MICROINSURANCE CONFERENCE06 08 NOVEMBER 201206-08 NOVEMBER 2012

DAR-ES-SALAAM

FAILURES IN MICROINSURANCEFAILURES IN MICROINSURANCE

AGNES CHAKONTA MANAGING DIRECTOR

MADISON LIFE INSURANCE COMPANYMADISON LIFE INSURANCE COMPANY ZAMBIA LIMITED

NATIONAL CONTEXT OF ZAMBIA

NATIONAL CONTEXT OF ZAMBIA

Zambia has a population of about 11.1million people

Zambia’s economy is based largely on copperZambia s economy is based largely on copper miningA i lt d t i t ti l f Agriculture and tourism are potential areas of growth

The 2006 census showed the overall poverty at 64%

Major challenge is poverty eradication

OVERVIEW OF MICROINSURANCE IN ZAMBIA

OVERVIEW OF MICROINSURANCE IN ZAMBIA

• Formal micro insurance began in 2000• MFIs support insurance for protection of the

loans under Partner-Agent model• Range of products has remained narrow—

death and illness are two primary risksdeath and illness are two primary risks• Concept of micro insurance still not widely

i t dappreciated• Informal or unregistered insurance activities

still there

FAILURE: WHAT WAS THE PROJECT?

FAILURE: WHAT WAS THE PROJECT?

• Standalone Funeral Insurance policies

• First of its kind

• Sold through a funeral insurance tied Agent—also in the business of selling coffins andalso in the business of selling coffins and burial services, so product bundled

• Product features largely same as that with MFIs

HOW AND WHY DID IT GO WRONG?

HOW AND WHY DID IT GO WRONG?

• Project failed to generate the targeted i d linterest and volumes

• Product not accepted by intended market—p ybundling made it very expensive

• The Agent gave up—too costly• The Agent gave up—too costly• Overly dependent on the Agent• Lack of education/product knowledge • Informal Protection Scheme working well• Informal Protection Scheme working well

WHAT LESSONS CAN BE LEARNED?WHAT LESSONS CAN BE LEARNED?

WHAT LESSONS CAN BE LEARNED?

Start with achieving client confidence

WHAT LESSONS CAN BE LEARNED?

Start with achieving client confidence Understand the culture and environment Education of the clients is key Always work with simplified productsAlways work with simplified products Add APPROPRIATE sweeteners Capable aggregator should be able to woo

large numbers, collect premiums, and settle claims at low cost

THANK YOU FOR YOURTHANK YOU FOR YOUR ATTENTION