UWFA Insurance Case Competition

Team #smooth

Aili Huang
Chris Ng
Jessica Yuan
Lily Peng

Overview

Rapid growth in certain cities in China has led to social and wealth imbalance between urban and
rural areas
The Chinese Insurance Regulatory Committee (CIRC) encourages insurers to offer microinsurance products to the poor
China Life is both a state-owned enterprise (SOE) and a publicly traded company

Issue

Should China Life offer insurance products to the rural market?

If yes, what products should China Life offer?

Decision criteria

Social responsibility
Profitability

Provide customized micro-insurance products through pilot project

Renewable & Convertible Term Insurance

Accident Insurance

Background

Recommendation

Insurance Premiums and Real GDP per capita

Rural Distribution in China (millions), 2007

100
80
60
40
66%
20
56%

46%

60%

64%
56%

64%

Rural Population

68%

Life
Non-life
GDP

60%

Urban Population

Micro-Insurance Overview
Definition

Insurance designed for the low income market;

Often used as a tool for social improvements
Traditional Insurance

Micro-Insurance

Clients

Low risk
High insurance literacy
Middle to high income

High risk
Low insurance literacy
Low income

Policies

Complex products
Many exclusions
Risk-adjusted pricing

Simple products and language

Few exclusions
Group policies

Distribution

Licensed brokers and

agents

Non-traditional intermediaries

Premiums

Received regularly
Monetary values

Received infrequently
Lower premiums
Not necessarily monetary
Flexible and faster claim process
Social Benefits

Profitability
About 80% of
claims and
operational costs
are covered by
premiums

Stimulates core
business operations
through
differentiation and
innovation

Evolution of Life
Micro-Insurance Products

Increases awareness of
risk management and
savings instruments

Reduces vulnerability
of the poor to damages
and losses due to
unforeseen events

Fiduciary Duty
As an SOE, carries
out the interest of
the government.

Industry Overview
Porters Five Forces

Industry Prospects**

Threat to
New
Entrants
Availability
of
Substitutes

Competitive
Rivalry

Bargaining
Power of
Suppliers

Bargaining
Power of
Buyers

Major Competitors*

Industry Characteristics

2007 Market Share

Other
20%
Taikang
Life
7%

Xinhua
Life
7%

Pacific
Life
10%

China
Life
40%

Ping An
Life
16%

Growing demand

Low market
penetration in rural
areas

Coexistence of SOEs
and private players

CIRC supports
participating
companies in the pilot
program

3
*Source: http://www.chinaknowledge.com/Business/CBGdetails
**Source: http://www.microensure.com/images/library/files/Resources/MicroinsurancePoV_01.12.pdf

Projected Profitability
Maximize shareholder value by pursuing profitable projects;
Project Profit = Product Profit + Synergy

Goal

Premium Revenue

Rural
23%

Urban
77%

Premium
Payment
1.37%

Target
Provinces
36%
Others
64%

China GDP

Others
98.63%

Rural GDP

China
Life
Unpenetrated

Target Province GDP

Market Size

Assume premium = RMB 25

Assume rates: 25% 39%

Expenses: Assumptions
Benefits & claims

Increase incurred claims ratio from 70% to 80%

Statutory insurance fund

Policyholder dividends

Decrease to 0

Underwriting, admin & others

Increase the ratios to revenue by 50%

Projected Profitability
Goal

Maximize shareholder value by pursuing profitable projects;

Project Profit = Product Profit + Synergy

(RMB MM)

2009E

2010E

2011E

2012E

2013E

Product Profit/(Loss)
5,155
Revenue
(5,603)
Expenses
(448)
EBIT
(360)
(Net loss)
-6.99%
NI margin

7,051
(7,664)
(613)
(493)
-6.99%

9,115
(9,907)
(792)
(637)
-6.99%

11,287
(12,267)
(981)
(789)
-6.99%

13,523
(14,698)
(1,175)
(945)
-6.99%

43,900

54,751

67,318

82,806

101,906

Synergy

1,536

1,916

2,356

2,898

3,567

Project Profit

1,176

1,423

1,719

2,109

2,622

Synergy

Synergy

NI - Traditional

5.5%
4.5%
3.5%
2.5%
1.5%
0.5%
-0.5%

20%
2292
1853
1414
975
536
97
-342

30%
2213
1774
1335
896
457
18
-421

Costs
50%
2054
1615
1176
737
298
-141
-580

40%
2133
1694
1255
816
377
-62
-501

Synergy

Investment
professionals believe
corporate social
responsibilities increase
shareholder value by an
average of 2-5%*
Assume synergy of 3.5%

