Agenda Syed Nayyar Hussain , Director, Securities and Exchange - - PowerPoint PPT Presentation

2:30 – 2:36

Welcome Message Syed Nayyar Hussain, Director, Securities and Exchange Commission of Pakistan, MEFIN Regional Steering Committee Chairman Opening message & House rules

• Dr. Antonis Malagardis, RFPI Asia III Program Director and Session Moderator

2:36 – 3:10

Speaker 1: Mr. Deepak Dhoj Khadka Country Director for Bangladesh International Development Enterprises (iDE) Speaker 2: Mr. Jun Jay Perez Executive Director RIMANSI Organization for Asia and the Pacific, Inc Speaker 3: Mr. Mohammed Ali Ahmed Executive Director and Chief Strategy Officer, EFU Life Insurance, Pakistan

3:10 – 3:40

Panel Discussion & Q&A Moderator, resource speakers & participants

3:40 – 3:45

Wrapping up, Key takeaways & Experience Survey Moderator

Agenda

House Rules

1. Please turn off your microphone and webcam to conserve internet bandwidth and allow for an uninterrupted webinar. 2. If you have questions, please post them in the chat. The moderator will pick them up during the Q&A session. 3. You can access the slides and the recording

• f the webinar on the MEFIN homepage in a

few days after the event.

Entrepreneurs are everywhere

A manifesto for solving poverty.

Designing impactful programs

It starts with the customers. We seek to understand their needs and develop solutions that meets their aspirations. It is more than just “selling” - it is solving the customer’s problems and improving their lives. It involves working through complex markets. We acknowledge the interrelationship and interactions amongst actors. We develop strategies to incentivize actions that produce positive social and commercial outputs. It results in systemic changes. Our goal is to create resilient systems that respond to the needs of an evolving market. Outcomes should last and accelerate well beyond the initial investments.

Designing for humans

Goal: To ensure that the product or service meets the needs and aspirations of your customers. Process: HCD is a systematic method for acquiring a deep understanding of customers, their environments, and their routines in order to create innovative solutions to the problems that they face. Tools: iDE HCD Tools https://www.ideglobal.org/story/human-

centered-design

IDEO Tools https://www.designkit.org/human-centered-

design

Outcomes: A solution that is desirable for your customers, works as intended, and can be produced, distributed and utilized in the market context that you work in. The Human Centered Design Model

Understanding Market Systems

SUPPLY DEMAND

DRF Solution provider (Bank, MFI, NGO) Beneficiaries (Single, households, communities)

Goal: To design interventions acknowledging that market systems include various actors, factors and functions that need to come together to serve the end customer. Process: Analytical process to create a holistic understanding of the links on the value chain and the roles of each market player. Tools: MSD Tools www.beamexchange.org System Analysis www.springfieldcenter.com Outcomes: A business solutions that make new connections and strengthen existing connections to achieve a more robust market ecosystem.

Adapted from Springfieldcenter.com

Supporting Functions

Information Re-insurers Fintech Solutions Data Registry Advertisers Infrastructure

Rules and norms

(formal & informal) Rules & Regulations Climate trends Consumer trends Standards Local customs

Creating Systemic Change

Goal: To ensure that the system is (re) designed in such a manner that the benefits of the development interventions are as wide and long lasting as possible. Process: An iterative process of gathering data (assessment), evaluating it against predetermined milestones and adjusting interventions where needed. Tools: AAER Model www.springfieldcenter.com Market systems resilience Index, iDE:

https://s3.amazonaws.com/www.ideglobal.org/files/public/RMEL_Confer ence-R_MSRI_FINAL.pdf?mtime=20190610215110

Outcomes: A market system that can self-develop appropriate business solutions adapting to the changing context and environment. Level of market transformation Phase 1: Early Adoption Phase 2: Adaptation Phase 2: Expand Phase 3: Respond

Adapted from Springfieldcenter.com

Beyond Impact

NUTRITION TO THRIVE

Vitamin-rich crops provide families and communities with the energy and mental ability they need to be successful.

GENDER EQUALITY

Men and women participate as customers and entrepreneurs, strengthening their families and livelihoods.

RESILIENCE TO CLIMATE CHANGE

Farmers have access to practical strategies to deal with unpredictable weather and its effects.

FOOD SECURITY

Sustainable farming practices ensure the availability

• f food while protecting the environment and health of

communities.

