Bringing insurance benefits for everyone

Current insurance penetration levels are low across emerging markets despite huge demand and greater awareness. In the Middle East and North Africa region, only one per cent of the low-income population can access and afford microinsurance.
Michele Grosso - who has worked with some of the largest insurance companies in France, Egypt and the UAE - realised that the industry lacked innovation and technological readiness to scale their products to emerging consumers. He launched Democrance in 2015 to help insurers address this market and make insurance accessible for those who need it most but can afford it least.
The InsurTech startup brings together two key industries - insurance and telecommunication.
"By harnessing the power of technology and forging partnerships, we unlock new markets for businesses. At the same time, we create social value for populations who were previously excluded from the benefits and protection that insurance affords," said the CEO and co-founder of Democrance.
The digital platform helps customers purchase insurance products on their mobile phones and insurance companies can manage the policies through the back-end of the platform with minimal effort or overhead costs. Simple unstructured supplementary service data, SMS and mobile technology makes insurance accessible to anyone with any type of mobile phone.
Democrance uses advanced technology such as machine learning and automation to help insurers save on costs and manage policies without the usual administrative-heavy operations of traditional insurance business.
"We aim to make insurance affordable by digitising and automating the value chain, thus reducing insurance providers' operational costs and passing on the benefits directly to the end-customer, creating value for all partners involved," said Grosso.
So how Democrance is different from other such portals?
"There are many FinTech and InsurTech solutions in the market, especially in Mena, that are targeting the same segments of the population that are already overserved by traditional financial institutions. About 99 per cent of Mena's lower-income population does not have access to insurance. This is the market we are focusing on," said Grosso.
Alberto Perez, Democrance's co-founder and COO said: "Democrance brings together two giant, heavily regulated industries, telecommunications and insurance, for the benefit of vulnerable populations. We bring a fresh startup mind-set and innovation to the static insurance industry, and a new model to differentiate their services vis-à-vis competitors to the telecommunications market."
It has not been an easy journey for Grosso. "It has not been easy building a technology startup and aiming to create a new market segment all at the same time. It takes a lot of persistence, drive and passion. It is difficult to find people who believe in your model, whether clients or investors, in the early days," he said.
On the insurance front, Democrance works with several major insurers who provide support by building innovative products. On the distribution side, it works with telcos and remittance houses to reach targeted consumers.
The startup recently partnered with UN agency International Fund for Agricultural Development that specialises in remittances, and ADA, a Luxembourg-based microfinancing NGO, to pilot a business model to insure low-income residents in the UAE and their families back home.
Democrance is currently present in Mena and Southeast Asian markets. Now it is planning to cover more emerging regions with its partners. The firm has set the target of providing access to basic life and health insurance to 15 million people within low-income brackets across the Mena region by 2020.
So far Democrance has raised $800,000 from leading institutional and private investors from the region and in Europe. The investors include Jabbar Internet Group and EOS Venture Partners, among others. The startup has also been awarded grant money from different supranational, government and public-private entities to further develop our business model.
Samih Toukan, chairman of Jabbar, said: "Investing in Democrance aligns with our vision to embrace entrepreneurs in the Arab world who are willing to innovate and take risks to create something great. The technological advancement that Democrance has brought to the market is not only pivotal in terms of developing the insurance industry but critical to society's welfare."
Sam Evans, founder and general partner of Eos Venture Partners, said: "We have a strong focus on developing markets where we believe the impact of new technology, like Democrance, can have a profound impact. Our focus as a global InsurTech specialised fund is to bridge the 'digital chasm' between InsurTech startups and traditional insurance companies. Democrance embodies this principle perfectly."
Grosso's advice to new startups is "make sure you are passionate about the idea you are trying to bring to life because the process will require a lot of effort. Secondly, never see raising funds as an objective - it is a means to an end".
He said industries, including in financial services, are quickly realising the need to evolve and respond to customer demand for easy, quick and mobile solutions or face extinction. -arif@khaleejtimes.com
Creating value for society and business
For consumers
-Customers can purchase insurance products directly on their mobile phones
-Makes insurance accessible for those who need it most but can afford it least
-Makes insurance affordable by digitising and automating the value chain
-Creates real value for those who were excluded from benefits of insurance
-Fills a gap in traditional channels, such as brokers and agents, to extend reach
 
For insurers
-Push existing products to a large number of new customers
-Tap up-sell potential as these segments climb economic ladder
-Use airtime, mobile money or loyalty wallets for premium collection
-Leverage digital platform for sales, premiums and claims management
-Administer insurance policies via fully automatised platform
 
For telcos
-Boost in customer acquisition with insurance offerings versus the competition
-Incentivise subscribers to top up more to keep the insurance policy active
-Retain customers by offering additional incentive to stick to existing operator
-Increase customer engagement by linking billing to core revenue strategy
-Gain and retain stable and strong revenue streams from insurance sales