1. Organisation of Eastern & Southern Africa Insurers (OESAI) Day 2, Thursday 25 th August, 2015 Reaching the Uninsured; Making Life Insurance relevant in Africa Ezekiel Macharia, Group Actuary - Jubilee Holdings

2. 2 AGENDA Africa Statistics Talking Points – Future of Insurance – Focus on the uninsured – Role of Life Insurance Conclusion

3. 3 Africa Statistics Population: 1.1b (15% of world population) Real GDP per capita: USD 2,200 Insurance density per capita: USD 60 Life Expectancy at Birth: 56 years Human Development Index: 0.502 Sources:Swiss Re, WorldBank,UNDP Ugandans on International Youth day via Twitter @KagutaMuseveni

4. 4 African Consumer Trends Market Disruption Peer-to-Peer Technologies Traditional & New Competitors Where is insurance heading?

5. 5 – African consumers are quick to adopt to new technologies – African Insurers will be more susceptible to disruption – Africans are ready to buy insurance if it is well packaged and adds value African Consumer Trends? Source: GSMA.COM Uptake of mobile money highest in Africa (50%). The market is willing to test new things.

6. 6 – Bypassing regulation: WhatsApp has captured 50% of the active mobile subscriber base in Kenya without a single local operating license. – 20 billions messages per day globaly. Market Disruption To serve the unisured we must adopt market disruptions in insurance?

7. 7 ZOPA is offering peer-to-peer banking – cutting out the bank. $1b lent out to date. Peer-to-Peer Technologies Taking this concept to insurance – will this be appealing to the uninsured?

8. 8 Traditional Competitors? – Platform as a Service (PaaS): Startup insurers/MicroInsurers should be able to reach scale without investing in millions of dollars on technology Scaling up capabilities

9. 9 New Competitors? – Your competitor is in another industry: Apple/Samsung entered Mobile Phone Industry. Nokia moves from 40% global market share (2008) to near-exit Market Entries Too Big to Fail? Nokia Revenue in 2008 - $70.7b Total Africa Insurance revenue (2013) - $69b

10. 10 Target Market Coping Mechnisms Key requirements for insurance Product requirements Focusing on the uninsured

11. 11 Target Market The insured African population is less than 5% but Africans earning above $20 per day ($7,300 per year) represent 19% of the population Income above $20 per day (19% of Africa population ~200m) $10-$20 (11% of Africa population ~121m)$4-$10 (10% of Africa population ~110m) Below $4 per day (60% of Africa population ~600m) Low Hanging Fruits ( potential of 200m uninsured who can afford insurance ) At 3%* of income paid towards insurance - $200 is available annnualy for insurance (ILO Insurance Willingness to Pay Statistic)

12. 12 Risk Management for the uninsured Coping Strategies (low income market) Self Insurance (Retain Risk) Salaries & wages Borrow from family, friends or money lenders Sell or pledge assets Social Protection (Transfer Risk) Public health services Disability compensation Informal Groups (Share Risk) Welfare associations Burial societies Church group loans Fundraisers Hiring of guards Mutuals Coping Mechanisms

13. 13 – Flexible Premium & readily available payment solutions – e.g.,Mobile Money with SMS confirmation – Easy to understand & claim with limited exclusions. Bulk rating for all ages, genders. – Low ticket business – Catastrophic reinsurance would be appropriate to suppor this – Leverage current technologies:- Mobile phones – using voice recording to read policy document Electronic submission of claim documents Using ICT to curb fraud Key requirements for insurance

14. 14 Using Life Products (Funeral Plans) to target the uninsured market? Easy to administrate claims Death claims are easier to verify than health or property claims Can be bundled with other products Bancassurance – bundling with savings account Protection for micro-loans (micro-credit) Limits can varied easily to differentiate the market Technology can enable clients to select insurance limits from a mobile menu Role of Life Insurance

15. 15 The future is uncertain but disruption in insurance is almost certain. There is a huge potential from the uninsured African population ~ 200m lives. These groups already have coping mechanisms –we should provide innovative solutions that will entice this target market. Life insurance can be used to test the market before introducing other insurance products – agriculture, health, index-based, etc. Conclusion

16. 16 ? QUESTIONS ezekiel.macharia@gmail.com +254 722 540 045

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