How Mobile Technologies Are Leap-Frogging Infrastructure in Emerging Insurance Markets Panel...
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Transcript of How Mobile Technologies Are Leap-Frogging Infrastructure in Emerging Insurance Markets Panel...
How Mobile Technologies Are Leap-Frogging Infrastructure in Emerging Insurance Markets
Panel Discussion – IIS 48th Annual Seminar, Rio De Janeiro20 June 2012
Stephen PackardDeloitte Consulting LLP
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Emerging markets are the new drivers of organic growth
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-10%
-5%
0%
5%
10%
15%
20%
Total Real Premium Growth in Indus-trialized Countries and
in Emerging Markets
Industrialized Countries (INC) Emerging Markets (EMM)
INC CAGR 2001-2010 EMM CAGR 2001-2011
Sources:Swiss Re, World Bank/IFC
Low penetration in emerging markets: Insurance premium as % of GDP is low – up to 3% of GDP (versus 5% to 10%
for industrial countries) The market density for life insurance (premium per capita) is on average less
than $50 compared to about $2,000 in industrial countries
Premium growth in emerging markets is more than 5X that of developed markets, with the trend likely to continue
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However, they face systemic challenges . . .
Emerging markets often lack critical business infrastructure
The number of developing countries with new infrastructure PPP2 projects in the first half of 2011 was the lowest since the early 1990s
–World Bank
1: World Economic Forum Infrastructure ranking, Global Competitiveness Report 2011-2012, covers transport, telephony & energy2: Public-private Partnership
Country Infrastructure Rank1/142
Brazil 64
China 44
India 89
Mexico 66
Russia 48
US 16
The economic downturn has exacerbated shortfalls in vital infrastructure investments
Firms may have to wait many years before local infrastructure is ready to support a complete rollout of services
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. . . including a lack of consumer understanding and proper distribution channels . . .
It is ignorance of, and not opposition to, insurance that creates the biggest risks for the industry’s future development
- The Geneva AssociationKn
ow
led
ge Perceptions of
Insurance
Source:Finmark Trust, CIFP, Deloitte Analysis
Understanding of Insurance
Experience with Insurance
HNW/Affluent
Middle Market
Mass MarketDis
trib
uti
on
Tie
rs
by
We
alt
h
Wealth ManagersLawyers and CAs
BanksAgents/BrokersWorksite
Call CenterOnlineMail
A lack of established distribution networks impede new players in emerging markets, with most channels (agents, through banks or post offices) controlled by public sector entities
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. . . with each market having its own unique set of barriers.
INDIA FDI Limits Opaque Regulations
BRAZIL Foreign Re-insurer Limits
MENA Political Instability Islamic compliant
offerings
Source:Deloitte Analysis
CHINA Inflation Aging Population
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New models are required to succeed in these markets
AXA, New York Life and Sun Life have cut or disposed off their stakes in Chinese joint ventures – China People’s Daily, Dec 2011
After New York Life, HSBC may exit the Life Insurance business in India- Insurance Times, India, May 2012
Existing models cannot be successfully transplanted: Regulations limit foreign
insurers by restricting organic growth and local acquisitions
Government-owned domestic players have wide networks and enjoy well-established brand reputations
Local competitors successfully mimic and leverage expertise and capabilities
Source:Insurance & Pensions, Knowledge @ Wharton
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Mobile technologies can go a long way in serving emerging markets . . .
Country
Percent of consumers using mobile wallet in YoY increase
2010 2011
China 9 21 133%
Brazil 9 20 122%
Kenya 10 25 150%
US 6 8 33%
Percent increase in mobile wallet usage from 2010 to 2011
Source:ITU (* 2011 numbers are estimates), TNS
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*0
102030405060708090
100DevelopedWorldDeveloping
Pe
r 1
00
inh
ab
itan
ts
Mobile Subscriptions per 100 inhabitants
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Accept payments through mobile payment systems, either at the agent or customer level (UAP Insurance/Kenya –farmers can insure crops via mobile payment
Data MiningAnalyze users’ mobile and mobile payment habits to identify eligible insurance customers
Monitoring
Payment Mechanism
Advertising/SalesSell insurance policies via SMS and push advertisements (Metropolitan/S Africa – using mobile insurance vouchers to advance sales)
Use mobile technologies to monitor usage and claims (HDFC/India – RFID sensors tagged to cattle to counter cattle insurance fraud)
Source:Zurich Financial, Financial Times, Mobile Commerce Daily
. . . with innovative firms using mobility solutions to leap over traditional infrastructure bottlenecks.
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NotesEmerging markets (using IMF classification): Asia excluding Japan and the newly industrialized Asian economies (referred to as Emerging Asia). Latin America and the Caribbean (referred to as Latin America). Central and Eastern Europe (referred to as Eastern Europe). the Middle East. Central Asia and Turkey (referred to as Middle East) and Africa.
The developed/developing country classifications are based on the UN M49, see:http://www.itu.int/ITU-D/ict/definitions/regions/index.htmlSource: ITU World Telecommunication /ICT Indicators database