Putting Clients at the Center: Key Dimensions of Client Value
Designing client-focused strategies for agricultural index insurance, emphasizing value for money, adaptation in time and nature, and education campaigns to empower stakeholders in the insurance process.
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Presentation Transcript
PUTTING CLIENTS AT THE CENTER OF THE DESIGN AND SALES PROCESS DETERMINING CLIENT VALUE Global Index Insurance Conference September 14th, 2015 Paris, France
Five key dimensions of client value in agricultural index insurance Value for money Client Value Value through technology Value adapted in time and nature Value through education Value through joining forces 2 |
Value for money: index insurance is an appropriate models in developing countries Frictional costs Public subsidies to foster farmers protection 5-10% Payback to the farmer 100% - Higher distribution costs - Higher claims handling costs - Higher cost of support functions Lower distribution costs No claims handling costs No adverse selection No moral hazard - Distribution costs - Claims handling costs - Support functions - Uncertainty loading 5-10% 25 35% 50 70% Traditional insurance in developing countries Traditional insurance Index Index Insurance combined with a meso- approach/light broker Insurance with subsidies 3 |
Value adapted in time and nature: index insurance can contribute to breaking the poverty trap cycle Adapted in Time Adapted in Nature Index insurance provides one of the most rapid payouts Index insurance can contribute to breaking the poverty trap cycle Increased sensitivity to adverse weather conditions Cost in $ by household in East Africa 1400 1200 Inability to buy new entrants Poor yield/crop destruction 1000 Poverty trap 800 600 Selling of assets 400 No access to credit 200 0 Step at which insurance can break the cycle Time in Months 0 2 4 6 8 * From a study in East Africa conducted by the World Bank Group 4 |
Value through education: information campaigns are key Levels of comprehension complexity Development of models, technical expertise, and geomatics Reinsurer/ global insurer Full understanding of model s output and relevance to local market Local insurer Aggregator/Broker Understanding of aggregated risk and capacity properly inform farmers Clear understanding of event covered, frequency, cost and pay-out Farmer The GIIF can intervene at every level 5 |
Value through technological progress: improvements in technology are revolutionizing the industry END 2000S SINCE 2010S MID-2000S Use of satellite imagery New data available through satellite imagery and allowing to compensate for lack of granularity First pilots with weather stations Data that allows for construction of indices but with a high basis risk Data science Big Data revolution helps us design the most appropriate insurance products 6 |
Value through joining forces: to tackle the food security problem, we all have a role to play Aggregators (e.g. banks, cooperatives) Brokers Distributors Private Sector Meteorologists Governments Farmers Academics Financial Institutions International Organizations Data Scientists Reinsurers/ Insurers Farmer s associations Media Joining forces: everyone has a role to play 7 |