60%
1975
1536
1097
658
219
-220
-659

*Source: S. Bonini, N. Brun, and M. Rosenthal, Valuing corporate social responsibility, The McKinsey Quarterly, February 2008

70%
1896
1457
1018
579
140
-299
-738

80%
1816
1377
938
499
60
-379
-818

Decision Matrix
Goal

Criteria
Criteria Weight
Term Insurance
Accident
Insurance
Micro-credit
Endowment
Insurance
Disability
Income

To develop profitable products that the low-income market would be interested in buying.
Product Social Risk
Value Protection

Rate of
Renewal

Ease of
Affordability Understandability
Distribution

Total

18%
6

18%
7

16%
8

13%
9

13%
6

11%
8

11%
8

100%
7.33

7.38

6.01

5.65

5.01

About the Matrix

Conclusion

o
o

5 Products are considered.

Products are designed to match the coverage
demand of the rural market.

Many criteria were considered but only the 7 most

relevant are selected.
Criteria are selected based on the interests of the
target market as well as the company.

Next Step

Promptness of
Claims
Settlement

Top products:
Term Insurance
Accident Insurance
Design the chosen products to make it
competitive and profitable.

- Employs educated younger

individuals to serve as
agents
- Agents are also
responsible for promoting
and educating general
population about
insurance

Premium
Payment

- Insurance for the whole

village
- Lower premium per
person
- Reduces distribution costs
- Village leaders act as the
agents

Individual
Insurance

Group
Insurance

Suggested Products
- If monetary payments are
difficult, potential other
payment methods include:
- Harvest payments
- Paying by trading cell
phone air time

Products

Features

Premiums

Benefit

Advantages

Renewable &
Convertible
Term 5

- Life Insurance
- Allows policyholder at the end
of the term to:
renew for an additional term
or
convert the policy to a
permanent one

Level premium
for each term
with a premium
increase for each
new term

Lump
sum

- Insurance for those

unable to buy
permanent plans at the
moment
- Assists rural
policyholders to
consistently obtain
insurance

Provide financial support against

the following as a result of
accidents:
- Accidental death
- Dismemberment of all or part of
a limb
- Loss of sight, hearing & speech

Regular

Lump
sum

- Affordable
- Financial protection for
the breadwinner of the
household
- Targeting those
working under high
risks

Accidental Death
&
Dismemberment
Insurance

(Ex: Premium of RMB

32 for coverage of
RMB 10,000)

(Ex: Premium of RMB

25 for coverage of
RMB 10,000)

Implementation Strategies
Increasing Penetration Rate *

Keeping Costs Low

Marketing, sales, policy administration, claims payment, monitoring

Distribution Channel

Agents

Intermediaries

Family
marketing
Shorter term/
commitment

Group policy
village leaders
Education

China Life

Customers

Low product
development costs:
simple product

Savings from
government support
program

Minimizing fraud
costs: adequate
monitoring

Two birds with one

stone: can cut down
social responsibility
contributions in
other areas

young generation

Pay with crops

Technology (ease of payment & renewal)

Policy origination and processing, premium collection, administration
Factors that Help to Increase Penetration Rate

Plans for the Future **

Low needs met/ high ease of design

Credit Life

Regulations &
Legislations

Pilot Project

Technology
Customized
Solutions

(timely
application
processing)

Savings Life

Gradually
increase
customization
of product
offerings

Partnerships
Monitoring
(minimize
fraud costs)

Flexibility &
Scalability
Mobility

*Source: adapted from http://www.iaisweb.org/

**Source: World Banks Social Funds Innovations Notes 2008

Term Life/Personal Accident

Property Insurance
Endowment Life
Agriculture

Health Insurance

High needs met/ low ease of design

8

Risks and Challenges

Communication and
Dialects

Distribution

Lack of Awareness

Multiple existing dialects in

China especially in rural areas

Some rural areas are physically

hard to reach

Citizens in rural areas simply do

not understand insurance

Solutions:
Build positive relationships
with village leaders
Recruit agents originating
from target counties

Solutions:
Start the pilot in nearby and
populated rural areas
Send agents on voluntary
and missionary tours

Solutions:
Develop products based on
familiar commodities, e.g.
crops and farm produces
Simple paperwork

Lack of Supporting Data

Claims Settlement

Due to remoteness of location,

its hard to gather accurate data

Ongoing due claims and

verifications can be inefficient

Solutions:
Start at populated rural
areas to gather information
as the base line
Gradually build up database

