Presentation made by David Ronoh (Managing Director - CIC Life Assurance Ltd, CIC Insurance Group, Kenya) at the 6th ICMIF Development Network Seminar (1-2 November 2012; Nairobi, Kenya)

1. MUTUALS UTILIZING TECHNOLOGY TO
INCREASE FINANCIAL INCLUSION
David K. Ronoh - Managing Director , CIC Life
5th November 2012
Nairobi Kenya

2. Introduction
 With almost half of the world’s six billion people
living on less than two dollars a day, alleviation of
poverty through financial inclusion has become
the biggest challenge to the human society. In
response, the global campaign against poverty
has gained momentum, with various development
actors suggesting the use of different instruments
to alleviate poverty. There is an emerging
consensus among many actors, including the
United Nations (UN), the International Labour
Organization (ILO), the International Co-operative
Alliance (ICA) and the European Union (EU), that
the co-operative enterprise is one of the few forms
of organization that can meet all dimensions of

3. The Big Challenge
• Financial exclusion is the unavailability of financial services to poor
people. It is believed to be one factor preventing poor people from exiting
poverty, by forcing them to manage their finances on a cash only basis and
restricting their access to equitable sources of credit and insurance.
• It is a reality that most poor people in the world still lack access to
sustainable financial services, whether it is savings, credit or insurance. The
great challenge before us is to address the constraints that exclude people
from full participation in the financial sector.
• Co-operatives have the advantages of identifying economic opportunities
for the poor; empowering the disadvantaged to defend their interests; and
providing security to the poor by allowing them to convert individual risks
into collective risks. Indeed, co-operatives are well placed to bring about
equitable development and justice desperately needed as well as social
continuity and cohesion for the disadvantaged

4. The Use Mobile in Financial Services
According to recent world bank report on Africa Region Poverty
Reduction and Economic Management Unit:
• The mobile revolution has transformed the lives of Kenyans
through:
– Communications
– Basic financial access
• Currently, 93% of Kenyans are mobile phone users and 73 %
are mobile money customers.
• Additionally, 23% use mobile money at least once a day
• New potential for mobile money has come with the rise of
interest-earning bank-integrated mobile savings
systems, beginning with the launch of the M-KESHO system in
March 2010

5. Kenya’s Potential Microinsurance Market
Upper • 1.6 Million
• Out of a total population of 40m,
there are 21m adults of whom
Middle • 2.4 Million 12m are unemployed.
• 7m Kenyans are employed in the
informal sector
• 4 Million – Microinsurance
Middle Low Market • 24m people living below $2 a
day.
Low
• 8 Million – • In excess of 12 million Kenyans
Microinsurance Market
earn between $2 and $10 per
day and form a strategic and
< $2 per day • 16 Million core market segment for
Microinsurance.
(Source: Cenfri, Kenya Microinsurance Landscape, 2010)
<$1 per day • 8 Million

6. Distribution Of Microinsurance
• The choice of a particular distribution channel is based
on its proximity and the trust relationship to the low
income market, in addition to cost efficiency, the main
challenge is outreach and growth.
• Micro insurers have innovatively worked together with
insurance intermediaries ,NGOs, retailers, community-
based organizations, governments, employers and
churches.
• CIC Kenya has been working with MFIs , cooperatives
and banks as the preferred distribution channels as they
have already established networks and are close to the
target market.
• The challenge of outreach & growth calls for alternative
distrubtion channel – the mobile technology

7. Why Slow Growth In Micro insurance Despite The
High Potential
• The lack of insurance awareness is also seen as a challenge and
translates into a relatively low demand for micro insurance services
• The high costs which are up of high acquisition costs as the policy
holders are often living in remote areas and are not reachable by the
conventional distribution networks
• The distribution of micro insurance products is also as a major challenge
as infrastructures are often not set up yet
• The lack of available data, which is needed for risk assessment and
premium calculations, is another significant challenge when entering
this market.
• Process challenges such as registration, administration, customer service
& claims settlement still a major challenge

8. Micro insurance Models
A number new micro insurance distribution models have
evolved that depend on the utilization of partnership with
organization not traditionally in the insurance space to use
technology in insurance product distributions namely,
• USSD registration
• Sales of card starter kit
• Premium deduction from airtime WASP & VASP
• Mobile money

9. Mobile Insurance
The new buzz word at CIC is M-Bima (Swahili for
Mobile Insurance). M-Bima is a first in the Kenyan
insurance landscape to be used to distribute and
collect insurance premiums. The platform was
developed by CIC based on information from our
cilents that they would like to be able to pay their
premiums in a mode that fits their lifestyle.
Most of the low income households in Kenya work
in the informal sector and earn a wage their
irregular income on a daily basis. To respond to this
lifestyle , CIC has over the last one year developed
M-Bima, a payment platform that allows clients to
sign up, pay for the premiums and review their A CIC Activation Tent in Donholm, Nairobi
statements from their mobile phones. The platform is
available on mobile phone as well as on the internet on

