Presentation by Agrotosh Mookerjee (MicroEnsure) at the Fin4Ag conference - Nairobi, July 2014.

1. Mobile Insurance:
Micro Product,
Macro Impact
Agrotosh Mookerjee
Principal Actuary
MicroEnsure

2. 1.WHY BOTHER ABOUT INSURANCE?
2.WHAT ARE WE DOING IN AGRICULTURE?
3. WHAT ARE WE DOING WITH MNO?
4. KEY LEARNINGS FROM MOBILE
PRODUCTS
5. WHAT NEXT?
AGENDA

3. WHO WAKES UP IN THE
MORNING WANTING TO BUY
INSURANCE?!

4. Value Creation – Accessing Demand for Insurance
Realities of Life in the Mass Market:
- Family death
- Illness
- Accident
- Natural disaster
- Lack of income and food
security
- Exploitation
- Marginalization
- Patronization
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

5. Do Low-Income People Want Insurance?
Low-Income Clients:
Move from city back to village
Remove children from school
Change to lower-paid/degrading work
Sell household goods or assets
Take on high-interest debt
Middle/Upper Income Clients:
Use savings
Raise money from community
Work an extra (temporary) job
Use insurance via employer
Take on low-interest debt
• The poor face more risk than any other population; they may not know about
insurance, but they live with a variety of risks on a daily basis
• The poor have many insurance “policies” today: assets, informal loans, various
savings spots, coping strategies
• The job of micro insurers is to offer more efficient risk mitigation tools, which are
simple, accessible, valuable and reliable
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

6. Mobile Insurance is Taking Off
Growth in Africa
2010-2012: 200%
Outside SA: 17.2 M
lives covered
Coverage by Country
8 of 9 markets with >1m lives insured have
done so with mobile micro insurance
Is low penetration a function of low demand?
Source: www.mfw4a.org/insurance/microinsurance-landscaping.html

7. Recent Agriculture Projects world-wide
COUNTRY DISTRIBUTION CHANNELS CROPS
INSURED
NUMBER OF FARMERS INSURED
(approximate)
ZAMBIA Contract Farming Cotton 7,000
RWANDA Linked to Lending, Farm
Inputs, Farmer Cooperatives
Rice, Maize,
Irish Potato
21,000
MALAWI Linked to Lending, farmer
union, church organisation
Tobacco,
Groundnut,
Maize
16,000
TANZANIA Linked to lending, contract
farming, farm inputs, NGO
Sunflower,
Safflower,
Beans, Cotton,
Maize
2,000
KENYA Farm Inputs Maize 3,000
UGANDA,
GHANA
Technical Consultancy support to insurance
industry, to develop crop insurance products.
n/a
PHILIPPINES Input supplier Rice 5,000
CARRIBBEAN Retail Livelihood
protection
1,000
Approx. 60,000 farmers in 5 countries (Kenya, Malawi, Rwanda, Tanzania,
Zambia) in Africa insured in 2013. Approx. 5,000 farmers have received payouts
in 2013.

8. IMPACT OF FARMERSHIELD, ZAMBIA
• Access to insurance (often for the first time) to over 25,000 farmers for life
insurance and approx. 7,000 farmers (in 10 locations) for weather-index
insurance;
• Approx. $380,000 insured, premium of approx. $30,000, premium prefinanced
by NWK and cost shared (upto 75% of cost for some farmers);
• Affordable for farmers- cost is $0.80-$3;
• Many life insurance payouts- approx. 3-4 claims a month;
• Weather Index Insurance payouts of aprox. $45,000 (250,000 ZWK) due to dry
spells and excess rainfall in 5 locations in Zambia;
• Strong demand for scale-up and from market;
• Strong interest to scale-up from insurance companies (despite the claim
payout!);
• Need to evaluate impact on yield and side-selling/ delivery of crop;
8

9. Introduction to MicroEnsure
MicroEnsure is the world’s first and largest company
dedicated to serving the mass market with insurance.
 Fastest-growing insurance organisation in Africa:
 10 MILLION PEOPLE INSURED GLOBALLY. ABOUT 7 MILLION IN AFRICA
 85% of our clients were never before insured
 Track record of innovation:
 Winner of 2009, 2011 FT/IFC Sustainable Finance Award
 “One of Africa’s 20 Most Innovative Companies - 2012” Financial Technology Africa
Magazine
 “One of Five Innovations to Watch in 2013” US Council Foreign Relations
 GameChangers 500 member - 2014
 Investors: IFC, Omidyar Foundation, Telenor, Opportunity
International, MicroEnsure management team
 Adding new investors: 2 of the largest global insurers

