M-insurance: where is it moving to?

Is it the next wave of mobile financial services in Africa…as well as globally?

When will we see “m-insurance” join the commonly used new dictionary of commerce?

This is the question posed by Jeremy Leach, Head of Micro-Insurance for the Hollard Insurance Group, who recently announced a partnership with MTN to develop m-insurance in emerging markets. Hollard has expanded from South Africa into 10 countries globally 6 of which are in Africa.

“The quantum leap of mobiles into commercial usage has given birth to various new words such as m-commerce, m-payments and the acronym mFSP – meaning mobile Financial Services Providers. So the question for the insurance industry becomes: Is m-insurance close, inevitable, possible and a good idea? And probably more to the point: How will it work?”

Leach says the growth of the mobile/cellphone market is one of the more remarkable – and impactful – phenomenons in recent times and the numbers are startling.

“M-insurance makes insurance accessible to the majority of people previously ignored by insurers because of a dependence on conventional banking. While Hollard has had considerable success in the low income market where we generate over $190 million in premiums in this segment alone, we believe this partnership with MTN will take the market to the next level.”

FIVE BILLION CELL PHONES WORLDWIDE

In February last year CBS News, Business, reported that the number of cell phones worldwide had hit 4.6B. Their report predicted that number would rise to 5B during 2010 - despite the economic slump.

According to the report “The number of mobile phone subscriptions worldwide has reached 4.6 billion and is expected to increase to five billion this year,” the U.N. telecommunications agency said.

Mobile phone providers in rich countries offer advanced services and handsets, while people in developing countries increasingly use the mobile phone for health services and banking, said the International Telecommunication Union (ITU).

"Even during an economic crisis, we have seen no drop in the demand for communications services," said the agency's Secretary-General Hamadoun Toure.

"The simplest, low-end mobile phone can do so much to improve health care in the developing world," Toure said in a statement, citing examples of patients receiving reminder messages on their mobile phone ahead of a medical appointment or text messages instructing them how to take complex medication.

Web access by people on the move, including through laptops and smart mobile devices, will probably surpass web access from desktop computers within the next five years, the agency said.

Leach explains further: “These mobile phones are increasingly reaching consumers who have had limited – or no – easy access to services before. Now with an estimated 60% of the unbanked in Southern Africa having mobile phones [cf FinScope surveys] the possibilities are virtually unlimited.

He says the advent of mobile operator-led ‘mobile money’ has dramatically increased the interaction of the mobile and financial services, with McKinsey estimating that it would “generate US$5 billion in direct revenues and US$2.5 billion in indirect revenues per year to mobile operators”[1].

“So where does the future of the insurance industry feature in this modern marketing phenomenon? How soon will we be referring to m-insurance with the same familiarity as we talk about m-payments and m-commerce?” asks Leach.