Inputs FBAs sell agri-inputs (seed, fertilizers, pest control) that reduce agricultural risk, improve productivity and increase farm profits Services FBAs provide advice on financing, insurance, land preparation, planting & harvesting, soil nutrients, and pest & disease control.

What do FBAs provide?

Output Market FBAs provide access to market price information. Some FBAs help their clients aggregate crops and facilitate produce transport to the market Linkage FBAs link farmers to

• ther market actors and

public extension agents for input and output products and services

Successful Farm Business Advisers

We believe that market facilitation is more effective and more sustainable when we involve non-business stakeholders in the process.

iDE was chosen as the winner of the 2017 P3 Impact Award for our cross-sectoral approach to market development. Created by Concordia, the University of Virginia, and the U.S. Department of State, the P3 Impact Award recognizes outstanding public-private partnerships (P3s) that improve the world in the most impactful ways. iDE’s Sanitation market development project works closely with Government of Bangladesh, Unicef and RFL (private sector) to market low cost hygienic latrines.

Entrepreneurs are everywhere

A manifesto for solving poverty.

Mi-MBA Association of the Philippines

12*24*48 ‘mutuality among mutuals’ Key Indicators 2019

• No. of Mi-MBA members,

partners 18

• No. of members

6.86 mn

• No. of insured lives

24.93 mn Contributions, premiums $ 96 mn Claims benefits paid $ 29 mn Equity value reserves (year) $ 39 mn Equity value (cum) $ 205 mn Equity value refund (year) $ 9 mn Number of claims 65,053

• Ave. amount of death

claims paid/day $ 78,000

• Ave. number of death

claims per day 178

• Association of mutual

microinsurers

• Family life insurance
• Insuring the poor and

low-income households

• 1-3-5-day claims

settlement

• Delivers 62% of the

microinsurance market

Meeting market demand

Leadership

Policy and regulation

Professional capacity

KRAs in the Development of the Microinsurance Sector

Casals, C. 2010 Balanced sector development

Determining Clients Effective Demand for Microinsurance

• Insurance experience and understanding
• Risks they are most concerned
• Coping mechanisms
• Household information
• Test microinsurance product features
• Test effective demand: highest premium & lowest

benefit acceptable, frequency of payment

• Test of trust to provider

Product Development Strategy

Product and Pricing

Financial managers (distribution channels) Actuary Members/ policyholders Regulators

Product and pricing has been determined iteratively using feedback from members, actuary, financial managers and regulators.

Sustaining the Gains

• Increase good word of mouth for microinsurance
• Develop data capture systems
• Exempt mutuals from IFRS 17 implementation
• Reduce non-life insurance tax
• Express lane for microinsurance product approval

Customer-centric Product Development in Informal Sector of Pakistan

9th MEFIN Public-Private Dialogue (PPD9) Mohammed Ali Ahmed, Chief Strategy Officer EFU Life Assurance Limited

EFU Life reserves the right to change, improve or correct the information, materials and descriptions in this presentation. Any dated information is published as of its date only.

2 BANK DEPOSIT ACCOUNTS2

57.6

MILLION

Source:

23%

FORMALLY SERVED POPULATION2 INFORMALLY SERVED POPULATION2 FINANCIALLY EXCLUDED POPULATION2

24% 53%

(>100 MN)

Financial Landscape of Pakistan

TOTAL CURRENT POPULATION1

220.6

MILLION

(5th most populous)

INSURANCE PENETRATION (% of GDP)3

0.93%

(EMERGING MARKET AVERAGE: 3.3%)

3

Source:

Informal Economy of Pakistan

Informal Employment

66%

Urban

76%

Rural

Non-agricultural Employment Agricultural Employment

40% 28%

Formal

72%

Informal

• f country’s total labor force

Comprises of:

 Low-income/vulnerable households  Micro, Small and Medium sized enterprises

Characteristics:

 Labor-intensive  Technology and skill-deficient  Neither taxed nor regulated or monitored by the government

Challenges:

 Exploitation of labor Rights,  Child labor  Lack of sustainable employment  Gender-based discrimination – The main constraint facing the informal sector is Access to finance (link to Microfinance & role of credit life) – The insurance needs of this segment are centered around life, health, crop, livestock and climate risk – Key sectors include: Agriculture, Wholesale & retail trade manufacturing, community services, construction & transport

Challenges in Product Development

Insurers face the following challenges while developing customer-centric products for the informal sector.

