AXA Emerging Customers: Business with social impact
Ensuring emerging customers around the world gain access to protection for their families, businesses and communities.
Meet Aziza, Fatma and Saiful.
Aziza, 43, Craftswoman, Egypt
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, 26, Private sector employee, Indonesia
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.
Saiful, Construction, Malaysia
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.
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 these markets.
All three benefited from insurance coverage from AXA, which enabled them to be resilient in the face of unexpected loss. And in all three cases, it was the first time they had used formal insurance.
Emerging customers are in a precarious middle position. Their incomes are often too high to qualify for the limited social protections that exist for the poorest in their countries, but they have not yet reached the level that would give them access to traditional private insurance. Many are part of the informal economy and, as self-employed workers or owners of a micro, small or medium-sized enterprise (MSME), they do not enjoy employee benefits. Without formal protections, their transition to the middle class is akin to a game of chance, and they are always at the mercy of illness, the theft of a bicycle or the burning of a place of business.
Even if they don't have formal insurance, they remain aware of the risks involved and have other means of managing them. More often than not, they lean on friends or family during tough times, build up a nest egg, or hold on to material assets that can be sold quickly and easily. But risk management through informal methods has its limits. Friends and family are not always able to fully cover unexpected costs. Every year, 100 million people (40 of them in India alone) are pushed back into poverty due to unforeseen health-related events and related costs.
Emerging customers have been particularly affected by the COVID-19 pandemic and the successive lockdowns associated with it. Due to lack of savings, loss of jobs and decline in business, customer resources have dwindled. The pandemic has also worsened access to health care and deepened health inequalities around the world.
It is time to act now to support these customers on their economic transition and prevent them from falling into poverty.
This is due to the way insurance products are designed, distributed and managed.
Often, insurance policies are complex and written in technical terms not adapted to the limited financial knowledge of this clientele. It may be necessary to fill out medical forms, while long delays and exclusions are an additional obstacle.
In addition, the income of emerging customers is often unpredictable, and they do not always know what tomorrow will bring. Long-term insurance policies are therefore poorly suited.
Finally, the sale of traditional insurance depends heavily on agents and brokers who mainly target high-end customers in urban areas.
Adapting insurance to the needs of emerging customers involves reinventing our business model to overcome barriers of cost, access, understanding and trust. AXA Emerging Customers has adapted products and distribution strategy to our target segment. For this, the products must be:
AXA Emerging Customers recognizes that providing inclusive insurance solutions is not only about delivering products, but also about accompanying customers even beyond their times of need with services. In FY 2022, 35 AXA EC schemes included services (e.g. diagnostic screening, telemedicine, education), reaching 3.5 million people. AXA EC has a particular focus on providing health services bundled with insurance cover in case of events like disability, hospitalization, or critical illness, because unexpected health expenses play a role in driving people into poverty.
Each year, AXA Emerging Customers assesses the customer orientation of its programs in various dimensions related to product development, complaints processes and information presented to customers. This evaluation helps to inform further product improvements and developments and is a first step in an internal approach to measuring the effects that insurance can have within communities.
Achieving sustainable development through inclusive insurance requires continuous cooperation between a number of actors, public and private, to provide the world’s vulnerable with new ways to manage risks. AXA partners with organizations and consortia that share the same vision and values, including the CEO Partnership for Financial Inclusion, the Insurance Development Forum, and the Microinsurance Network.