Post on 13-Apr-2017
Buphe International 1
Reposition to Address Underserved Markets
The Untapped Potential of Insurance: Observations from the African Private Health
Insurance Sector
Daniel van der MerweGroup Executive Corporate Affairs
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Africa Insurance and Reinsurance Conference
2016
Premise and Focus Area
Buphe International
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As Insurers we are often privy to the success stories our policy holders have experienced.
But what if we were able to
change all of that?
The untapped potential of Private
Health Insurance on the African
Continent:
Phenomenal and tangible
potential in improving the
wellbeing of millions of people
on the Continent.
For the majority, they are stories are often unable to share in, or experience for themselves
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Challenges and Reasons
. The African Continent, home of the fastestgrowing economies in the world;
. However, the worst healthcare performer in theworld.
KPMG: THE STATE OF HEALTHCARE IN AFRICA (2012)
Reasons:
• (HIV/AIDS) epidemic.
Other factors:
• Governments focussed on direct payment; • Corruption;• Infrastructure problems;• Poverty; and • Conflict.
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However…
KPMG: THE STATE OF HEALTHCARE IN AFRICA (2012)
African healthcare has a number of
success stories…
Delivering effective healthcare in Africa
usually means doing things differently.
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The Relevance and Prevalence of Private Hospitals
• Private facilities, do not necessarily provide higher quality care than government facilities.
• The major private healthcare
companies are operators
collaborating on engagements with
medical schemes and health insurers.
The case of South Africa.
• Various other examples, differing in
scale.
• Funding and human resources constraints at government facilities.
• Through Buphe’s engagements, we have established a network in every major centre.
• Challenge in rural communities.
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Reasons for Low Prevalence
• The predominant number of private facilities are for profit businesses, requiring a steady stream of income
in order to operate effectively.
• In order to understand the lack of facilities, one has to understand how healthcare is funded on the African
Continent.
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How is Healthcare Currently Being Funded on the African Continent?
Expenditure on healthcare in Africa can be divided
into three categories:
Government spending; Private spending; and External sources (donour funding, primarily).
KPMG: THE STATE OF HEALTHCARE IN AFRICA (2012)
Government Spending:Some African Governments can afford to providegood healthcare, but model breaks down in poorercountries.
Private Spending:Countries in which private expenditure on healthcaredominates are of two types:
- Almost all spending is out-of-pocket spending atpoint of delivery; and
- Private spending is collected and pooled so thatprovision is made for unexpected health problems.
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Shift to Private Healthcare Financing and Relevance
• Direct payment at point of use.
• Pooled funding is more preferable.
• Increase the funds available for private,
pooled healthcare by encouraging health
insurance schemes.
Pooled funding offers a partnership
where insurers and service providers can
interact and find solutions to common
problems.
KPMG: THE STATE OF HEALTHCARE IN AFRICA (2012)
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The African Insurance Industry
Positive GDP Growth, resulting in a new (urbanised) emerging middle class;
Expected high growth in infrastructure investments and niche risks;
Increased external investment; and
Opportunities for product and distribution innovation supported by mobile communication.
The outlook for insurance and reinsurance in sub-Saharan Africa Summary Report 2014 (Trust Re)
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Microinsurance Penetration in the UninsuredMarket
• Identified 61.9 million people in the Africa region as
covered by microinsurance at the end of 2014, VS. 44.4
million people in 2011.
• Looking at institutions who reported both periods,
comparable growth of 30%.
• Each product line experienced growth, health, property
and agriculture growing at a higher rate than life
cover.
Microinsurance, means to engage a larger portion of
the uninsured market.
How successful have these initiatives been thus far?
Study - The Landscape of Micorinsurance Africa 2015: Conducted
by the Micro Insure Centre and Published by the Micro Insurance
Network and Munich Re Foundation
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Performance of Microinsurance Products
• Loss ratios are relatively low, with median
of 25% (26% premium-weighted average).
• Loss ratios driven by life products.
• Health and agriculture products
experienced higher, yet sustainable, loss
ratios, at 56% and 49% median.
Study - The Landscape of Micorinsurance Africa 2015: Conducted by the
Micro Insure Centre and Published by the Micro Insurance Network and
Munich Re Foundation
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The Challenge with Microinsurance and Suggestions
“S.A.U.V.E” – Simple, Accessible, easily Understood, Valuable and Efficient.
Understanding your client - In order to provide a successful micro-insurance product, insurers must understand:
• The needs of their clients;
• Their current risk-management behaviour;
• The overall potential market.
Queenie Chow - Microinsurance: Creatinginclusive insurance for all – AIO Journal 2016:
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The Challenge with Microinsurance and Suggestions
Distribution Channels: Accessibility –
Key drivers suggested for success in microinsurance
distribution:
Crafting and implementing win-win-winpropositions for clients, distribution channelsand insurers;
Joint investments in product development; and
Participation of distribution channels in thevalue chain.
Lemmy Manje – Inclusive insurance in Africa: Products and distribution
channels (AIO Journal 2016)
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What Do We Need To Do?
We need to think and do things differently:
• Appropriateness and Affordability of products and
services;
• Simple, Effective and Responsive Service Levels to our
target market;
• Data Management System Design;
• Training for Our Staff;
• Look at Our Communication;
• New ways to Reach Our Focus Markets; and
• Medical Service Provider Network Building.
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Our Approach
• Long Term Focus and approach to product
innovation.
• Tailored IT Platform and MIS
Development.
• Scheme Administration and Service
Delivery.
• Constantly Look at Opportunities for
Improvement.
• Ensure Responsiveness to changing
market needs and requirements.
• Conscious Decision to Improve Access to
Quality Healthcare on the African
Continent.
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Conclusion
Private Health Insurance, is a specialised field, loss ratios can be particularly high - sound and tested risk
management principles have to be applied.
Larger inclusion and proving greater access to quality private healthcare, will reduce Africa’s position as the
unhealthiest continent in the world. This is the (significant) untapped potential of insurance on our Continent.
"The Model T car was a pioneer. There was no conscious public need of motor cars when we first made it. There
were few good roads. This car blazed the way for the motor industry & started the movement for good roads
everywhere.”Subject: Model A, Source: Ford News, p. 1. "New Ford Car
Announced Details Forthcoming Soon", Date: 6/1/1927”
Thank You!
Buphe International 17 Premier in Healthcare Solutions
Access to Quality Healthcare Anywhere In
The World*
*Through strategic partnerships with Leading Insurers and Providers of Healthcare in various countries.
Email: info@buphe.com
Web: www.buphe.com