TAG Zambia Microinsurance

Technical Advisory Group

Microinsurance SPOTLIGHT

MICROINSURANCE DEVELOPMENT - ZAMBIA

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January 2016

This Microinsurance Spotlight provides is a snapshot of major market developments in Zambia’s microinsurance process in 2015.

Microinsurance Business Models for Africa: Regional Learning Conference Over 80 insurance professionals from Zambia, Lesotho, South Africa, Kenya, Zimbabwe, Bostwana, Ethiopia, Switzerland, United States of America and Germany attended the first-ever regional microinsurance learning sessions hosted by the Technical Advisory Group (TAG) and supported by Financial Sector Deepening Zambia (FSDZ), ILO’s Impact Insurance Facility, FinMark Trust and Munich-Re Foundation. The themes addressed in the conference included health insurance, agriculture insurance, distribution models, business strategy and planning, customer-centricity, consumer education, marketing, microinsurance regulations and Private Public Partnerships. Half of the conference attendees were from Zambia’s insurance industry with representation from 16 insurance companies. The success of this first regional learning conference was largely due to the combination of a comprehensive agenda and great speakers covering critical topics in microinsurance as well as a mix of training and plenary sessions. The next regional learning conference will be in Kenya in April 2016. More details will be provided in February 2016. Insurance Week continues to gain greater industry buy-in and yield better results The Insurance Week 2015 was successfully implemented and continues to receive greater buy-in by insurers and other insurance stakeholders. In 2015, there were more interactions between insurers and the general public as the product exhibitions were conducted in the markets in high-density areas and shopping halls. It was also good to note that some of the insurers offering microinsurance products managed to sell some microinsurance policies. IAZ implements its first regional Insurance conference IAZ held its first regional conference under the theme ‘Excellence in service delivery’. The TAG with support from FSDZ participated in the microinsurance session by delivering two presentations on Zambia’s microinsurance development process as well as trends and practices on the microinsurance business case. The presentations were well received particularly as they were very aligned to the conference theme of excellency in design and delivery of insurance services and also pushing beyond traditional models. The conference was attended by 140 participants of which 110 participants were from Zambia’s insurance sector with representation from 25 insurance companies, 10 insurance brokers, 3 reinsurance companies and 1 reinsurance broker. Madison Life launches Tilitonse Madison Life launched another innovative life microinsurance product, Tilitonse. The product uses mobile platforms for sign up using a simple starter pack. Consumers can pay as low as ZMW1 per day for the premium. Tilitonse is one of the products that attracted sales during the Insurance Week 2015. Madison Life remains an active player in the microinsurance space, launching 3 life microinsurance products in the last 3 years, namely, Mutende, Dignity and Tilitonse life plans.

Airtel takes a new route In 2014, Airtel partnered with African Life and MicroEnsure to launch the first-ever large loyalty microinsurance product covering all its subscribers. After nearly a year, Airtel has evaluated this model and will no longer be offering the free life cover loyalty product. Airtel still plans to remain an active distribution channel for insurance to its customers and is contemplating shifting to other types of insurance products and a different business model. This development also coincides with MicroEnsure scaled down operations in Zambia as the loyalty product was a major business line for MicroEnsure.

2015

Geoffrey Chirwa, Vice Chair- Technical Advisory Group speaking at the launch event of the Insurance Week 2015 in Kamwala, Lusaka, September 2015.

MICROINSURANCE MARKET DEVELOPMENT HIGHLIGHTS

Juliet Munro, FSDZ/FSDA Senor Advisory facilitating the opening session of the Microinsurance regional learning sessions in Livingstone, March 2015.

Doubell Chamberlain, Dirk Reinhard, Craig Churchill and Jeremy Leach during the learning sessions, Livingstone, March 2015.

Madison Life staff selling the Tilitonse product during the Insurance Week 2015 product exhibitions in Kitwe, September 2015.

PICZ launches its first microinsurance product Professional Insurance Corporation Zambia (PICZ) launched the first ever low-cost Personal Accident product that uses an innovative mobile platform for premium collection. At the grand launch, PICZ offered free cover to travellers on a Mazyandu city-to-city bus. Mazyandu is one of its distribution channels. Other distribution channels for this product include Kazang, a mobile payment provider. This product certainly adds value to the current product portfolio of microinsurance products in Zambia. PICZ is currently FSDZ’s partner under the Microinsurance Acceleration Facility, receiving technical and financial support to make the product work.

Focus and Mayfair continues to extend cover to small scale farmers After two agricultural seasons of piloting weather index insurance to small scale farmers in cotton and maize, Focus General and Mayfair Insurance continues partner with agribusinesses and farmer networks to scale up the provision of insurance to small scale farmers. Although the motivation of the distribution channels is varied; from portfolio protection to improving loyalty of good performing small scale farmers, the two insurance companies seems to be driven by the need to expand their market penetration into the low-income segments of the agriculture sector and hence contributing to the welfare of small scale farmers. The financial performance in the last season was characterised by high claims ratios and low scale; the limited risk pooling was a major challenge. The extension of cover to more farmers with wider geographical spread may yield better results. One important outcome of the pilots so far, is that small scale farmers have experienced benefits of insurance through the payouts. In 2015/2016 season, FSDZ has partnered with Musika to support Focus General and Mayfair Insurance in increasing outreach of weather index microinsurance products.

