Achieving Scale and Efficiency in Microinsurance Through Retail and Banking Correspondents

Exploring alternative distribution channels to extend the reach of insurance
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This study examines banking and retail correspondent models as possible microinsurance distribution channels to achieve scale at low cost. It seeks to understand the factors driving profitability and the client value proposition of these models and draw out lessons from these partnership models that can be replicated to drive scale and efficiency. The four distribution models analyzed in the paper are Bradesco in Brazil, HDFC-FINO in India, Malayan-CLIS in Philippines, and Hollard-Edcon in South Africa. The research is based on analysis of information collected from interviews with key stakeholders, in-store visits, mystery shopping exercises, and desktop research.

In analyzing the case study partnerships and products, key success factors were identified, which include:

  • Agent networks play a key role in extending the reach of insurance;
  • Providing adequate incentives to all parts of the value chain ensures a harmonious and sustainable partnership;
  • Retail and banking correspondents provide efficient and convenient premium payment mechanisms;
  • Efficient and convenient client servicing can be promoted by delegating responsibilities to the correspondents;
  • Leveraging the distribution channel brand overcomes distrust of insurers and can drive cost-efficiencies;
  • Partner resources and channels can be combined in creative ways to take advantage of their infrastructure and expertise;
  • Investing in systems can drive efficiencies in the long run and at scale.