With millions of subscribers in their arsenal and a recognisable brand name in tow, mobile players try to squeeze more value out of their customer base through offering insurance services. Microinsurance penetration in many of the developing markets in Africa and Asia is below 10% with Ghana (29%) and South Africa (64%) the only two countries with a relatively high penetration. The advent of microinsurance has paved the way for telecom providers to enter the insurance market thanks to mobile services increasingly becoming staple commodities. Various insurance offers are available (e.g. life, accident, medical, funeral cover, vehicle and financial support) from telecom players with life insurance being widely offered.
Churn management is one of the most common benefits that mobile operators see in offering insurance with free and “freemium” subscription models utilised to strengthen customer relationship. For instance, Telenor India offers a completely free insurance (called Suraksha) where subscribers automatically qualify for a minimum life insurance. Telenor India, in the span of five months (October 2015 – March 2016), was able to convince over 50% of its customer base (23m mobile subscribers) to take the Suraksha service (i.e. over 50% of its customer base). In this free insurance scenario, telecom players do not earn revenues. Reduced churn and higher mobile spending are the ideal results that telecom providers are aiming for to somehow offset the insurance-related expenses. Mobile operators also bank on insurance services to increase or maintain ARPU levels. The freemium model provides subscribers an option to pay an additional fee to move from a basic insurance to a much more comprehensive coverage. In the long-run, InfoCom expects that mobile players will be active in the insurance market, using this as a springboard for mobile banking service adoption.