The worthy challenge of bringing insurance to the base of the pyramid

People signing up for MicroEnsure’s health financing package, Fearless. Photograph: BCtA

MicroEnsure’s Richard Leftley on growing an inclusive business to scale

MicroEnsure is a UK-based micro-insurance intermediary, with a mission to bring affordable insurance products to low-income consumers in developing countries. In 2016, they made a commitment through Business Call to Action to provide insurance to five million new low-income customers, expanding to three new emerging markets by 2020. The company has also committed to design three ground-breaking, scalable products, with a focus on health financing, in order to meet the needs of the most vulnerable people in these markets.

Not an insurer itself, MicroEnsure provides comprehensive solutions for tailoring insurance products to mass markets, including product design, marketing, risk selection, underwriting, and pricing. Its partners include mobile networks, micro-finance institutions and banks. The company bridges the gap between traditional insurance providers and consumers at the base of the economic pyramid by offering innovative and commercially viable means for its partners to insure millions of low-income consumers in emerging economies.
Since its founding in 2002, MicroEnsure has grown into a global company serving over 40 million low- and middle-income customers in 20 countries – 85% of whom have never before accessed insurance. The company is seeing significant growth with new partnerships and products including Telenor Suraksha – a free life insurance product offered by Telenor India, which gained 20 million new customers in 2016 to become the fastest-growing insurance product in history. In all, MicroEnsure has designed over 200 products covering risks such as death, illness, disability, crop loss, and property damage.

We talked with Richard Leftley, founder and CEO of MicroEnsure, about the company’s journey to scale in a market considered by most to be very challenging.

How did the story of MicroEnsure begin?

Richard Leftley. Photograph: MicroEnsure

I was 29 and had had one job as an insurance broker working as far as you can get from consumers. In retrospect, I think I was mad back then, thinking that I understood insurance and sailing ahead with the aim to sell insurance to people in Africa. I had no spreadsheet or work plan. I just saw that these people needed insurance and did not have it. Given the fact that in the beginning, we did not have money or a clear plan, it’s hard to explain how we reached where we are now. What I know is that I’m an incredibly stubborn person – and despite people telling me for the first five years that I was crazy and should not go forward, I kept insisting, trying new models and ideas with whatever money I had. I think at the core the focus was – and still is – never losing sight of the challenge and passion to find solutions.

How did you build the inspiration and ideas into a company?

After years of wandering in the wilderness with the help of an initial grant from the Gates Foundation, we got a wake-up call. By that time, I had surrounded myself with people similar to me, and while we were inspired, we did not actually get a lot done. Then we realised that to become a company, we needed to include people with execution skills on the team. It was a massive culture shift and it was not easy. But this is how the company evolved: by changing course. 

Consequently we received a sizeable grant from Gates and practically became a company overnight, growing from a three-person team with a $250,000 (£200,000) budget to a $5.5m budget within a year. The key was the change in the team. In the beginning, you might need the crazy guy with lots of ideas, but then you need structure, execution capability and rigour – people able to do the things you are not. The ability to change course and come back from not-so-successful decisions has been key in our success to date. It has been a gradual adaptation, moving from a grant-supported company to our current equity-financed model.

MicroEnsure’s business model has evolved over time. What were the key developments that enabled MicroEnsure to scale?

Initially MicroEnsure served micro-finance institutions, giving us some reach, but in 2010 we realised that we needed other ways of distributing the product. So we looked at a range of possible partners meeting three main criteria: they needed to be trusted by end users, have accessible points of sale and the ability to transact payments. And we needed to learn what trust really means to people with low incomes, which we found to be frequent interaction. People don’t just trust their mobile networks because of advertising, but because when they top-up their phone credit, they see that it works. Interestingly, that’s why I think people don’t trust traditional insurance companies – it’s the opposite of this. When you pay, nothing happens - as long as you don’t have to claim.

We started working with mobile networks to build a freemium model that provides them with indirect revenue by increasing customer loyalty. It’s is an easy product to try out in BoP markets, and caters to consumer education since customers get to see how the product works first hand. Once consumers are educated through this model, we can build value by selling other products to that consumer base.

One of the lessons we learned in Ghana was that a distribution model where agents educate consumers wasn’t needed. Customers were happy to take up a free product based on its perceived value, and connection with the mobile network brand. Simplification of products and processes, and innovations in distribution lead to scale.

What keeps you going – and working for more inclusive business?

It’s the individuals with passion that drive change – be it outside or within corporations. To start out on this journey, you need something that fires you up deep down, and that fire is with individual champions willing to take a risk.

Content on this page is provided by Business Call to Action, sponsor of the The Guardian Business and the Sustainable Development Goals Hub