Solutions:
Provide initial payment right
after claims have been filed
Provide final settlements
within 30 days
9

Recommendations
Entrance to the
micro-insurance
market in China
Objectives
accomplished

Accidental Death & Dismemberment Insurance

Renewal & Convertible Term 5 Insurance
Achieve profitability: 1,176 MM (2009E), increasing to
2,622 MM(2013E)
Through suggested products, reinforce China Lifes
socially- responsible brand image

2013 & beyond

2012
2011

2008
Finalize product
offerings
Obtain policy
approval from
government
Recruit agents

Consider longterm suggestions

2010
Continue to
to risk mitigation
implement the
(e.g. gradually
Increase the
2009
suggested
build up database
penetration rate
and relationships
Introduce the two Seek out additional strategies (e.g.
gradually increase with rural areas)
suggested
rural markets
the customization
products in the 9
of products)
selected
provinces
Establish
distribution
channels

Incorporate
technology to
facilitate
increasing client
base
Remind clients to
renew or switch
to permanent
policies

Recommendations
Timeline
10

Decision Matrix Privately-Owned

Goal

To prioritize maximizing shareholders interest while maintaining certain levels of social responsibilities.

Privately-Owned:

State-Owned:

Maintain governments financial and social

interests
Lower expenses from existing government
supports
Lower profit margins

Criteria
Criteria Weight
Weight Change
Term Insurance
Accident
Insurance
Micro-credit
Endowment
Insurance
Disability
Income

Product Social Risk

Value Protection

Rate of
Renewal

More focus in generating revenue

Higher expenses
Higher profit margins
More competition

Ease of
Affordability Understandability
Distribution

Promptness of
Claims
Settlement

Total

25%
+7%
6

13%
-3%
7

16%
+3%
8

15%
+2%
9

10%
-1%
6

11%
0%
8

10%
-1%
8

100%

7.31

6.08

5.72

5.01

11

7.32

Projected Profitability
Premium Revenue

Expenses: Assumptions
Benefits & claims

Increase incurred claims ratio from 70% to

80% 77.50%

Statutory insurance fund

Policyholder dividends

Decrease to 0

Underwriting, admin & others

Increase the ratios to revenue by 50% 70%

China
Life
Unpenetrated

Market Size

Cost

Profit margin = -4.98% (from -6.99%)

2009 project profit = RMB 1,165MM (from RMB 1,176MM)
1,280
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%

50.00%
1015
1078
1142
1205
1268
1332
1395

52.00%
994
1060
1126
1192
1257
1323
1389

54.00%
973
1042
1110
1178
1247
1315
1384

Market share
56.00%
952
1023
1094
1165
1236
1307
1378

12

58.00%
931
1005
1078
1152
1225
1299
1372

60.00%
911
987
1063
1139
1215
1291
1367

62.00%
890
968
1047
1125
1204
1282
1361

Ultimate Recommendations Privately-Owned

Changes to Recommendations

SWOT Analysis

Strengths

Established extensive
sales force
Large market share in
existing insurance
market; strong brand
BOD consisting of
former government
officials

Weaknesses

Opportunities

Low current market

penetration in microinsurance
CIRC is supportive for
participating
companies
Pilot project is
profitable and brings
synergies to the
company
14

Lack of government
involvement may
disadvantage the
company
Shareholders may
differ in opinions in
terms of CSR choices

Re-evaluated financial viability and

profitability of the pilot project

Considered changes in strengths,

weaknesses, opportunities & threats

Threats

Altered weightings of criteria in

decision matrix

SOEs may have more

preferential treatments
from the government
There might be
regulatory barriers to
the micro-insurance
market for private
companies

13

Accidental Death &

Dismemberment
Renewable & Convertible
Term 5
Profitability: 1,165 MM
(2009E)

Appendix A: Income Statement

Income Statement of China Life (in RMB MM)
2003A

2004A

2005A

2006A

2007A

2008E

2009E

2010E

2011E

2012E

2013E

Gross written premiums and policy fees

69,334

66,257

81,022

99,417

111,886 130,683 148,962 169,916 193,329 219,756 249,795

Less: premiums ceded to reinsurers

(1,571)

(1,182)

(769)

(140)

(85)

Net written premiums and policy fees

67,763

65,075

80,253

99,277

111,801 130,175 148,383 169,255 192,578 218,902 248,824

Net change in unearned premium reserves

(547)

