Banks and insurers dial into world's poorest

Bima agents in Tanzania  
Bima agents in Tanzania 

When insurance agent Hope visited the small town of Asamankese in Ghana last year, the reaction she got was one that few salespeople in the western world could dream of. Presented with a gift of “kenkey” (sourdough dumplings) and peppers from a customer grateful that she had been able to make a claim to cover hospital fees, she was thanked for selling the policy and, three days later, signed up 400 others.

Hope is one of thousands of agents descending en masse to different rural villages and deprived cities around the world every week, dressed in bright blue clothes and caps branded with the logo of a mobile phone operator. But instead of flogging phone packages they are selling insurance – rebranded “bodyguards” by the agents trying to explain the point of insurance to those living on less than a few dollars a day.  

For Islamabad-based Gulnaz Shehzadi’s family, this marketing gimmick provided a lifeline after her husband was shot and killed. Having been convinced to sign up to personal accident insurance for 29p a month by topping up his mobile phone, the family received almost $3,000 (£2,275) two days after he died.

“I was sceptical about insurance,” Ms Shehzadi told the company who sold her the policy, Swedish insurer Bima. “But I have learnt from this experience that everyone should have it because life is very unpredictable.”

Bima's agents in Bangladesh 
Bima's agents in Bangladesh 

For the hundreds of millions of people around the world living on less than $2 a day, opening up a bank account or buying insurance is not a priority. Around two billion adults have no access to formal financial services, according to the latest data from the World Bank Group. Just 54pc of adults in developing economies having access to a bank account versus 94pc of those in high-income OECD economies.

Banks and insurers have for years tried to come up with innovative ways to get into these markets – Aviva used to host game shows in rural Indian villages to promote life insurance – but the explosive use of mobile phones in recent years means that the adoption of financial services is poised to grow faster than ever before.

Bima has grown rapidly since launching its first operation in Ghana seven years ago through a partnership with local mobile phone operator Tigo, offering free life insurance to those that topped up their phones with five cedi (81p) a month. It later adopted a paid model, paired up with more mobile phone companies, and now has 24m customers across Asia, Latin America and Africa. The goal is to boost that number to 75m customers by 2022 and 150m in 2027, with more mobile phone partnerships on the way.

“Mobile phone operators are really fighting for so-called share of wallet [in these markets],” says Bima’s deputy chief executive Mathilda Strom. “This [insurance] is something that will bind them to their customers more than any game or ringtone, and increase loyalty to their SIM card. If people shift an extra $1 to their business, it makes a big difference on a big scale.”

With 1.6bn of those without a bank account owning a mobile phone, and mobile penetration rates in emerging markets as high as 80pc, money is pouring into research in this area. The World Bank and the Bill & Melinda Gates Foundation announced a new programme focused on digital financial inclusion over the summer, and financial giants including Visa and Mastercard have pledged to improve financial inclusion by 2020. Mobile phones, expected to account for almost one-tenth of African GDP by 2026, are an obvious way in for the banks and insurers otherwise struggling to get attention.

“In east Africa, mobile money is the same as credit cards,” says Hussein Sayed, who deals with banks and insurers on behalf of Tigo in Tanzania. “Mobile money for us is the future.”

Mobile phones are increasing people's access to financial services
Mobile phones are increasing people's access to financial services

Indeed, whether financial institutions choose to partner up with a mobile phone operator or not, the number of people with access to financial services is going to rise sharply in the years ahead – 700m adults signed up to a bank account for the first time between 2011 and 2014.

Although lending and insurance in these markets generates minuscule revenues, if any at all, many of the world’s banking and insurance goliaths are keen to get in early and be among the first to develop relationships. FTSE-100 insurance giant Prudential first entered the Asia market almost a century ago and now generates almost 70pc of all its new business profit from there.

Having pioneered the iconic “man from Pru” sales tactic in the UK, it adjusted the marketing technique for Asia so that its 600,000 agents meet customers “any way and any place” rather than knocking on their doors. With total private wealth rising $4 trillion every year, but insurance penetration on the continent still low at around 2.4pc, salespeople are heading to local coffee shops, town centre offices or even social media platforms to win business, Prudential’s Asia boss Nic Nicandrou explains.

The approach works – despite having been in the market for years, 60pc of all Prudential’s products sold in Asia go to first-time buyers. 

“In our industry, building nationwide footprints takes time and patient investment,” Nicandrou says. “In Indonesia, it has taken more than two decades to develop a network covering the whole archipelago. Despite our huge scale in Asia, we believe we are only just getting started.”

The “man from Pru” tactic is one the insurer will now take to Nigeria, a market it entered earlier this year. While relationships are never going to build overnight, the fast growth of technology means that loyalty to brands can form quicker than ever before, with the potential benefits for developing-world customers such as Ms Shehzadi’s family vast. 

As agents visit small towns such as Asamankese to raise awareness of insurance, Ms Strom is hopeful the general sense of mistrust in financial services begins to fade among the unbanked and uninsured. “If their first experience with insurance is not positive, for instance the company doesn’t pay claims or goes bust, this can be a huge setback in the education and detrimental to our efforts in breaking down trust,” she says. 

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