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Craig Churchill and Vijay AthreyeCGAP Working Group on Microinsurance
Cape town, November 2006
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Presentation Overview
1) Key challenges2) Main marketing messages3) Microinsurance marketing techniques4) After-sales service5) Marketing mandatory insurance6) Lessons from Tata-AIG
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1) Key marketing challenges
Low-income market…• Is unfamiliar with insurance…often confuse insurance
with savings• Is largely illiterate• Assumes that insurance is for the rich• May have bad experiences with insurance (e.g. late or
rejected claims, corrupt agents)• Often does not engage in long-term financial planning• Lacks infrastructure (e.g. banking, transport,
communications)
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1) Key marketing challenges
Microinsurance is difficult to sell because…• People do not want to think about risks • Reliance on historical coping mechanisms: family,
fatalistic attitude• The poor live from day-to-day and lack disposable
income• The poor cannot afford to spend their limited resources
to buy peace of mind• Products are seldom built around distribution • Community involvement in front end processes is
minimal
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2) Main marketing messages
Based on a review of the case studies, microinsurance providers often use a combination of four main messages:
a) Protectionb) Solidarityc) Optimismd) Trust
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2a) Main marketing messages:Protection
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2d) Main marketing messages: Trust
Link insurance delivery to a trusted organization:
• AIG with TATA• VimoSEWA with SEWA• TUW SKOK with the credit unions
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3) MI marketing techniques
3-step marketing process
1) Raise awarenessa) about insurance b) about a specific insurer
2) Cultivate an understanding of insurance
3) Activate the market
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3) MI marketing techniques
• Use of enrolment campaigns• Effectiveness of testimonials• Promotions: raffles, lotteries
3) Activate the market
• Provide staff with appropriate resources (e.g. brochures, pictorial presentations, FAQ sheets)• Simple products are easier to explain• Provide sales training for frontline staff• Use local concepts• Consider diverse communication channels
2) Cultivate an understanding
• Marketing role of prevention campaigns• Branding: logos, taglines• Public relations: corporate sponsorship
1) Awareness raising
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3) MI marketing techniquesChallenge: Educate the market about insurance, its utility relative to other risk management strategies, and encourage vulnerable households to buy insurance…without pushing policies on the poor
Possible solutions:• Set moderate sales targets• Balance sales commissions with re-enrolment incentives• Set up a separate microinsurance department• Encourage salespersons to buy insurance as well
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3) MI marketing techniques: Customer promotions
Product brochure and wall painting
18-60years
Choice of Accident Rider SA from 5K TO 50K
Rs148 for 30 yr oldFor 10K SA + ADB+
Service tax
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3) MI marketing techniques:More customer promotions
Distribution of claim /Policy documents
Street play to create awareness
Branded van as mobile office
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3) MI marketing techniques: Channel promotions
• International convention• Van miles scheme• Company branded
merchandise scheme• Retraining module• 100 percent insured village
scheme
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3) MI marketing techniques:Challenges wary with by product and channel
Retail
GroupMandatory
GroupVoluntary
Company own channel/ Combination
BanksNGOsCoops and CBOs
MFIs (partner-agent)
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4) After-sales Service
• Provide a brochure or policy document for all• Encourage or facilitate claims • Prevent claims rejections, delays• Have a claims appeals processes• Solicit word-of-mouth recommendations • Monitor retention • Measure satisfaction
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5) Marketing mandatory insurance
Problems with mandatory coverage:• Clients do not know they are covered• They may not be aware of all of the benefits• They do not know how to make a claim• They consider insurance a cost of getting a loan• But they do not know how much it actually costs• They may want a refund if they do not make a
claim
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5) Marketing mandatory insurance
Possible solutions:• Include some voluntary components• Highlight the menu of services/benefits• Show how much it would cost if it was voluntary• Make the product real (e.g. testimonials)• Promote the solidarity nature of insurance
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6) Lessons from Tata-AIG:Marketing individual policies
ADVANTAGES+ Can cater to market heterogeneity – Really inclusive+ Integration – share common front-end facilities and costs+ Choice of products (including long tenure products) – Creating
the MI customer+ In some countries, meets regulatory mandate
LIMITATIONS– Requires high levels of awareness creation/capacity building– Costly – long-term infrastructure may be warranted– Long-term commitment of organization and top management is
required
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6) Lessons from Tata-AIG
Topmgt. and
regulatorycommitment
Relevant/affordable
products
Processesfront end /back end
Team andpeople
Livelihood-basedgrassroots
capacity building
Integration:Long-term
growth drivers
Target marketawareness
Development sector
involvement
Technology innovation for servicing costs
Nov 04 –5.90% FYO5 -7.74% FY07–9.32%
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Craig Churchill Vijay Athreyechurchill@ilo.org Vijay.Athreye@tata-aig.com
No product, however good, sells by itself,especially in microinsurance!!!
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