(67)

(215)

(430)

(397)

Net premiums earned and policy fees

67,216

65,008

80,038

98,847

111,404 129,717 147,860 168,659 191,900 218,131 247,948

Net investment and other income

11,667

11,798

18,174

48,464

79,968

Total Revenues

78,883

76,806

98,212

147,311 191,372 215,778 257,838 307,000 363,151 430,123 510,372

(8,570)

(6,816)

(8,311)

(10,797) (17,430) (15,606) (17,789) (20,291) (23,087) (26,243) (29,831)

(4,882)

(6,418)

(6,847)

(6,999)

REVENUES

(508)

(458)

86,061

(579)

(522)

(660)

(596)

(751)

(678)

(854)

(771)

(971)

(876)

109,977 138,340 171,251 211,991 262,423

BENEFITS, CLAIMS AND EXPENSES

Insurance benefits and claims
Life insurance death and other benefits
Accident and health claims and claim adjustment
expenses
Increase in long-term traditional insurance
contracts liabilities
Interest credited to long-term investment type
insurance contracts
Non-insurance benefits and claims expenses
Interest credited to investment contracts

(6,343)

(7,385)

(8,418)

(9,603)

(10,926) (12,419) (14,117)

(39,966) (25,361) (33,977) (44,238) (45,334) (58,682) (66,890) (76,299) (86,813) (98,680) (112,169)
(6,811)

(3,704)

(4,894)

(6,386)

(7,181)

(8,361)

(9,531)

(10,871) (12,369) (14,060) (15,982)

(449)

(616)

(973)

(996)

(1,138)

(3,081)

(3,938)

(4,953)

(7,793)

(8,521)

(11,607) (9,859)

(2,048)

(5,359)

(17,617) (29,251) (31,480) (40,228) (50,603) (62,641) (77,543) (95,990)

Increase in deferred income

(5,942)
Policyholder dividends resulting from participation
in profits
(1,207)

A-1

(6,131)

(7,590)

(9,396)

(16,997) (20,310) (24,183) (28,606) (33,882) (40,203)

Appendix A: Income Statement

Amortization of deferred policy acquisition costs

(5,023)

(6,263)

(7,766)

(10,259) (13,461) (12,780) (14,568) (16,617) (18,906) (21,491) (24,428)

Underwriting and policy acquisition costs

(1,294)

(1,472)

(1,845)

(2,415)

(2,725)

Administrative expenses

(6,862)

(6,585)

(7,237)

(9,339)

(11,798) (13,303) (15,896) (18,926) (22,388) (26,517) (31,464)

Other operating expenses

(872)

(131)

(798)

(859)

(1,651)

(1,525)

(1,823)

(2,170)

(2,567)

(3,040)

(3,608)

Interest expense on bank borrowings

(7)

Statutory insurance fund

(85)

(96)

(174)

(194)

(219)

(221)

(252)

(288)

(327)

(372)

(423)

(3,173)

(3,617)

(4,125)

(4,694)

(5,335)

(6,065)

Total benefits, claims and expenses

(81,970) (67,303) (86,702) (121,706) (146,390) (172,595) (203,259) (238,930) (279,457) (327,173) (383,675)

Share of results of associates

409

Net profit before income tax expenses

(3,087)

9,503

11,510

25,605

45,391

43,183

54,579

68,070

83,694

102,950 126,696

Income tax expenses

(1,180)

(2,280)

(2,145)

(5,554)

(6,331)

(8,449)

(10,679) (13,319) (16,376) (20,144) (24,790)

Net profit - Traditional

(4,267)

7,223

9,365

20,051

39,060

34,733

43,900

54,751

67,318

82,806

101,906

equity holders of the Company

(4,252)

7,171

9,306

19,956

38,879

34,572

43,696

54,497

67,006

82,422

101,434

minority interest

(15)

52

59

95

181

161

203

254

312

384

472

1,536

1,916

2,356

2,898

3,567

equity holders of the Company

1,529

1,907

2,345

2,885

3,550

minority interest

11

13

17

Net profit attributable to:

Synergy
Synergy attributable to:

A-2

Appendix B: Income Statement Calculations

Income Statement Calculations
2003A
Growth: Gross written premiums
N/A
% of reinsurer premium to gross written premiums
2.27%
% of net change in unearned premium reserves to
net written premiums
0.81%

