DIGITISING AND HARNESSING SOCIAL CAPITAL TO OFFER LOW COST INSURANCE
DataDrivenFinance AS, with its daughter company DataDrivenFinance Kenya Ltd (DDFinance -K, established March 2018), a new digital challenger, has committed to delivering scalable risk management solutions to the majority low income segment in Kenya, by providing affordable insurance products using basic mobile phones. In Kenya, a developing economy with over 90% mobile phone penetration, only 3% of the population is insured leaving little to no financial safety net in case of accidents or misfortune.
Traditional insurance underwriters depend on relatively high processing costs and substantial manual workflows, and are unable to make their products affordable for this enormous target market. DDFinance – K has found a way to bridge this gap through combining a deep understanding of financial services with emerging semantic technologies to enable massively scalable, profitable, small amount insurance services in mass volume markets.
Operating as an Insurance Network Service, DDFinance-K works with various partners to deliver digital insurance products to the end user. These partners include Care International Kenya (CIK) and CIC Insurance Ltd (CIC). CIC underwrites the insurance risk while CIK, a training and distribution partner gives us access to 40,000 Village Savings and Loan Association (VSLAs) with a total of 1.000,000 members who are already trained in finance. In this training and distribution partnership, CIK wish to extend its VSLA digitalization to Microinsurance, where member’s social capital (trust and reputation) will be used in automating policy binding and claims handling.
Cognizant of the fact that low-income markets operate on a culture of collectivism, where individuals are dependent on their social networks, as evident in the widely popular phenomena of saving groups, the end-users on the ground know precisely who in their network can be trusted. DDFinance – K digitizes this information into a Social Capital Metric score (SCM), enabling individuals of low income to capitalize on his or her good behaviour. Trust is a prerequisite for this Collective-Based-Insurance (CBI) model to work for the purpose of verifying claims digitally.
Claims handling is among the primary barriers to the market, a costly process with significant consequences if done poorly. Automatic claims handling is thus necessary for achieving close-to zero variable costs, which in turn requires digital customer data to form the basis of this decision. Is this a valid claim? Can this person be trusted?
Prices for digital insurance products from DDFinance – K starts as low USD 1,3 per year in premium for receiving USD 5 per day if hospitalized and receiving USD 100 in case of death.
DDFinance – K is a UN SDG Partnership Platform company and selected by World Bank to participate in the Innovation Knowledge Challenge in Nairobi April 5th. The global reinsurer Swiss Re supports DDFinance – K with technical support, and Innovation Norway provides substantial financial support, for our work of opening the insurance markets for the underserved low-income segments.