Digital Insurance In Action

CoverNow is focusing on low premiums, low distribution costs and simple terms and conditions to distribute insurance in emerging markets via mobile

Insurers are increasingly introducing need-based P&C products as opposed to generic policies based on risk categorization. A Brazilian based accelerator operated by Upstream Systems has announced the launch of CoverNow, a new microinsurance solution providing basic health and life coverage through mobile devices.

Specificly, CoverNow is focusing on low premiums, low distribution costs and simple terms and conditions to maximise engagement. By partnering with insurers, Upstream distributes CoverNow in a number of ways:

• Bundled as part of Mobile Operators’ loyalty schemes
• Included as a group of offerings provided by Mobile Operators to their customers
• Standalone micro-insurance offering on an independent website

However, distributing micro-insurance has its own challenges which were summarised by a leading microinsurance CEO recently: “Trying to explain to someone with no prior experience of insurance that if you pay even just a little bit every month then someone will pay you back if your crops failed or your child is hospitalised is often met with skepticism”

CoverNow is initially rolling out in Egypt and Brazil in 2016 and will then pursue a phased roll out in other emerging markets.

According to Marco Veremis, CEO of Upstream “Microinsurance is on the rise in emerging markets and is already widely available via other delivery channels, but mobile offers a significant point of difference. Mobile operators have a vital role to play in facilitating wide-spread coverage to those who otherwise would not have access to health and life insurance. CoverNow not only offers mass-scale distribution, providing access to insurance coverage for the “underserved”, it also provides a simple billing solution through a subscription micro-payment model, facilitated by direct carrier billing.”

Benefit to Customers

• Simple and affordable life & health insurance bundles designed for emerging markets consumers.
• Financial security for low-income demographic.
• Reliable and simple registration and billing process.
• Comprehensive & integrated customer services including self service and claims processing support mechanism.

Benefit to the Insurer

• Penetration into new market segments – low-income group
• Cost effective mass market distribution using through mobile devices
• Leveraging prepaid airtime credit for premium collection

Microinsurance offerings in emerging markets are becoming increasingly common. As the end product is a commodity and there are claims processing challenges, the key to success will be the existing strength, reach and brand recognition of Upstream Systems combined with the ability of CoverNow to process claims whilst maintaining profitability.

Although this initiative by CoverNow shows promise in terms of providing affordable health insurance for low income demographics in Egypt and Brazil. It remains to be seen whether the claims distribution will be able to compromise on the coverage limit especially in emerging markets where the ability to engage in financial services is quite low.

CoverNow Website

Upstream Launches CoverNow Microinsurance Offering