2004A
-4.44%
1.78%

2005A
22.28%
0.95%

2006A
22.70%
0.14%

2007A
12.54%
0.08%

2008E
16.80%
0.39%

2009E
13.99%
0.39%

2010E
14.07%
0.39%

2011E
13.78%
0.39%

2012E
13.67%
0.39%

2013E
13.67%
0.39%

0.10%

0.27%

0.43%

0.36%

0.35%

0.35%

0.35%

0.35%

0.35%

0.35%

Total financial Assets

239,507 352,757 473,118 645,052 834,749 847,634 1,083,189 1,362,541 1,686,686 2,087,944 2,584,661
Growth: Total financial assets
105.98% 76.18% 53.64% 40.79% 32.79% 27.79% 25.79% 23.79% 23.79% 23.79%
% of total non-insurance premium income to total
financial assets
14.35%
7.04%
6.16% 10.69% 12.53% 10.15% 10.15% 10.15% 10.15% 10.15% 10.15%
% of expense to net written premium
-88.88% -65.00% -67.32% -68.92% -68.24% -69.16% -69.16% -69.16% -69.16% -69.16% -69.16%
Life insurance death and other benefits
-12.65% -10.47% -10.36% -10.88% -15.59% -11.99% -11.99% -11.99% -11.99% -11.99% -11.99%
Accident and health claims and claim adjustment
expenses
-7.20% -9.86% -8.53% -7.05% -5.67% -5.67% -5.67% -5.67% -5.67% -5.67% -5.67%
Increase in long-term traditional insurance
contracts liabilities
-58.98% -38.97% -42.34% -44.56% -40.55% -45.08% -45.08% -45.08% -45.08% -45.08% -45.08%
Interest credited to long-term investment type
insurance contracts
-10.05% -5.69% -6.10% -6.43% -6.42% -6.42% -6.42% -6.42% -6.42% -6.42% -6.42%
Amortization of deferred policy acquisition costs
-7.41% -9.62% -9.68% -10.33% -12.04% -9.82% -9.82% -9.82% -9.82% -9.82% -9.82%
Underwriting and policy acquisition costs
-1.91% -2.26% -2.30% -2.43% -2.44% -2.44% -2.44% -2.44% -2.44% -2.44% -2.44%
Statutory insurance fund
-0.13% -0.15% -0.22% -0.20% -0.20% -0.17% -0.17% -0.17% -0.17% -0.17% -0.17%
% of expense to non premium income
Interest credited to investment contracts
-3.85% -5.22% -5.35% -2.06% -1.42% -3.58% -3.58% -3.58% -3.58% -3.58% -3.58%
Policyholder dividends resulting from participation
in profits
-10.35% -17.36% -29.49% -36.35% -36.58% -36.58% -36.58% -36.58% -36.58% -36.58% -36.58%
% of expense to total revenue
Increase in deferred income
-7.53% -10.15% -8.68% -7.88% -5.15% -7.88% -7.88% -7.88% -7.88% -7.88% -7.88%
Administrative expenses
-8.70% -8.57% -7.37% -6.34% -6.16% -6.16% -6.16% -6.16% -6.16% -6.16% -6.16%
Other operating expenses
-1.11% -0.17% -0.81% -0.58% -0.86% -0.71% -0.71% -0.71% -0.71% -0.71% -0.71%
Effective tax rate
23.99% 18.64% 21.69% 13.95% 19.57% 19.57% 19.57% 19.57% 19.57% 19.57%
% of equity holders to total consolidated entity
99.65% 99.28% 99.37% 99.53% 99.54% 99.54% 99.54% 99.54% 99.54% 99.54% 99.54%
Value-add from CSR
0.00%
3.50%
3.50%
3.50%
3.50%
3.50%

A-3

Appendix C: Financial Analysis of Products

Financial Analysis of Rural Products (RMB MM)
2009E

2010E

2011E

2012E

2013E

REVENUES
Net premium revenue
Net investment and other income

5,155
-

7,051
-

9,115
-

11,287
-

13,523
-

Total Revenues

5,155

7,051

9,115

11,287

13,523

(4,124)

(5,641)

(7,292)

(9,029)

(10,818)

(759)
(188)
(477)
(55)
-

(1,038)
(258)
(652)
(75)
-

(1,342)
(333)
(843)
(97)
-

(1,662)
(413)
(1,044)
(120)
-

(1,991)
(494)
(1,251)
(143)
-

(5,603)

(7,664)

(9,907)

