value addition and new innovations in micro insurance

Value addition and new

innovations in Micro Insurance

Presentation by

H.M.R.M.Herath,

Senior Manager –IR

Sanasa Insurance Company limited,

At

AOA 30th Anniversary Seminar

26th August 2014

at Cinnamon Lakeside Hotel Colombo.

Contents of the presentation

• Definition of added value.

• Objectives of value addition.

• Types of value added.

• Necessity of added value in micro insurance.

• Application of value additions in Agricultural

Insurance of SICL.

• Conclusion..

Definition of value addition

The enhancement a company gives its product or

service before offering the product to customers.

Value added is used to describe instances where

a firm takes a product that may be considered a

homogeneous product, with few differences (if

any) from that of a competitor, and provides

potential customers with a feature or add-on that

gives it a greater sense of value.

Objective of value addition in Micro

insurance

• To improve performance of insurance products

or services in order to make happy the

customer.

“any activities that do not add value to the

customer are considered waste”.

Types of Value addition

• There are two types of added value

1. Value-added (VA) Activities/Processes: Any activity or process the customer will be willing to pay for.

Eg: Customer can receive insurance policy at the same time it is filled. (issuing policy in the field)

2. Non-value-added (NVA) Activities/Processes: Any activity or process the customer would not want to pay for, but which cannot be eliminated in the process of value added. Eg: Regulatory processes may be considered business-value-added.

Basic requirements of value addition

• Identifying Customer perception about product

and services.

• Identifying and eliminating root cause of the

problems of the Company.

• Cost benefit analysis (it is affordable to the

customer and at the same time company can

run with profit).

SICL-Value addition and new

innovation in Micro insurance.

“Insurance is an abstract concept about an

intangible promise to pay, which makes it

difficult to convince clients of its value.”

To address this issue,

SICL is bundling value-added services along

with risk protection to make products tangible

and to provide more frequent “benefits”.


innovation in Micro insurance. Cont..

• Introduction of Weather Index insurance (WII) to

the Paddy and Tea farmers as a new innovation.

“The weather insurance products are very specific to the area, the season, crop and peril insured.

Payouts for the decreased revenues from cultivation of the specified crop happening due to excess or deficit in rainfall in the specified location

are made to the customer.”



Special features of Weather Index Insurance

Automated Claim calculation

No claim request

Farmer can receive Rainfall data of their weather

station though the insurer

100% transparent



WII Tea has been bundled with 4 rider covers.

Value

addition

Hospitaliza

tion cover

Personal

accident

cover

Funeral aid

insurance

Property

cover



Progress of weather Index Insurance for Paddy

-

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

Premium Collected

LK0

500

1000

1500

2000

2500

3000

3500

4000

Number of Farmers enrolled



Progress of weather Index Insurance for Tea

0

2000

4000

6000

8000

10000

12000

2012 2013 2014

Number of Farmers enrolled

Number of Farmers

-

1,000,000.00

2,000,000.00

3,000,000.00

4,000,000.00

5,000,000.00

6,000,000.00

7,000,000.00

2012 2013 2014

Premium collected

LKR



SICL-livestock insurance

1st time in Sri Lanka SICL introduced the RFID microchips

Trace a specific animal and ultimately prevents

fraudulent claims

Technical training programs for Livestock farmers

Fast claim settlement



• Added value in Crop insurance - claim

settlement

In the event of Crop damage, settlement of claim to be done

on the recommendation of a village based claim committee

consisting SICl Agri officer and 3 other members nominated

by the farmers organization.

Advantages;

- No complains after assessment.

- Estimation is transperent and easy.

- High renewal percentage.



• Value added in SICL funeral expenses Insurance.

Fast claim settlement for funeral

expenses insurance.

All the Sanasa primary societies are

advised to settle the cash payment to

the insure after verification by society

and reimburse from Insurer.

Conclusion

1. Value additions include easily-operated strategy, free from defects ofdelays, lack of transparency, presenceof human error, free from bureaucracyand easy procedures in claimssettlement.

2. Micro insurance products linked tolarge package of risk managementstrategies and services are moreeffective.

Thank

you

value addition and new innovations in micro insurance

Business