Business News of 2012-10-31

Tigo Family Care Insurance Is Top Micro Product in Ghana

Tigo’s Family Care Insurance has been adjudged the most successful micro insurance product in Ghana by the National Insurance Commission (NIC).

A survey carried out by the NIC and Danish Development Authority (GIZ) on the supply and demand for micro insurance in Ghana indicates 61% of Tigo Family Insurance subscribers were satisfied with the product.

“Based on the number of policy holders and premium volumes, Tigo Family Care can be considered the most successful micro insurance product in Ghana,” the report said.

Survey questionnaires were distributed to 41 companies providing micro insurance, including mainstream insurance houses, but 20 responded and Tigo emerged tops out the 20.

The report noted that the Tigo product is patronized by a wide range of people, including many low-income earners, who, according to Head of Solutions at Tigo Ghana Abdul-Nasser Alidu, are the main target of the product.

The Tigo Family Care Insurance is in two parts – one is completely free and the other requires a daily token premium of 5Gp for twenty days in every month. Both of them provide cover for the subscriber and one additional family member of the subscriber’s choice.

Under the free model, the amount of cover is between GHC200 and GHC1,000 based on how much the customer spends the month before the month of claim.

The second “freemium” model is virtually the same, but the amount of cover is doubled because of the daily premium of 5Gp.

Abdul-Nasser Alidu told Adom News Tigo Family Care Insurance has so far registered about 400,000 subscribers and provides cover for more than a million people, half of whom are on free model and the other half are on the ‘freemium’ model.

“So far we have paid out over 600 claims in the amount of more than GHC500,000,” he said.

The NIC report acknowledged that “it is likely that client satisfaction and trust (in the Tigo Family Care Insurance) would increase over time as clients see that their claims are getting paid.”

The report also noted that most of the existing clients are well informed about the terms and conditions of their policies, and only 5.88% of respondents said they have no knowledge of what the policy covers.

Alidu noted that Tigo Family Care Insurance is positioned as a loyalty driver rather than a direct revenue driver, saying that premiums and commissions the company pays on behalf of it customers, are higher than the 5Gp they contribute.

He said the success of the product lies in the way it is providing free cover for several low-income customers, and has kept customers loyal to the brand and also driven those customers to spend more because of their expected benefits in higher claims.

“Even though we pay higher premiums than the customers contribute, those customers have remained loyal to Tigo and are also spending more on Tigo now so we derive the benefit in the form of ARPU (average revenue per user),” he said.

Alidu said beginning from next year, Tigo would be add other policies unto its Tigo Family Care Insurance package to give the low-income segment of the economy even more opportunities for insurance cover.

He believes that telecom operators are effective channels for the distribution of insurance policies, more effective than the other modes of distribution adopted by the mainstream insurance companies.

Tigo Family Care Insurance was developed in partnership with Bima (Milvik), underwritten by Vanguard Life and administered by MicroEnsure.