Large telecom operators in Africa like Airtel, Safaricom, Tigo, MTN and Vodacom; are now competing with each other to break into the African insurance market. They are using innovative business models to attract customers, and challenging traditional insurance premium payment models, says an article on TheAfricaReport.
Samuel Kiruthu, chairman of Kenyan telecoms firm Cellulant said that mobile telephony can completely revolutionise the insurance sector, and that step change has already begun. He prophesized that the firms which move the fastest in this area, will gain the most.
The continent however has been progressing fast in mobile penetration which is soaring. Almost 65% of sub-Saharan households own a mobile phone. This is expected to go as high as 79% by 2020, according to Frost & Sullivan.
That has given opportunities as MTN has a life insurance product mi-Life in Ghana. In South Africa, network operator SharedPhone offers a My Funeral Card product. Airtel and Tigo offer micro life insurance products in Tanzania. Vodacom is the latest entrant with a health insurance product called bimaAFYA. Econet offer life insurance products to its mobile phone users in Namibia and Zimbabwe.
Africa has a very low insurance penetration rate of only 3.5%. This is almost half of the global average of 6.3%, according to a report by Global reinsurance major, Swiss Re. South Africa contributes to a major part of the African average as it stands at 15.4%. Without the continent’s heartland, the average tumbles down to one percent.
Mobile telephony which has already revolutionized the payment systems and banking in Africa, is also expected to do the same with insurance. There is certain amount of synergy between payment models and insurance. Systems like M-Pesa allow consumers to pay premiums, file claims and receive payouts through their mobile phones.