Earlier this year Jamii, a local start-up in
Tanzania offering micro-health insurance services, announced ambitious plans to
expand into East and Central Africa this year.
Launched in January 2015, Jamii is a mobile
policy-management platform that performs the administrative activities of an
insurer, while also providing access to low-cost insurance policies ordered on
mobile phones using “quick codes” (formally known as unstructured supplementary
service data, or USSD, codes).
Having won Tanzania’s portion of Seedstars World, an
emerging markets start-up competition, in September that same year, the firm
recently closed a $750,000 round of seed funding, split equally between grants
and venture capital. This came on the back of a $250,000 grant from the Bill
and Melinda Gates Foundation, and the firm will pitch for another $1m in
investment in Switzerland in April.
Jamii’s plans include a new educational campaign to
improve domestic growth, while also extending its reach into Kenya, Uganda,
Ghana, Nigeria and South Africa over the coming months. The firm has set a
target of expanding its customer base to 200,000 in 2017, rising to 720,000
next year.
Jamii’s expansion highlights the innovative approach
insurers are taking to broaden their consumer base in Tanzania.
As with many of Africa’s economies, low insurance
penetration, average incomes and product awareness make Tanzania’s market of
52m people a tough one for insurers to tap, with per capita GDP at just $879 as
of 2015, according to the World Bank.
As a share of GDP, premiums averaged under 0.7%
between 2012 and 2015, up from 0.5% in 2006 but still low by regional
standards, according to the 2015 “Annual Insurance Market Performance Report”
by the Tanzania Insurance Regulatory Authority (TIRA). Meanwhile, a report by
global reinsurer Munich Re revealed that 7.31% of the population had a
microinsurance policy in 2012, the fourth-highest rate in Africa.
As a result, Tanzania’s high and rising mobile
penetration – subscriptions spiked by 24.4% in 2015 to reach 39.7m, or 81% of
the population, according to the Tanzania Communications Regulatory Authority –
has become a key driver of industry growth, according to a feasibility study
carried out by Switzerland-based microinsurer Stonestep in October 2014.
For years the TIRA has actively promoted expansion
of microinsurance in the country, a key part of this being the introduction in
2013 of its “Microinsurance Regulations and Guidelines”. These regulations –
which focus on fairness, consumer protection, innovation, participation and
transparency – describe microinsurance as an ideal channel for low-income
Tanzanians to access insurance coverage.
To help secure this, they require companies offering
such insurance to also provide risk-pooling instruments for low-income
households, lower premiums than conventional policies, and insurance for
informal workers such as farm hands. They also lay down comprehensive standards
for agent education and – to address payment delays recognised as a big
contributor to slow uptake – mandate that claims be paid within three working
days of receiving a claim, with a maximum five-day extension.
Enacted in 2014, the guidelines were a key step in
paving the way for innovation in the age of mobile finance, thus bolstering
prospects for long-term increases in insurance coverage across the country, as
it becomes ever easier to reach low-income people through the supercomputers in
the palms of their hands.
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