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Arthur D. Little

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MicroEnsure Suraksha – India’s first mass market free insurance product

In View Summary

With "Suraksha" venture, Microensure wants to set new benchmark and create a powerful driver of core business for its partners whilst mitigating risk for millions of consumers in India

With the “Suraksha” venture, MicroEnsure wants to set a new benchmark and create a powerful driver of core business for its partners whilst mitigating risk for millions of consumers in India

In a first of its kind initiative, India’s Telenor, MicroEnsure and Shriram Life are launching an embedded insurance product distribution scheme by offering free life insurance to its existing 47.55 million customer base as well as new mobile subscribers of Telenor India across its six operating circles. This insurance product named “Suraksha” gives protection which will be 100 times the value of recharge and up to maximum cover of Rs 50,000 per connection for a month.

Richard Leftley, CEO of MicroEnsure encapsulated this initiative: “Embedded insurance products cast a wider financial net, wide enough to catch the poor of India, but without the limitations of traditional marketing and sales processes. With this venture we look forward to creating a powerful driver of core business for our partners whilst mitigating risk for millions of consumers in India. With this initiative we hope to set new benchmarks.

MicroEnsure helps in designing these mass-market insurance products and in providing on-going operational support required to make a digital product work.

Currently, only 3.9% of India’s population has an insurance cover of any type. The primary reasons for the low penetration are issues like lack of awareness, cumbersome enrolment process, costly premiums and lack of trust. Lack of distribution networks has also kept the insurance penetration rate low.

CEO of Telenor India, Vivek Sood describes the partnership as “bridging the disparity in access to life insurance among the low and middle-income individuals. With insurance penetration being very low in the country, our scheme has the potential to empower society through financial security. Our deep understanding of mass-market consumer behavior, a huge retail network and efforts to create awareness around services beyond basic voice will enable us to remove persistent financial risks faced by our customers. With the life insurance offer, Telenor will create a unique differentiation in financial services just like we have done with our affordable mobile service”.

To date, over 17 million Indians have enrolled themselves under this scheme, whilst almost 7.8 million customers have been insured across Telenor’s network until January 2016. Telenor claims that it has the highest number of policy holders in the country for a single micro insurance product.

Reported Benefits

Benefit to Customers

  • More affordable and flexible premiums for India’s emerging middle class
  • Faster claims processing
  • Easier policy administration
  • Reduced exposure to risk in case of unexpected events

Benefit to the Insurer

  • More effective and relevant product design
  • Reduced cost of distribution and greater reach
  • Greater efficiency and penetration into new market segment
  • New revenue stream for both Telenor, Microensure and Shriram Life

The Digital Insurer's View

Although the range of products MicroEnsure distributes through telecom channels is still limited, this joint venture provides a glimpse of how life insurance will be distributed in emerging economies. Additionally, it seems establishing partnerships with telco’s that are eager for additional revenue streams is relatively straight forward, however servicing policies and effectively processing claims in an emerging economy can be more elusive and it is this function that will test the longevity of MicroEnsure distribution model.

References

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