In this Issue of Africa Telecoms, we are looking at East Africa and mobile banking. Hollard recently announced a joint venture with MTN called mi-Life in Ghana. Can you tell us a little more about the product?
mi-Life is a life insurance product that has been specifically designed for the MTN mobile money platform. It is a holistic solution that allows the subscriber to buy the product from MTN merchants and service centres and also through one’s mobile menu; pay for the premium through Mobile Money; and manage the levels of cover subscribers want. Premiums vary from 1 cedis (US$ 0.65) for 500 cedis cover (US$ 331) to 5 cedis (US$ 3.31) for a cover of 2,000 cedis (US$ 1,327). Whilst there is a range of other m-insurance initiatives, this is the first of its kind in that it leverages off both the distribution and collection mechanisms of MTN Mobile Money. What is particularly exciting is that it addresses the unique challenges of Ghana. As only 34% of the population is banked and 22% insured (FinScope 2010), the combination of mobile money and insurance should dramatically push back the frontier of access.
The platform was created by MFS Africa, whose CEO Dare Okoudjou, we ran a Q&A with last year. Can you tell us about this partnership and the platform itself?
Hollard and MFS Africa have an international partnership focused around m-insurance for mobile money operators, where MFS provides the mobile money know-how and technology (in the form of their MFS-Box) to support the deployment of insurance. Hollard addresses all the insurance requirements in terms of product development, pricing and the regulatory issues. Hollard believes firmly in partnerships and backs specialists such as MFS Africa in pursuit of providing value to our consumers and partners.
How does this platform interact with that from Fundamo that runs their existing m-banking platform?
MFS-Box acts as a bridge between mobile wallet platforms (eg Fundamo) and the information system of financial institutions (eg insurance). It enables the policy to be populated automatically using data from the m-banking platform or the automatic renewal of a policy after a premium has been successfully collected from a client’s mobile wallet. This allowed us to have an almost seamless rollout of mi-Life as we were able to deploy the MFS Box with minimal distraction to MTN, which is a key comparative advantage.
Can you walk us through the decision to choose Ghana as a country in which to launch an m-banking insurance product?
The focus on Ghana came about for differing reasons and as a result of discussions with the MTN Group. At a high level, it is a country with high growth prospects, an enabling business environment and a supportive regulatory environment for insurers, which is extremely important. Furthermore, in discussion with MTN, we found that MTN was a well-respected brand and the largest mobile operator in the country with nine million subscribers, and that it had rolled out almost two million mobile money accounts. And lastly but not least, MTN has a dedicated country team who were keen to roll out mi-Life. We were also fortunate that our administration partners, MicroEnsure (a specialist international microinsurance administrator), and MFS Africa were also present in the country.
Is the partnership with MTN a group wide agreement or currently with MTN Ghana only?
If group wide, what is the expected rollout time frame for mi-Life to be offered to MTN’s other properties across Africa? Hollard and MTN have a group wide agreement so Ghana is the first of many. However, we will of course want to watch the pilot first before we make a decision about the next country, although we hope it is soon! But I would watch this space over the next six months.
Security is generally a question that is brought up fairly early on when looking at new m-banking products. Both from the perspective of activating a policy and then from claiming the benefits for the policy, can you give us some insight into the security procedures currently in place?
The MFS / Fundamo platform ensures very strong security features similar to a full banking experience. The old banking security adage of “what you have and what you know” resonates here – the client has a cell phone and a unique PIN number known only to themselves. So, in theory, it is safer than having a debit card as you don’t need to go to an ATM; and you can manage payments and buy the policy from the safety of your own home.
mi-Life is a life insurance product. Does Hollard foresee other insurance products being offered via mobile in the future? And if so, what type of products and when can the product portfolio expansion be expected?
mi-Life is the first of many products we plan to roll out with MTN Mobile Money. Whilst we would expect to offer more complex products, we are also planning a school fees product and a bill payment product which would cover the required instalments in the case of death. We would expect the next suite of products to start rolling out in the next six months.
With the fairly elaborate funeral habits of the general population in Ghana, is this a purely life insurance product or is it backing up as a funeral policy as well?
It is certainly a form of funeral policy, in that the funds may well be used to cover the costs of the funeral. As you pointed out, Ghanaian funerals are very elaborate with the most remarkable coffins shaped in the form of cell phones or birds, and so the funeral has a huge impact on the finances of a household. Further, should the main income generator die, the family can be devastated without life or funeral cover to meet the funeral expenses or provide some cash flow to tide them over till they can find an alternative income source.
Considering that life insurance is a recurring paymentbased product, how is this handled in the mobile banking arena?
Does the premium come off an existing bank account or a mobile banking wallet? The premium is deducted from the mobile wallet and MFS have actually recreated the recurring debit order on this platform so the premium collection is automated. This is unusual as mobile money initiatives often are based around push payments initiated by the user. The automatic deduction should make the experience for the consumer much more positive.
Regulation is a key area that needs to be supportive of m-banking initiatives. Has the environment been supportive in Ghana and have you had similar experiences in other markets where discussions have taken place to launch mi-Life?
We have certainly found Ghana an enabling environment for m-insurance with a regulator that has been encouraging of new initiatives. Other countries which we have operated in do tend to be far more restrictive in terms of using alternative distribution. For example, in some countries, it is a requirement for an agent of the insurer to distribute the insurance, whereas in this case MTN is appointed as a corporate agent so we can leverage off their footprint. We are fortunate that the international insurance regulatory body, the International Association of Insurance Supervisors, is also working to try and enable the market for microinsurance.
How does mi-Life differ from products currently on the market? For example, Econet Wireless’s product ‘EcoLife’ which is offered in partnership with Trustco?
We understand that EcoLife is more of a loyalty programme which is paid for by the mobile operator with the level of cover linked to your airtime spend. mi-Life is different in that it is a voluntary product that clients can select according to the cover they need and it also allows more predictability in terms of the level of cover.