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The Challenge of Selling Insurance

The Challenge of Selling Insurance

  • Nuno Calha • Executive Director EY, Financial Services

Those who follow the insurance sector in Mozambique recognize a large number of entities operating in the country, highlighting a more expressive weight of products linked to the Non-Life business, instead of Life one, and relatively low penetration (Premiums/GDP) and density (Premiums/Population) indexes (when compared to more mature markets). We see that there is still a relevant way to go so that product diversity, competition and general access by customers is a reality and, consequently, growth.

The general access of insurance products to the population and companies is not an easy task. The distribution by traditional channels (mediation/brokerage) throughout Mozambique can take too much time and require large investments. Despite the medium and long-term returns it may have to the sector, ensuring a proximity and knowledge of customers that other channels will have greater difficulty in achieving, it is necessary to find other ways to cover more population in the supply of products and, at the same time, to raise awareness of the benefits that the insurance activity brings (and if possible, with lower costs). In this sense, there are other mechanisms, already tried in other markets, which could enable this to be achieved, with a more reasonable level of investment.

The search for synergies/partnerships with other financial sector entities, with a much more widespread presence throughout Mozambique, as banking entities can be a possible mechanism. The “bancassurance” channel represents for insurers in Mozambique an excellent opportunity to quickly gain presence and scale in most of the territory, but also to raise funds, through the availability of “new products” in the market, such as those of Life business products. Another mechanism is the development/use of electronic platforms, very common today, benefiting from the level of internet penetration in the country, either through mobile phones, smartphones /tablets, or by the creation of specific platforms / systems. They are highly scalable solutions, with a reduced marginal cost, which allow, at the same time, to make products available to end customers and distributors.

Despite a hard challenge, these are two examples of solutions that can contribute to a profound change in the insurance sector in Mozambique, contributing to its development/growth. If in the case of “bancassurance” there is a limitation to the extent that the number of partners is restricted, the use of new technologies allows reaching all potential customers and partners /distributors (and we are not only referring to traditional agents, but to other/new possible intermediaries, such as a simple car salesman for example). In addition to the range those solutions can reach, a very relevant step can also be taken in the access/processing of customer information and all that this may result.

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