10. MicroEnsure Global Footprint
Micro Health Insurance
- Tanzania: KNCU Primary Care Cover
- Philippines: Triple 10
- Ghana: Credit Health for MFIs
- India: Rural, Cashless Inpatient Cover
Mobile Insurance
- Zambia - Airtel
- Tanzania: Tigo
- Ghana: Airtel, Tigo, MTN
- Kenya: yuMobile, Airtel
- Senegal: Tigo
- Malawi: TNM
- Bangladesh: Grameenphone
- Malaysia: Digi
- Pakistan : Telenor
Agricultural Insurance for Smallholders
- Malawi, Rwanda, Zambia, Ghana, Uganda, Kenya,
Tanzania: Rainfall Index Cover
- Caribbean: Hurricane Index Cover
- Philippines: Typhoon Index Cover
Caribbean
AFRICA
Zambia
Malawi
Rwanda
Nigeria
Ghana
Uganda
Tanzania
Kenya
Mozambique
Senegal
ASIA
Bangladesh
Pakistan
India
Philippines
Malaysia
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

11. Our Innovations in the Past 6 Months: #1
Largest benefits on a mobile
insurance product in the world
Telefonica Ghana Three for Free, launched
January 2014
First mobile insurance product to cover
life, accident and hospital cash
Up to 0.4% subscriber penetration per day
World Bank CGAP video on Tigo product:
http://www.cgap.org/photos-videos/tigo-
ghana-insuring-ghanaians-mobile-phones

12. MicroEnsure Partnership Sample
MOBILE
BANKING
INSURANCE
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

13. Why is MicroEnsure the Global Leader?
Speed to Market
- Largest group policy in African history (Zambia) – 8 weeks start to finish
Best Claims Operation in the World
- Pay claims in minutes in rural areas submitted on handwritten napkins
- 76% claims ratio in company history; currently paying 70,000 claims in Philippines
Social Impact
- Never exclude HIV, pre-existing conditions, etc
Partner Value Creation
- Achieve ARPU growth, churn reduction, liabilities and asset growth
Systems Capability
- 1.2 m new policies/hour, web-based, fully customizable for all classes of risk
Product Innovation
- Weather Index (2004) Enhanced Credit (2008) Credit Health (2011)
- EduSave (2012) Decongestion (2013) Mobile Three for Free (2014)
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

14. Why do Customers Love Mobile Insurance?
Customer
Value
Reliable
Protection
from Risk
Simple
Processes built
for Mass
Market
Products
address real
needs
Easy access to
services from
a trusted
brand
Lower cost risk
protection
than anywhere
else
Growing suite
of products
Policy
management
convenience

15. Why are MNOs Doing Insurance?
MNO
Value
ARPU Uplift (6-
15%)
Churn Reduction
(25-60%)
Direct Revenue
(US$0.05-
0.20/sub/month)
Competitive
Difference (new
product class)
New Customer
Additions
Brand and Social
Impact (1,000s
of claims paid)
Lifetime
Customer Value
(Stickiness)

16. Our Innovations in the Past 6 Months: #2
Largest Group Insurance Policy in
African History
Launched 11 February 2014, project started
9 Dec 2013; 8 weeks from pitch to launch
2.2 million insured on 1 March 2014

17. Fastest-Growing Opt-In
Insurance Product in History
30,000 sign-ups on some days (already 14,000
today)
No Exclusions, No Age Requirements
Compare:
…67 years of insurance in Pakistan = 7 million
policies
…3 Months of our product = 700,000 policies
Our Innovations in the Past 6 Months: #3

18. Value Creation – Accessing Demand for Insurance
Barriers to insurance uptake:
Cost
• Typical insurance premiums can
represent 8-10% of a typical income
in mass market population
Trust
• Insurers are not seen as trustworthy
due to product complexity and poor
claims payment
Access
• Insurance agents are not sufficient to
cover a whole country, and they do
not target the poor
Under-
standing
• Clients lack financial, legal, health
education to understand coverage,
terms and conditions
Cost
• Offer superior value for money
– even “free” or low-cost
Trust
• through Telefonica’s trusted
brand
Access
• …via mobile through Universal
Access (USSD, IVR, Apps)
Under-
standing
• …and begin with simple
products
Our Value Proposition:
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

19. Value Capturing – Insurer Perspectives Must Change
• Illiteracy, indigenous languages
• High rates of morbidity, mortality, natural risks
• Poor document access, distrust of written forms
• Inconsistent cash flow, majority of assets unbanked
• Poor history with all formal financial institutions
• Distrust of all types of insurance companies
• Expected intimidation, inconvenience, bribes
• Low health, legal, financial education
• Pervasive superstitions and traditional beliefs
All Mass
Market
Insurance
Products
Must
Account
For:
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

