How a finance partnership can take Microinsurance Solutions to the masses

Frans Prinsloo, Head – International at Hollard Insurance.

With a population of just 2.8 million the Caribbean island of Jamaica is better known for sandy beaches and its world class track and field athletes than for innovative insurance solutions.

But this perception is changing. Hollard Insurance and a wholly-owned subsidiary of the Grace Kennedy Group (GKG), the Jamaica International Insurance Company (JIIC) have a unique partnership that started in 2012. The joint venture highlights Hollard’s ability to operate in different markets and redefines how insurers can partner to improve access to micro-insurance solutions.

At the time the joint venture was conceived, one of the big unknowns was whether or not the GKG – a consortium of the largest food and finance corporate entities in the Caribbean, North and Central America, the UK and Africa – would provide the right ‘fit’ for insurance distribution. Do food and insurance mix?

“The partnership makes sense from a strategic perspective because both firms have similar growth ambitions in emerging markets,” says Frans Prinsloo, Head – International at Hollard Insurance. “Our businesses are built on similar cultures and we have a mutual desire to broaden the access to financial services through micro-insurance.”

Success in the micro-insurance niche hinges on insurers’ ability to reduce distribution costs and expand product reach. In this regard both Hollard and GKG are committed to reach the unserved and underserved micro-insurance segments in poorer country markets through alternative distribution methodologies.

In the case of Jamaica, the solution to the question of distribution was to bolt an insurance-based value added service (VAS) – best described as a loyalty benefit that accrues to the consumer without any additional cost – to a popular regional method of settling utility (water and lights) accounts.

The insurance solution provided through the joint venture is known as Bill Protect and is offered through Bill Express, a remittances firm. It is designed to address the fears identified by a focus group study conducted by the Mona School of Business, namely:

- Being sick and unable to work (facing a simultaneous loss of income and increase in health expenditure);

- Having insufficient income to pay bills, particularly those associated with the care of children; and

- Risk of accidental injury or death on the job (a major risk faced by the respondents who were overwhelmingly blue collar workers).

Bill Protect is a utility (water and lights) payment protection plan which is activated ‘free of charge’ if three consecutive utility bill payments are made via Bill Express, which is also the policyholder.

“Bill Protect is directly aligned to the customers’ needs and, provided they continue making their payments through Bill Express, their utility bills are covered for a period of two months for certain disability events, per the policy wording,” says Prinsloo.

Despite the rather small regional population the joint venture achieves cost efficiencies thanks to the large number of transactions processed. Bill Express has some 250 collection points throughout the Caribbean (Jamaica, Trinidad, Guyana, St Lucia) and handles 800 000-plus remittances per month, both for locals and the estimated 1 million-plus in the Jamaican diaspora.

Over the next 12 months the joint venture will solidify its position in the Caribbean region by raising awareness among consumers about the benefits they enjoy ‘free of charge’ for remaining loyal Bill Express customers.

It will also focus on improving the take-up of other micro-insurance products being marketed by JIIC, including coverage for loss of income due to extreme weather events and a micro-insurance offering that pays out for both accidental death and medical expenses due to an accident.

“We are confident that the innovative micro-insurance solutions that we are working on in Jamaica can be applied in countries in the rest of Africa where insurance penetration remains extremely low,” concludes Prinsloo. Hollard expects that the lessons learned in Jamaica will translate effectively in markets such as Ghana, where it recently established a presence.

“We will continue to leverage our reputation for innovation and business friendliness by joining forces with global joint venture partners and offering support with product innovation, alternative distribution methodologies and the design, marketing and administration of insurance policies.”

Hollard is the only African company to be part of the Micro-Insurance Network. The Global Network exists to drive and promote access to financial services to poor communities around the globe.