Only 17% of global insurance premiums come from emerging markets, although their contribution to global GDP is 40%. This discrepancy is driven, in great part, by the underinsurance of lower-income populations.
The causes of this global protection gap range from a very local cultural understanding of risk and a lack of accessible and affordable solutions, to both limiting and fragmented regulatory frameworks.
Billion dollar market
By targeting the emerging middle class, the micro-insurance industry has experienced fast-paced growth in recent years. It is estimated to represent three to four billion people in need of protection, or a market of $30bn (£20.7bn, €26.6bn) to $50bn in annual insurance premium revenue.
Building upon its existing micro-insurance schemes developed locally across Asia, Africa, and Latin America that currently protect over three million emerging customers, Axa has decided to allocate dedicated resources and expertise to address this growth segment, and develop offerings encompassing Life & Savings, Health, Property & Casualty insurance, as well as Assistance.
Garance Wattez-Richard has been appointed to lead Axa’s emerging customer segment at group level. She was previously the group’s head of media relations and reputation, and leader of Axa’s women & insurance initiative.
“Lower income populations in emerging countries remain unreached by mainstream commercial and social insurance schemes, all the while being the most vulnerable to shocks."
Wattez-Richard will report to Thomas Buberl, a member of Axa Group’s management committee, chief executive of Axa Germany, and chief executive of the global business lines for the Health and Life & Savings businesses.
Vulnerable to shocks
“Lower income populations in emerging countries remain unreached by mainstream commercial and social insurance schemes, all the while being the most vulnerable to shocks. There is a clear opportunity to accompany them in their journey to becoming the middle class of tomorrow”, said Buberl.
“The specific protection needs and characteristics of this emerging middle class will force us to reinvent the way we conduct our business, opening up a space in which to leverage digital technologies, pilot innovative products and services, as well as scale up our partnership-building abilities to better reach and serve our clients. Ultimately, these are elements that will feed back into our traditional insurance business,” he added.
To accelerate the scaling-up of this initiative, Axa has increased its stake in MicroEnsure to 46%. MicroEnsure is a UK-based mobile micro-insurance business serving over 20 million emerging customers through partnerships with mobile network operators, banks and microfinance institutions in 17 countries across Asia and Africa.
It will become the platform of choice for Axa to develop its emerging customer insurance offer.
Richard Leftley, chief executive of MicroEnsure, said: “Nobody wakes up in the morning having dreamt of buying insurance, and 85% of MicroEnsure’s clients are new to the concept. We have a proven track-record of finding innovative, affordable solutions to reach the populations traditionally unreachable and un-protectable by insurance.
“The presence of Axa alongside our other shareholders Omidyar, Sanlam and the IFC-World Bank will significantly help us accompany our customers in their progression towards a higher socio-economic status whilst providing a safety net to reduce economic setbacks, ultimately contributing to eradicating poverty and boosting shared prosperity.”