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New technology key to developing emerging markets: IIS panel


RIO DE JANEIRO—Developing economies are tough markets for insurers to enter and expand in, but they can make significant headway if they use new technology rather than distribution networks traditionally utilized in developed nations, a panel of experts said.

Forging business partnerships with cellular telecommunications companies in Africa and using mobile technology in Brazil, for example, will enable insurers to penetrate the markets and grow their business, the experts said during a panel session at the International Insurance Society Seminar in Rio de Janeiro on Wednesday.

“Emerging markets are an area where the industry is looking for real organic growth,” said Stephen M. Packard, director of Deloitte Consulting L.L.P. in Hartford, Conn. In emerging markets, the premium growth rate is five times that of developed nations, he said.

But insurers need to adapt their approach when they enter emerging markets and use technological tools that are now widely available in developing nations, such as cellular phones, he said.

In Africa, insurers have been able to penetrate the markets by linking with telecommunications companies, said Bruce Sahd, managing director of CaseJohnson Group, a Cape Town, South Africa-based consultant and alternative distribution specialist.

In Zimbabwe, for example, a cellular phone provider offers free funeral expenses coverage, a major concern in many areas of Africa, to subscribers who spend a minimum of $3 a month. The coverage starts at a basic level but increases with greater usage. The telecommunications company then pays a group premium to its insurance partner based on the number of subscribers opting into the program.

The program creates loyalty for the telecommunications company, and premium income and brand awareness for the insurer, he said.


In the first six months, the company saw a 10% to 12% increase in subscribers and a 31% increase in cell phone usage, Mr. Sahd said.

In Brazil, insurers are exploring ways to make better use of mobile technology to increase market penetration and improve customer service, said Cristiano Barbieri, director of information technology at SulAmerica Seguros e Previdencia in Sao Paulo, Brazil.

Cell phone usage has surged in Brazil, he said, with more than 200 million cell phones for a population of 190 million. “In three to five years, most people will get access to our products through mobile technology,” he said.

There are several ways that mobile technology can be used to reduce insurers’ expenses, increase sales and improve services, Mr. Barbieri said.

By using GPS, for example, insurers can offer better roadside assistance services to auto policyholders as they can quickly identify where the car is located, identify the driver and dispatch a roadside assistance vehicle.

Mobile technology also can be used in claims to photograph damage and quickly send the information to claims adjusters. By speeding the flow of claims information, it is easier to identify fraud, Mr. Barbieri said.

The technology also allows insurers to put analytical data into the hands of their sales force and customers. With life insurance and pensions products, for example, mobile technology can be used to show simulated payments and benefits quickly without the cost of sending out paper documentation, he said.

In addition, brokers can use social media to create their own “virtual stores” to market insurers’ products, Mr. Barbieri said.

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