Aziza is a client of the Lead Foundation in Egypt. When Lead and AXA Egypt launched an insurance program, Aziza first considered it as an unnecessary additional expense. But when she was hospitalized and the cover reimbursed her expenses, she understood the value it could bring.
Fatma signed up to Alodokter’s mobile app service providing unlimited consultations with specialist doctors. When she was hospitalized for 3 nights, she only had to submit a picture of her discharge form to receive a speedy claims payout.
Every month, Saiful sends money to his family in Bangladesh through Merchantrade, a remittance company. When he was involved in a serious accident he was protected by Merchantrade Insure, a scheme designed by AXA Malaysia, and received a disability allowance which allowed him to undergo treatment and fully recover.
What do they all have in common?
Fatma, Aziza and Saiful are part of the emerging customers segment. They live in emerging countries, work hard to provide for their families and strive to give their children better opportunities through education. Their incomes are irregular, but average between 2 and 13 USD per day, making them part of what some have coined the “middle of the pyramid”, the keystone of the active population in most of these markets.
All three of them benefited from AXA’s inclusive insurance covers to get out of a tight spot. And in all three cases, it was the first time they ever accessed formal insurance.
Indeed, emerging customers are in a precarious intermediary position. Their income is often too high for them to be eligible for the limited social security nets which exist for the poor in their countries, but have not quite reached the levels which would give them access to traditional private insurance. Many are in the informal economy, and as auto-entrepreneurs, owners of a micro, small and middle enterprises (MSMEs), they are not covered by employee benefits. Without protection, their transition towards the middle class therefore becomes a game of snakes and ladders, where they are always at the mercy of an illness, the theft of their bike, or a fire at their shop.
The fact that most emerging customers do not have formal insurance does not mean that they are not aware of their risks – they manage them in other ways. More often than not they rely on friends and family during rough times, cash saved under the mattress and tangible assets that can be sold quickly and easily. But managing risk through informal methods has its limits. Friends and family are not always able to entirely cover unattended costs. Each year, 100 million people (and 40 in India alone) fall back into poverty due to unexpected health-related events and associated expenses.
Why is traditional insurance not accessible to Emerging Customers?
It all stems from the way insurance products are designed, distributed and operated. Often, insurance policies are complex and drafted in technical terms not adapted to the limited financial literacy of this customer base. Enrolment may require health forms to fill out, while long waiting periods and exclusions form another barrier.
In addition, Emerging Customers often have volatile revenues and do not always know what tomorrow will look like. Long-term policies are therefore ill-adapted. Finally, traditional insurance distribution focuses a lot on agents and brokers who mostly cater to higher-end customers in urban areas. Moreover, employee benefits are not available for lower income workers, who are often in the informal economy.
Reinventing insurance: An inclusive business model in practice
AXA invested in creating a business dedicated to protecting the emerging middle class because we believe the only way to deliver lasting social impact is through a scalable, profitable business approach. Our aim is to empower people on their way to the middle class and prevent them from slipping back into poverty.
Tailoring insurance to Emerging Customers’ needs means reinventing our business model to overcome barriers of cost, access, understanding and trust. This entails products which are:
- Affordable: introducing flexibility in cover levels helps match emerging customer’s income levels, and offering monthly premium options suits their cash flows.
- Accessible: emerging customers can be hard to reach, as many of them are in remote areas and aren’t likely to knock on the door of an insurance agent. To overcome this barrier, AXA set up partnerships with microfinance institutions, mobile network operators and many others to offer protection to their customers.
- Aspirational: Insurance must help emerging customers in their transition to the established middle class. AXA Emerging Customers is committed to delivering social impact, and the team co-creates products with clients through field research, ensuring that the products meet the needs of clients.
- Understandable: for first-time buyers of insurance, education about how insurance works is critical. We simplify terms and conditions so people are not denied claims on the basis of hard to grasp exclusions such as “pre-existing medical conditions” or “hazardous occupations”. We remind our customers and their beneficiaries of their cover and how to use it.
Family remittances – sending home money to support the family – is a common practice in emerging countries, and forms the backbone of livelihoods and entire economies. Through its partnerships, AXA Emerging Customers aims to improve financial inclusion for migrant workers by accelerating the development of insurance and protection service offerings to low- and middle-income individuals, and thereby democratizing their access to financial services. Read more about our partnerships with Democrance and Western Union.
Meet the team
Today AXA Emerging Customers works in eleven countries across three continents:
- Asia: India, Indonesia, Malaysia, the Philippines and Thailand
- Africa: Egypt, Ivory Coast, Morocco, Nigeria and Senegal
- Latin America: Mexico
Get in touch with the team if you want to learn more about our projects and provide insurance to those who need it the most.