IAZ launches a 5-year strategic plan With an overall goal of building the capacity of the Insurers Association of Zambia (IAZ) in becoming an indispensible industry partner and significantly contributing to the performance and growth of Zambia’s insurance industry, IAZ developed and launched a 5-year strategy on 18th September 2015. The strategy seeks to enhance the image and reputation of the insurance industry to various stakeholders including consumers, distribution partners, government, the Pensions and Insurance Authority and other auxiliary institutions involved in the supply chains of insurance. The development of the Strategy was commissioned by Board of IAZ and the drafting was financially supported by the Financial Sector Deepening Zambia (FSDZ). For more details contact the IAZ Secretariat, email: iazsecretariat@iaz.org.zm .

FSDZ re-launches the Microinsurance Acceleration Facility The Microinsurance Acceleration Facility (MAF) is a fund that aims to accelerate the development of an inclusive insurance market in Zambia and also contribute to the body of knowledge on viable microinsurance business models and approaches. Through the provision of financial and technical assistance, it co-invests with insurers and other microinsurance actors in the design, experimentation and roll-out of insurance products that are affordable, accessible and appropriate for Zambia’s low-income market. The MAF was re-launched on October 29 as an open facility to all market players seeking financial and technical support to test new microinsurance products or business models.

in Zambia.

Lunch event of Muende Bwino

Billboard: Insurance cover for farmers by FOCUS General

Shipango Muteto speaking at the IAZ strategy launch event

Juliet Munro explains the new features of the Microinsurance Acceleration Facility at the Information session on October 29, 2015

FOR MORE INFORMATION CONTACT: Lemmy Manje Microinsurance Coordinator Email: lemmy_manje@msn.com Phone: +260 96 587 1465

TAG Zambia Microinsurance

Technical Advisory Group

Finscope 2015 insurance results presented to market players and industry stakeholders The results from the in-depth analysis of Finscope 2015 findings on insurance and risk management were presented to insurers, brokers, distribution channels and other stakeholders on October 29, 2015. Over 60 professionals from the insurance industry, distribution channels and other financial institutions attended this session. Among the key highlights of the presentation is the low uptake and usage of insurance in comparison to financial services and coping strategies used by the majority of Zambians. Insurance usage is still skewed towards the salaried market segment and those in high-income bands. These results are an indication that market development interventions are still relevant in Zambia and much more still needs to be done in bridging the gap between the supply and demand of insurance and more importantly building an insurance culture through investments in consumer education. Microinsurance Landscape Survey 2015 launched The Pensions and Insurance Authority (PIA) in collaboration with the Technical Advisory Group on Microinsurance (TAG), Financial Sector Deepening Zambia (FSDZ) and Insurers Association of Zambia launched the annual microinsurance landscape survey for 2015. The results of this survey will not only provide performance figures of the microinsurance sector but also but also guide the formulation, prioritisation and implementation of market and regulatory interventions that would support the development of the microinsurance sector in Zambia. The results of this survey will be shared with the industry in the first quarter of 2016 and also published in the TAG Annual Report for 2015

Zambia represented at the 11th International Microinsurance Conference The 11th International Microinsurance Conference took place from 3-5 November 2015 in Casablanca, Morocco. The Microinsurance Coordinator for Zambia (Lemmy Manje) facilitated and presented in a session on ‘Strategies to develop inclusive insurance markets’. FSDZ co-sponsored the Executive director of IAZ (Christabel Banda) who presented on the panel on microinsurance regulations and the TAG Chair (Titus Kalenga) who was invited as a speaker to share the experiences and lessons from Zambia’s microinsurance development process. Further, as part of efforts to increase exposure to microinsurance best practices, FSDZ also co-sponsored one insurance company, Mayfair Insurance. Mayfair Insurance is one of leading insurers investing in weather index insurance for smallholder farmers. Among the key highlights of the conference, the Africa Microinsurance landscape survey showed Zambia, Ghana and Morocco as countries experiencing significant growth in microinsurance. The growth reported for Zambia was partly attributed to the involvement of mobile network operators (MNOs) in the distribution space for microinsurance especially through Airtel‘s loyalty life insurance product which has now been discontinued with plans to transition into an opt-in paid insurance product. Notably consumer awareness and product disclosure were key challenges for this product. However, some claims were paid out to demonstrate value; this experience serves an important lesson for market players contemplating or already providing similar products.

Snapshot of Finscope 2015 insurance results

Forthcoming TAG Annual Report 2015

Christabel Banda (Executive director of IAZ) representing Zambia on the conference session on microinsurance regulations, Casablanca, Morocco, November 2015