MicroEnsure : Democratizing Insurance

Anand Laishram *

A majority of people living in developing countries are just a setback or two away from complete financial ruin. An unforeseen event can easily send millions upon millions of people around the world below the poverty line. It can be an illness, or a natural disaster, or a vehicle accident, or even a shop burning down. Countless people live with immense economic vulnerability around the world.

But the surprising pattern that Richard Leftley, the founder of MicroEnsure, came across, upon studying statistical analyses by a leading global re-insurer, was that these regions also had some of the lowest insurance consumption in the world.

Most of the insurance pay-outs were taking place in the developed world. And the developing world, which needed the safety net of insurance way more, hardly had access to any insurance. Most people in these countries didn’t even know what insurance meant.

Leftley realized the need to address this non-consumption. He left a cushy, high paying job in London, to start MicroEnsure, with the goal of making insurance accessible and affordable for people living in the poorest countries of the world, starting in Zambia, Africa.

In order to serve these markets, where most people didn’t understand the concept of insurance, MicroEnsure had to develop an innovative business model, aimed at breaking down the barriers to consumption. The traditional insurance business models just wouldn’t work in these markets. MicroEnsure didn’t get things right from day one. They had to experiment repeatedly and face financial difficulties themselves. But ultimately, through trial and error, they found the perfect formula.

- Firstly, they had to reframe what they were selling, around their target customers’ Jobs To Be Done. They couldn’t just sell ‘insurance’ to people who had very little idea about the concept in the first place. Instead, they appealed to people’s needs to steadily provide for their families, by protecting themselves from the unforeseen upheavals of life, which could prove very costly for those who were already making do with very little.

- Secondly, they had to break down the barriers to consumption (especially Accessibility, Expertise and Time). MicroEnsure enables this by allowing people to buy insurance along with talktime minutes. By spending a certain minimum amount (and upwards) on talktime, customers can include insurance in their purchase as well.

Mobile connectivity was already present in Africa and people were accustomed to buying talktime minutes from their neighbourhood retail stores. By allowing people to also purchase insurance using basically the same process that they were already familiar with, MicroEnsure made insurance highly accessible for these first-time buyers.

- They also made signing up for insurance very simple. Customers only needed to give their mobile numbers, thus eliminating the need for paperwork or for the customers to give more personal information. This was a radical new development in the insurance industry, which traditionally relies heavily on data and information collected from customers.

Such deviations from the norm were considered very risky, but ultimately the innovative approaches began to bear fruit.

MicroEnsure started out with a lot of difficulties, but they have today become an enormous success. Since starting out in 2002, MicroEnsure has served over 60 million customers, and has paid out more than $30 million in insurance claims.

When they launched in India, they signed up 1 million customers on day one. They have also introduced different types of insurance products, including hospitalization insurance, which can prove to be the difference between life and death for many poor families.

MicroEnsure has been awarded the Financial Times/ ITC Transformational Business Award four times as well. Companies like MicroEnsure need to be celebrated for their immense contributions to society. They also demonstrate the power of Market Creating Innovations in creating prosperity.