Cell phone-based insurance targets low-end market

We may all have had light bulb moments when sudden flashes of inspiration and discovery of a solution to a problem stares at us in the face. FILE PHOTO | NMG 

We may all have had light bulb moments when sudden flashes of inspiration and discovery of a solution to a problem stares at us in the face.

Entrepreneurs have such moments but theirs are often the basis of their next business idea, some of which go on to succeed.

John Paul Otieno and John Magambo had their light bulb moment when they rolled into the market mobile phone-based AfyaPoa under their Insurance for All (IFA) company.

The licensed insurance agency, with a focus on providing low-income earners in Kenya with relevant and affordable insurance products, is the first product it has rolled out into the market with great success. The model of the business is such that payments are automatically deducted from mobile phone credit, meaning policy holders only pay what and when they can afford.

“It is a unique health financing solution that combines benefits of insurance, savings and loans. We have 49 registered companies, over 500 insurance brokers and over 20,000 insurance agents all serving little over two percent of our population,” he says.

Otieno says that his company stands out because of its focus on delivering products to the remaining 98 percent who are mostly low income earners.

“The firm offers quick and simple products mostly via mobile phones. So far we have sold about 1,500 policies since we launched AfyaPoa in 2018, covering over 6000 lives,” he says.

Otieno says their inspiration comes from the fact that a single misfortune such as the death, disability, or even sickness of a breadwinner or any of his family members, can wipe out whatever little savings or capital they have worked so hard to accumulate, driving them and their families deeper into poverty.

“There is a great need to provide appropriate low-cost insurance products that these people can easily access,” he says.

He adds that the elements of AfyaPoa’s design are crucial to its success as the daily repayments match how Jua Kali (informal) workers – mostly day labourers – earn their money.

While AfyaPoa may be doing well right now, Otieno says that it was not an easy start for the duo.

He says that despite the fact that their idea was good enough to get them the initial capital from a local investment group (Chama) called SIAM Investments Ltd while still at the idea stage, they still faced hurdles.

“With the initial funds we were able to set up the business and start out.

“We were also lucky to benefit in this early stage from various grants through UKAID -funded projects,” he says.

That however did not mean a smooth takeoff for the business, explains Otieno who adds that it took about two years from the time they set up to get an underwriter and bank who were willing to partner on the product.

“We finally rolled out on our first pilot in 2016 at Kahawa West Market. But we were forced to withdraw the product from the market after about five months of active selling when the bank we were working with went into receivership. The underwriter was also unable in most part to pay up the initial claims that came in,” he says.

While that may be enough for a small startup to give up and look for something else to do, Otieno says that they believed in the idea so much that they looked for new partners and forge forward especially during uncertain times.

“We relaunched the product in December 2017, just after the repeat presidential election having gotten new partners. We also modified the product and our strategies to reflect the lessons learnt from our initial pilot,” he says.

The common man

One of the strategies they incorporated in the company is the use of mobile phones to make their services easily available to the common man.

Otieno say that since the use of the mobile phone has been mooted as a viable way of mobilising funds for healthcare, especially for low-income earners they knew this is what they needed to do.

“We have to be viewed as efficient in delivering the promise by our clientele in order for them to trust and buy our products. We have thus innovated by re-engineering our processes right from the way we do selling, registration, premium payment to claims settlement so as to enhance the customer experience. We leverage on the mobile phone to deliver the desired convenience and efficiency,” says Otieno.

He says that this is so because more than half of Kenya’s population earns less than Sh250 per day but has access to a mobile phone.

Insurance for All has made great strides with their biggest achievement this year being granted the Sankalp Africa Award at a summit held in Nairobi, an initiative by Intellecap Advisory which Otieno says has given them the boost they needed.

Although the Sankalp award has no cash value, Otieno says that by being the third overall winner will give them exposure to enable them eventually scale up their business.

“We have increased our marketing activities to cover the whole of Nairobi. We hope to move into Mombasa and Kisumu next year and we are looking at growing our policy numbers to 10,000 by the end of this year from the current 1,500,” he says.

Otieno adds that they have also made it a priority to add value to their insurance product by incorporating other financial benefits that are likely to provide immediate and enduring value to their customers.

“As a result our product is the first of its kind to come bundled with an element of saving and loans. We are moving on further to also incorporate investment options as well in the near future,” he says.