Micro-insurance is the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. The success of micro-insurance sector is based on the guiding principles of outreach, sustainability, and providing benefits for all. In order to achieve these milestones and to increase the penetration, a combination of regulation, technology, and risk management is required.

Challenges in Micro-insurance:

Micro-insurance faces several challenges that hinder the industry from growing. A lack of quality data prevents efficient underwriting of micro-insurance products. Distrust from customers due to a lack of understanding of the product and/or previous negative experiences with insurance reduces the demand for micro-insurance. The often physical nature of claims processing leads to relatively high operating costs and a long claims turnaround time. Finally, there is a huge disparity in insurance adoption among the different income segments. Most large insurance companies compete to get the maximum share of wallet among the highest-income segment. Hence, the penetration remains quite low among the middle income and lower middle income segments.
Focusing on these 'emerging consumers' can unlock the insurance potential as they have growing incomes and constitute the highest proportion of the population.

Case of Britam Micro-insurance

This is exactly what Britam Micro-insurance (MI), a unit of Britam in Africa did to penetrate the large under-served market. Britam is the pioneer and market leader in offering innovative and affordable micro-insurance products to approximately 0.7 million insured lives in Kenya. It smartly leveraged its existing strengths and its parent's Digital Insurance Platform developed by InfoAxon Technologies , to increase insurance penetration within emerging markets, have lower administrative cost and risk, engage and digitize its partner network such as hospitals, aggregators etc. to provide superior services to its customers.

Challenges Faced By Britam Micro-insurance (MI)

Britam MI works with 400+ hospitals across Kenya to provide cashless health micro-insurance services. However, the biggest challenge was to set up seamless processes at partner hospitals.
Among several processes in need of digitization, Britam MI decided to begin with digitizing claims, before addressing enrollments, since hospital claims processing had been its most significant pain point for many years. The existing process caused lengthy delays and dissatisfaction among partner hospitals, some of which threatened to leave the network.

Digitizing and Improving Processes

In order to better understand how to improve its claims process, Britam MI conducted a systematic diagnostic review of its existing processes. It measured the average time taken for each step (see figure 1 below). The two main bottlenecks identified were:

1. The time taken for hospitals to send the claims documents to Britam MI.
2. The time spent on data entry from physical documents into the IT system.

Therefore, it decided to work with InfoAxon Technologies and Liferay to design a hospital portal that digitized its hospital claims journey reducing turnaround time by >80%. The portal digitized Britam's Micro-insurance claims submission and customer on-boarding with a goal to make insurance paperless!
The portal allows partner hospitals to check member’s validity, and simply submit all claims information and documentation digitally. Britam MI aims to digitize all its claims in 2020. Its initial focus was on 50 hospitals which between them are responsible for 80% of the claims.

The Benefits

Portal has resulted in considerable improvements and savings within just a couple of months at the pilot hospitals. To start with, claims turnaround time has been dramatically reduced to less than 10 days from 57-65 days as seen below:

Portal also has significant cost efficiencies including gradual savings in re-directing data entry staff to other tasks, and decrease in expenses on printing, transfer, scanning and storage of paper based claim documents. Britam MI predicts savings in excess of $100,000 over the next 4-5 years.
In fact, the partner portal has resulted in unexpected advantages for Britam MI. Some partner hospitals are so eager to join the portal and benefit from faster claims payments, that they are offering a 5 per cent “prompt payment discount” on claims cost. This could represent a considerable saving for Britam.
Britam continues to digitize its processes and sees considerable potential to further reduce inefficiency and provide a seamless process for customers. The new enrollment system, for example, allows for sales staff to simply take a photo of a new customer and upload it to the system. This saves customers the need to pay for passport photos in order to sign up for the insurance – a significant saving for customers at around 5-10% of the cost of the insurance policy in the first year!
Overall, use of partner portal has helped Britam MI:

1. Improve claims turnaround time by 80%
2. Save in excess of $100,000 in claims and underwriting processes over the next 4-5 years
3. Enable quick scale-up by digitizing the customer on-boarding process
4. Make enrollment cheaper and easier for customers, especially in the rural areas

Lessons Learned

Britam MI leveraged existing strengths and refocused its microinsurance business to be more client centric, have lower administrative cost and risk, be simple-to-administer and focus on working with strategically aligned aggregators. 
As Britam continues its Digital Transformation journey, it gathered few insights which helped adoption more widespread and reduced turnaround time:

1. "Bottom-up" product design generates increased buy in: After completing its market segmentation research, instead of just sharing the findings in a document to all stakeholders, it experimented with a “bottom-up” product design workshop, bringing together all micro-insurance business stakeholders. All business stakeholders appreciated the “bottom-up” approach to product development and action plans were successfully developed to target selected segments.
2. Process diagnostics and well-managed data can reveal bottlenecks and help improve efficiency: Britam MI decided to conduct a systematic diagnostic review of its claim process. The plan was to measure the average time taken for each step to identify bottlenecks.

Know More

To hear Saurabh Sharma (Head Micro-insurance, Britam) share the journey of development and implementation of partner portal by InfoAxon Technologies to digitize its health claims, please see the Britam MI Video
(The video presentation was recorded during Liferay's first Forum in South Africa on Oct 22nd, 2019 along with its Gold Partner, InfoAxon Technologies)


The presentation slides can be accessed at SlideShare