• 1. Lack of Financial Awareness – Due to low literacy and income, the population is not aware of the

benefits of insurance

• 2. Irregular Income Streams – Due to income seasonality and macro-economic instability.
• 3. Lack of Customer Trust – Driven by the perception of insurance firms not following through on claims, mis-

selling, hidden charges, excessive and complicated documentation etc.

• 4. Cumbersome Regulatory Oversight – Strict regulatory requirements hinder the digital journey

(Mandatory underwriting paper stamps, absence of digital signatures etc.)

• 5. Gaps in infrastructure – Inadequate centralized database management systems to cope with high

volumes of information, analysis and dissemination.

• 6. Dearth of Client Touchpoints – Transitioning from product focus to client-centricity will likely be difficult to

achieve without having more meaningful and frequent interactions with customers.

• 7. Religious Considerations – Underlying perception of insurance as a business that is antithesis to Islamic

beliefs (held by 96% of the population)

• 8. Internal Limitations

– Unwieldy legacy infrastructure having dated technology and platforms – Product and process complexity impeding ease and transparency – Long-standing silos between lines of business, business and IT functions, and market channels 4

• Sold exclusively through Branch & Call Center
• 88% Revenue from Customers aged < 50 years
• 82% Subscriptions from Male Customers

Distribution Channels Innovative Features

• Pro-rata coverage
• Premium as low as Rs. 2/day

Launch of Kamyab Mustakbil

Simple term life plan with Death Benefit up to Rs. 1,000,000

• Addition of Accidental Death & AMR Benefit
• Total coverage up to Rs. 1,300,000
• Sold additionally through App and USSD

Launch of Kamyab Mustakbil Plus Kamyab Mustakbil Kamyab Mustakbil Plus 2016 2017 2019

• Term Life and Accidental Death Benefit
• Total Coverage up to Rs. 1,000,000
• Daily/Monthly Recursive Premium

Launch of Easypaisa Life Insurance

• Digital Enrollment and Policy Delivery
• Cashless Claim Payments
• Lesser Exclusions

Key Considerations

Case Study: Product Evolution at Telenor

Easypaisa Life Insurance 5

Current Market Practices

• 1. Focusing on Microinsurance: Introducing ‘bite-sized’ and affordable products that are

embedded into consumers’ lifestyle (payment burden can be divided over shorter coverage terms)

• 2. Exploring Alternative Distribution Channels: Offering insurance through non-traditional

channels like Telcos, digital wallets and USSD code

• 3. Introducing New Payment Methods: To remove the barriers of premium collection as well as

claim disbursements, new modes of payment (like Airtime etc.) are integrated into the customer journey

• 4. Analyzing Claims Data: Identifying learnings about family size, medical expenditures and

income levels from micro-insurance claims data and incorporating them into future product development/revamp

• 5. Leveraging Digital Wallets’ Data: Income and spending behaviors of customers can be

measured through the use of Easy Paisa and Jazz Cash.

• 6. Offering Customized Products: Utilizing information about usage of credit facilities from

Microfinance institutions to provide customized products.

6

Moving Forward – Insurer’s Perspective

• 1. Customize Insurance: The traditional ‘one-size-fits-all’ approach to insurance is not

applicable on vulnerable households and informal sector.

• 2. Monitor Claim Ratios: Constantly monitoring claim ratio to properly gauge the utility/impact
• f the product on the end-customer.
• 3. Incorporate Customer Feedback: Keeping the customer at the center of product

development by continuously using customer feedback and behavior from all available customer touchpoints

• 4. Create Need-Awareness: Invest time and money in client education about insurance and

create a powerful and cogent marketing pitch

• 5. Digitize Internal Processes: Especially those which affect customer touchpoints (Instant

claims, Personalized quotes etc.)

7

8

Role of Regulator & Private Sector

Launch mass media campaigns with the collective effort

• f the Government and the insurance industry to raise

awareness regarding insurance and its benefits

Mass Awareness Campaign

Leverage institutions that have achieved high consumer penetration in their respective markets such as Telcos, MFIs, MFBs & NGOs

Ecosystem Development

Elimination of regulatory obstacles to the launch of new products on the market, and simplifying the notification and approval process.

Regulatory Relief

Establish centralized repository to assist insurers determine the appropriateness of a policy, resulting in need-based selling and reduction in mis-selling.

Centralized Repository

9

Thank you!

Panel Discussion & Q&A

Key takeaways

Experience survey

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