10. CIC Experience In The Use of Mobile Technology
Marketing
Distribution
Insurance Administration
Customer Service &
Support

11. Case Study: M-Bima
M-Bima Platform:
• CIC Insurance has developed the M-Bima Platform
• The platform was developed by CIC based on information
from clients that they would like to be able to pay their
premiums in a mode that fits their lifestyle.
• It is a payment platform that allows clients to interact with
the insurance company from a touch of a button and at
their convenience. The uses include:
• Distribution of insurance products (clients can sign up for a
policy)
• Collect money for savings (Payment of premiums via M-Pesa)
• Communication and updates to existing clients
• Review of client statements
• The platform is available on mobile phone as well as on the
internet on www.m-bima.co.ke

12. Jijenge Savings Plan
Jijenge is the first product that is riding on the M-Bima
platform. Product Features:
• Immediate automatic life cover on joining in the event of Accidental
Death or Accidental PTD.
• Low premium payments from as low as an equivalent of Ksh.20 daily
to accommodate the policyholder’s irregular cash flows
• 12 year savings plan with options of Exit Benefits from the end of
3rd year
• Optional Family Life cover that pays a shared benefit of Sum Assured
per year for death of a member of a nuclear family
• Premium payments free of transaction charges to the clients
• Weekly premium arrear reminders sent and clients have online
access to Policy Account status

13. Marketing
• Marketing seeks to facilitate adoption of the M-Bima platform
• Building an M-Bima brand with language that resonates with
the target market has become important due to increased
competition

14. Marketing (Cont’d…)
Wall branding is a major marketing tool for CIC’s
M-Bima platform as shown below

15. Marketing (Cont’d…
Qualitative research is one of the avenues of market analysis being used. This
includes having focus group discussions with sample groups of M-BIMA clients at
their convenience, in areas of their operation. This will inform CIC’s future
marketing plan which includes branding, communication and distribution.
An M-Bima Focus Group of existing clients
CIC has taken insurance to the next level by making it not only affordable to the
average person, but by making it a convenient affair. It is clear that M-Bima’s
success will be a breakthrough for microinsurance worldwide.

16. Distribution
The main distribution channel is through M-Pesa
outlets and existing networks in the informal
sector. To stimulate the market, CIC organizes
activations whereby the company goes to a
neighbourhood, sets up a tent and have sales
people talking to clients. They attract attention
by playing popular local music and
entertainment.
A client uses their mobile phone to sign up for M-Bima Jijenge
Savings Plan

17. Insurance Administration
M-Bima leverages on Mobile Money
Technology for:
 Distribution
of the Insurance products
 Premium collection
 Agents Commission payments
 Claims Process (Reporting, tracking &
payment)
 Customer Service and Policy Administration
 Commission processing

18. Customer Service & Support
 Among areas where mobile technology is being
used to provide customer service and support
include:
 Bulk SMS for premium payment reminders and
disbursement of statements
 Twitter and other social application to respond to
customer queries
 USSD for registration, claims reporting &
endorsements
 Mobile money for premium payment and client benefit
payments
 Mobile Applications

19. Customer Service & Support
(Cont’d…)
 Insurance companies have partnered up with players in the
telecommunications industry to implement the Unstructured
Supplementary Service Data (USSD) technology. This technology
has opened the door to interactive communication between the
client and insurance company without human intervention with the
following benefits:
 Access to service request via a phone menu
 Benefits paid using the phone
 Statements and client originated queries
 Company originated feedback, promotions & customer education
 Bulk SMS messaging has also proved a powerful tool for sending
standard messages such as:
 Payment reminders
 Client Statements
 Notifications

20. Issues And Challenges
Technological Challenges
• Integration of mobile system with existing underwriting systems
• Network and Data outages
• In certain rural areas, there are people who do not know how to use
internet services on their phones
• Number portability issues: Inability to use mobile money services across
networks
Other Challenges
• High initial expenses due to the expensive distribution model
• Poor product knowledge and skepticism about the Insurance Market.
• Risk of miss-selling by the distributors
• The marketing approach can expose a brand to reputational risk
• Operational risks as a result of exposure born out of the nature of the
operations of the product

21. Conclusion
• The mobile technology is no doubt the most creative
innovation in the world, providing any-where any-time
convenience, just-in-time payments, personal security and the
ability to enhance the increasingly time pressured business
environment
• The opportunity afforded by the mobile phone are
revolutionary. The secret lies in crafting the right strategic
partnership with the mobile networks
• Marketing through technology brings business up to speed
with today’s fast-paced, technology-centered consumer
market.