MicroEnsure Case Study

MicroEnsure's innovative SMS-based insurance platform creates partnerships with mobile carriers which enable customers to enroll in seconds and pay using pre-paid airtime.

Operating throughout Asia and Africa, MicroEnsure’s innovative SMS-based platform and partnerships with mobile carriers enable customers to enroll in seconds and pay for the product using pre-paid airtime. Claims can be submitted via a text message and are paid to the customer’s “mobile wallet” within hours. The company’s insurance platforms have provided more than 35 million customers in Africa and Asia with their first insurance policies over the past five years.

The insurance industry has long struggled to provide cover for poor people. Low-income groups represent a US$40 billion market opportunity.1 But as they face extensive risks and can only afford tiny premiums, they tend to get overlooked. The lack of health insurance is particularly acute, with penetration in Africa below 3% of the population.2

After meeting a Zambian woman pushed into poverty by a family bereavement in 2001, insurance broker Richard Leftley set out to find a better way of providing protection for the vulnerable. Convinced there was a huge – and profitable – market for low-income insurance, he quit his job and joined non-profit Opportunity International, charged with designing cover for people living on a few dollars a day, and finding ways to distribute it.3

Leftley’s move showed foresight, but he could hardly have predicted he’d wind up running a business with over 40 million customers in 15 countries.4 In 2008, his hugely successful initiative became for-profit venture MicroEnsure, which offers affordable health, life and disability insurance in Africa and Asia.5 Its evolution from charitable exercise to commercial enterprise shows what can be achieved by imagining new answers to existing problems – and finding the right partners to make them reality.

Working with mobile phone networks to create a low-cost, mass distribution model, MicroEnsure generates a massive risk pool to drive down premiums.6 Simplicity is key. Clients can register in seconds, use phone credit to buy policies and submit claims via SMS.7 Free insurance is bundled with airtime, and customers can add extra cover via drop-down menus or voice prompts.8 These methods are driving business for insurers, helping telecoms firms build customer loyalty and bringing insurance to new groups: surveys suggest that for 86% of people signed up for basic health cover through a partnership with pan-African telecoms firm Airtel, it is their first policy of any kind.9

As well as the innovative model, a string of key organisational decisions have helped build MicroEnsure’s success. The 2008 switch to a commercial entity – able to operate flexibly and access debt and equity financing – was one. Another came in 2012, when Opportunity International relinquished its majority stake, allowing an infusion of capital from new investors including IFC and AXA Group, which became the biggest shareholder in 2016.10 Such steps have boosted customers, market reach and funds, and the company expects to break even on investment in the mobile insurance model in 2017.11 Leftley predicts the approach will shake up developed markets too, where making claims will eventually be “as easy as voting on The X Factor”.12

References

1 IFC. (2016) “Built for Change: Inclusive business solutions for the base of the pyramid”. https://www.ifc.org/wps/wcm/connect/44bbb896-2899-4ed3-9967-204e1ff954d6/Built+for+Change_FINAL_low+res.pdf?MOD=AJPERES.

2 USAID. (2016) “Special Edition 2016: Reaching Scale”. mHealth Compendium, May. http://www.unicefstories.org/wp-content/uploads/2016/08/mHealth-Compendium-Special-Edition-2016-Reaching-Scale-.pdf.

3 IFC. (2016) “Built for Change: Inclusive business solutions for the base of the pyramid”. https://www.ifc.org/wps/wcm/connect/44bbb896-2899-4ed3-9967-204e1ff954d6/Built+for+Change_FINAL_low+res.pdf?MOD=AJPERES.

4 Ibid. 

5 Ibid.

6 Ibid.

7 Sustania. “Affordable Health Insurance via SMS”. http://solutions.sustainia.me/solutions/affordable-health-insurance-via-sms/.

8 IFC. (2016) “Built for Change: Inclusive business solutions for the base of the pyramid”. 
https://www.ifc.org/wps/wcm/connect/44bbb896-2899-4ed3-9967-204e1ff954d6/Built+for+Change_FINAL_low+res.pdf?MOD=AJPERES.

9 USAID. (2016) “Special Edition 2016: Reaching Scale”. mHealth Compendium, May. http://www.unicefstories.org/wp-content/uploads/2016/08/mHealth-Compendium-Special-Edition-2016-Reaching-Scale-.pdf.

10 IFC. (2016) “Built for Change: Inclusive business solutions for the base of the pyramid”. 
https://www.ifc.org/wps/wcm/connect/44bbb896-2899-4ed3-9967-204e1ff954d6/Built+for+Change_FINAL_low+res.pdf?MOD=AJPERES.

11 USAID. (2016) “Special Edition 2016: Reaching Scale”. mHealth Compendium, May. http://www.unicefstories.org/wp-content/uploads/2016/08/mHealth-Compendium-Special-Edition-2016-Reaching-Scale-.pdf.

12 Benson, R. (2016) “This startup is bringing insurance to the developing world”. Wired, 15 July. http://www.wired.co.uk/article/microensure-insurance-asia-africa.