20. Typical Insurance
Micro Insurance
Profit
Brokerage
OpEx
Losses
Core Problem:
How do you offer
insurance to people that
face more risk and
can’t afford to pay the
same premium?
Solution:
Price in the Risk
Reduce Expenses
Reach Scale Quickly
The cost of delivery and operations puts many micro
insurance products outside the reach of the mass
market.
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD
Value Capturing – Insurer Perspectives Must Change

21. MicroEnsure’s service model lowers costs dramatically…
Typical Insurance
Micro Insurance
Profit
Brokerage
OpEx
Losses
Reducing OpEx:
- Product Design
- Product
- Training
- Marketing
- Policy Administration
- Loss Adjustment
- Underwriting
- Reinsurance
- Policy Reporting
- Claims Processing
- No Excess “Costs”
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD
Value Capturing – Insurer Perspectives Must Change

22.  Waiting Period of 3-6 months before cover commences
 Medical Examination required for underwriting
 Family Medical History shows genetic linkage to disease
 Exclusions for HIV/AIDS, death by heart/lung disease or
other pre-existing medical conditions, mountain climbing,
paragliding, mental illness, asthma, diabetes, hypertension
 Cover, surrender value lapses if premium paid late
 Cover terminates when subscriber reaches a certain age
 Complex documents and forms required for claims
 Claims Processors paid by claims denial rate
Typical Life Insurance Terms & Conditions
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD
Value Capturing – Insurer Perspectives Must Change

23.  Waiting Period of 3-6 months before cover commences
 Medical Examination required for underwriting
 Family Medical History shows genetic linkage to disease
 Exclusions for HIV/AIDS, death by heart/lung disease or
other pre-existing medical conditions, mountain climbing,
paragliding, mental illness, asthma, diabetes, hypertension
 Cover, surrender value lapses if premium paid late
 Cover terminates when subscriber reaches a certain age
 Complex documents and forms required for claims
 Claims Processors paid by claims denial rate
Typical Life Insurance Terms & Conditions
Scale requires simplicity...
which is justified by scale
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD
Value Capturing – Insurer Perspectives Must Change

24. Typical Barriers
Insurers need to change their processes and assumptions, and be willing to
accept thinner profit margins.
Insurance regulators must accept different processes: no wet signatures, no
policy documents
Telecoms must be willing to offer a free product to change market perceptions
about insurance; paid-for products will only penetrate the subscriber base up to
1% within one year, but freemium products will penetrate 15-20% of the base,
of which 40% will purchase paid-for upsell products, leading to higher revenue
for Telefonica indirectly in the short term and direct revenue in medium term
The telecom and insurer must be agreed that the telecom’s brand is primary
Project plans and charters have to be established and followed in an orderly
fashion; otherwise mistakes will be made and gaps will be missed
CONFIDENTIAL – FOR RECIPIENT ONLY © 2014 MICROENSURE HOLDINGS LTD

25. Why Offer the Promo (Freemium) Product?
 Creates a Market – Traditional products have only reached 0.5%
penetration in any market in their first year, whereas promo products reach 8-12%
 Accesses Consumer Demand – mass market consumers face persistent
risks btu have never had insurance before: promo products give them experience
 Product Pays for Itself via ARPU Uplift and Churn Reduction
 Created Market will Convert to Paid-for Products
12 operators worldwide are currently running with
this model…it has driven ARPU and loyalty everywhere

26.  Consolidate the policy wording, terms & conditions onto 1-2 pages
 Eliminate any important word that a 12-year-old doesn’t understand
 Consider alternatives to “wet” signatures: may involve regulators
Claims:
 Accept documents that are accessible & meaningful in rural contexts
 Audit the second claim (that looks out of sorts) and do trend analysis
 Be proactive, accessible, and helpful in claims processing: incentivize
claims officers on how fast claims are paid from event to payment
 Start the internal clock when the event occurs, not at document receipt
 Measure the customer’s full experience from event to receipt of cash
 Accept digital documents for speed (but protect right to hard copy)
 Expect loss ratios of 50-60% for clients to see value
Process Notes for Mobile Insurance
How Mobile Makes Insurance Better

27.  Understand customers and address their most important needs!
 Strong trusted distribution partners with good brand recognition;
 Strong business case for distribution partners and insurer;
 Claims- PAY them! Efficient claims process; Social Impact;
 Insurer should rethink strategy; have a long term approach;
 Products should be simple, innovative, cheap/ even free!
 Robust systems needed and ground presence required
 Best Practice project planning and long term strategy
 Introduce Value-add-services e.g. Crop advisories, weather forecasts
SUMMARY OF KEY LESSONS LEARNT