBILE INSURANCE IN THE CIMA ZONE 2. COMPARISON WITH THE MI MARKET IN GHANA 3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS IN CIMA 4. FANAF’S RECOMMENDATIONS

3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS IN THE CIMA ZONE a) Feedback on pilots a. 1) Insurer-centred models Pluses: . efficient distribution channel for all segments of the population. better image for insurance through its association with the MNO. client management well automated, which improves client relations

3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS IN THE CIMA ZONE a) Feedback on pilots a. 1) Insurer-centred models Minuses: . the minimal involvement of the MNO does not allow the hoped-for results to be attained. low premium collection rate. a distribution network that is cumbersome to set up

3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS IN THE CIMA ZONE a) Feedback on pilots a. 2) Models centred around an MNO and/or technical service provider Pluses: same as for insurer-centred models with more potential Minuses: . management somewhat cumbersome with the technical service provider. MNO and/or provider often take initiatives without consulting the insurer

3. FEEDBACK ON PILOTS AND MI EVOLUTION PROSPECTS IN THE CIMA ZONE b) Prospects All stakeholders in the sector now agree that Mobile Insurance has huge potential because of: § the very strong penetration of mobile phones and the constantly growing use of mobile populations and especially low-income people § MI’s many advantages money by

Indeed, Mobile Insurance (MI): üfacilitates access for a large number of low-income people who are outside the reach of classical insurance to buy life insurance products and especially microinsurance üfacilitates premium collection at a relatively lower cost üfacilitates policy management and rapid client information at low cost ü generates client trust through the presence of an MNO 20

ü improves the entire insurance value chain: Product Creation Pricing Marketing Distribution Client Management Premium & Claims Payment In light of all these advantages, all sector stakeholders (CIMA, FANAF, MNOs) must rapidly join efforts to make mobile insurance an efficient model for the development of life insurance and microinsurance in particular. 21

PRESENTATION OUTLINE CIMA ZONE 1. CURRENT STATE OF MOBILE INSURANCE IN THE 2. COMPARISON WITH THE MI MARKET IN GHANA 3. MI EVOLUTION PROSPECTS IN CIMA 4. FANAF’S RECOMMENDATIONS

4. FANAF’S RECOMMENDATIONS Ø Given MI’s immense potential and the advantages listed above, Ø Given the diverse models already existing in the CIMA market, Ø Given that insurer-centred models are less exposed to the risks involved in offering MI and identified during this workshop, Ø Given that MNO-centred models have higher growth rates in terms of the number of policies purchased, thus favouring greater financial inclusion and the development of microinsurance, Ø Given the balance of power in favour of MNOs and providers in their partnerships with insurers offering mobile insurance,

4. FANAF’S RECOMMENDATIONS FANAF recommends: Setting up an appropriate regulatory framework involving all stakeholders concerned (CIMA, FANAF, Central Banks, Telecommunications Regulation Authorities, mobile network operators, platform providers, consumers) and allowing all MI models to be offered, whether currently existing or not. This regulatory framework must take into account the legal and administrative aspects of digitalising insurance, notably when it comes to mobile microinsurance:

4. FANAF’S RECOMMENDATIONS ü policy digitalisation, or failing that a system for the electronic authentication of contractual documents that, what is more, should be streamlined. ü regulatory provisions governing the unilateral withdrawal of the MNO or technical service provider, and the responsibilities of these later. ü phone credit purchase levels ensuring the profitability of the model for all parties involved (insurers, MNOs, providers and clients). To accomplish this, FANAF requests that a reflection framework involving all stakeholders be set up and entrusted with setting up such legislation.

THANK YOU

CIMA FANAF WORKSHOP ON MOBILE INSURANCE ————————-Abidjan