BENEFITS, CLAIMS AND EXPENSES

Insurance benefits and claims
Non-insurance benefits and claims expenses
Interest credited to investment contracts
Increase in deferred income
Policyholder dividends resulting from participation in profits
Amortization of deferred policy acquisition costs
Underwriting and policy acquisition costs
Administrative expenses
Other operating expenses
Interest expense on bank borrowings
Statutory insurance fund
Setup expenses
Total benefits, claims and expenses

A-4

(12,267) (14,698)

Appendix C: Financial Analysis of Products

Net profit before income tax expenses
Income tax expenses
Net profit
Net profit margin (%)
Net profit attributable to:
equity holders of the Company
minority interest
Rural products calculations
Net premium income (RMB MM)
Forecast GDP (RMB B)
% Rural GDP to Urban GDP
Forecast Rural GDP (RMB B)
Weighted avg % premium payment to income
% rural population targeted
Penetration rate
Market share of China Life
Net premium income (RMB MM)
Benefits, Claims and Expenses
% of expense to net premium revenue
Benefits and claims
Life insurance death and other benefits
Accident and health claims and claim adjustment expenses
Increase in long-term traditional insurance contracts liabilities
Interest credited to long-term investment type insurance contracts

A-5

(448)
(88)

(613)
(120)

(792)
(155)

(981)
(192)

(1,175)
(230)

(360)
-6.99%

(493)
-6.99%

(637)
-6.99%

(789)
-6.99%

(945)
-6.99%

(359)
(2)

(491)
(2)

(634)
(3)

(785)
(4)

(941)
(4)

29143.3
30%
6725.38
1.37%
35.75%
25%
62.62%
5154.9

33219.6
30%
7666.06
1.37%
35.75%
30%
62.62%
7051.11

37892.5 43113.9 49007.3

30%
30%
30%
8744.42 9949.362 11309.38
1.37%
1.37%
1.37%
35.75%
35.75%
35.75%
34%
37%
39.00%
62.62%
62.62%
62.62%
9115.36 11286.54 13522.81

-80.00%

-80.00%

-80.00%

-80.00%

-80.00%

0.00%
0.00%

0.00%
0.00%

0.00%
0.00%

0.00%
0.00%

0.00%
0.00%

Appendix C: Financial Analysis of Products

Amortization of deferred policy acquisition costs

Underwriting and policy acquisition costs
Statutory insurance fund

-14.73% -14.73% -14.73%

-3.66% -3.66% -3.66%
0.00%
0.00%
0.00%

% of expense to non premium income

Interest credited to investment contracts
Policyholder dividends resulting from participation in profits

-14.73%
-3.66%
0.00%

-14.73%
-3.66%
0.00%

0.00%
0.00%

0.00%
0.00%

0.00%
0.00%

0.00%
0.00%

0.00%
0.00%

% of expense to total revenue

Increase in deferred income
Administrative expenses
Other operating expenses
Setup expenses

0.00%
-9.25%
-1.06%

0.00%
-9.25%
-1.06%

0.00%
-9.25%
-1.06%

0.00%
-9.25%
-1.06%

0.00%
-9.25%
-1.06%

Additional % to selected expenses

50.00%

Effective tax rate

19.57%

% of equity holders to total consolidated entity

99.54%

99.54%

99.54%

99.54%

99.54%

A-6

Appendix D: Innovation & Technology

Seamless Integration of Technology

Importance of stream-lining processes

Examples of Successful Implementation

Real-time connectivity

In 2008, the ILO found that transactional systems

that streamline processes such as customer
registration, claims management and the
efficient flow of information are particularly
important to micro-insurers.
Without them, it said, the automation of user
interfaces, and the addition of knowledge
management, product design and business
intelligence, will simply add costs without
improving services to customers.

Flexibility enabling agents*

(2008) Aviva has implemented straight-through

processing that allows it to issue a policy within 24
hours of the application data being entered at any of
its Indian micro-finance partner Basixs 220
branches.
(2007) In India, IFMR Trust Holdings and HDFC Ergo
GIC use radio-frequency identification (RFID) tags to
minimize insurance claims fraud.

Mobility
(2008) Tata-AIG and ICICI-Lombard use vans to
roam the rural areas of India, educating consumers
by showing videos that explain the benefits and
workings of micro-insurance.

(2008) IFFCO-Tokios agents, working in remote

areas, use digital pens to quickly convert their
handwritten notes into formal policy
applications. The pen data is transferred via
GPRS or Bluetooth to the companys web-based
platform for processing.

*Source: http://www.microensure.com/images/library/files/Resources/MicroinsurancePoV_01.12.pdf

A-7