d vd merwe airc presentation 2016

Buphe International 1

Reposition to Address Underserved Markets

The Untapped Potential of Insurance: Observations from the African Private Health

Insurance Sector

Daniel van der MerweGroup Executive Corporate Affairs

Premier in Healthcare Solutions

Africa Insurance and Reinsurance Conference

2016

Premise and Focus Area

Buphe International

2

Premier in Healthcare Solutions

As Insurers we are often privy to the success stories our policy holders have experienced.

But what if we were able to

change all of that?

The untapped potential of Private

Health Insurance on the African

Continent:

Phenomenal and tangible

potential in improving the

wellbeing of millions of people

on the Continent.

For the majority, they are stories are often unable to share in, or experience for themselves

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Premier in Healthcare SolutionsBuphe International

Challenges and Reasons

. The African Continent, home of the fastestgrowing economies in the world;

. However, the worst healthcare performer in theworld.

KPMG: THE STATE OF HEALTHCARE IN AFRICA (2012)

Reasons:

• (HIV/AIDS) epidemic.

Other factors:

• Governments focussed on direct payment; • Corruption;• Infrastructure problems;• Poverty; and • Conflict.

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However…


African healthcare has a number of

success stories…

Delivering effective healthcare in Africa

usually means doing things differently.

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The Relevance and Prevalence of Private Hospitals

• Private facilities, do not necessarily provide higher quality care than government facilities.

• The major private healthcare

companies are operators

collaborating on engagements with

medical schemes and health insurers.

The case of South Africa.

• Various other examples, differing in

scale.

• Funding and human resources constraints at government facilities.

• Through Buphe’s engagements, we have established a network in every major centre.

• Challenge in rural communities.

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Reasons for Low Prevalence

• The predominant number of private facilities are for profit businesses, requiring a steady stream of income

in order to operate effectively.

• In order to understand the lack of facilities, one has to understand how healthcare is funded on the African

Continent.

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How is Healthcare Currently Being Funded on the African Continent?

Expenditure on healthcare in Africa can be divided

into three categories:

Government spending; Private spending; and External sources (donour funding, primarily).


Government Spending:Some African Governments can afford to providegood healthcare, but model breaks down in poorercountries.

Private Spending:Countries in which private expenditure on healthcaredominates are of two types:

- Almost all spending is out-of-pocket spending atpoint of delivery; and

- Private spending is collected and pooled so thatprovision is made for unexpected health problems.

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Shift to Private Healthcare Financing and Relevance

• Direct payment at point of use.

• Pooled funding is more preferable.

• Increase the funds available for private,

pooled healthcare by encouraging health

insurance schemes.

Pooled funding offers a partnership

where insurers and service providers can

interact and find solutions to common

problems.


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The African Insurance Industry

Positive GDP Growth, resulting in a new (urbanised) emerging middle class;

Expected high growth in infrastructure investments and niche risks;

Increased external investment; and

Opportunities for product and distribution innovation supported by mobile communication.

The outlook for insurance and reinsurance in sub-Saharan Africa Summary Report 2014 (Trust Re)

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Microinsurance Penetration in the UninsuredMarket

• Identified 61.9 million people in the Africa region as

covered by microinsurance at the end of 2014, VS. 44.4

million people in 2011.

• Looking at institutions who reported both periods,

comparable growth of 30%.

• Each product line experienced growth, health, property

and agriculture growing at a higher rate than life

cover.

Microinsurance, means to engage a larger portion of

the uninsured market.

How successful have these initiatives been thus far?

Study - The Landscape of Micorinsurance Africa 2015: Conducted

by the Micro Insure Centre and Published by the Micro Insurance

Network and Munich Re Foundation

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Performance of Microinsurance Products

• Loss ratios are relatively low, with median

of 25% (26% premium-weighted average).

• Loss ratios driven by life products.

• Health and agriculture products

experienced higher, yet sustainable, loss

ratios, at 56% and 49% median.

Study - The Landscape of Micorinsurance Africa 2015: Conducted by the

Micro Insure Centre and Published by the Micro Insurance Network and

Munich Re Foundation

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The Challenge with Microinsurance and Suggestions

“S.A.U.V.E” – Simple, Accessible, easily Understood, Valuable and Efficient.

Understanding your client - In order to provide a successful micro-insurance product, insurers must understand:

• The needs of their clients;

• Their current risk-management behaviour;

• The overall potential market.

Queenie Chow - Microinsurance: Creatinginclusive insurance for all – AIO Journal 2016:

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The Challenge with Microinsurance and Suggestions

Distribution Channels: Accessibility –

Key drivers suggested for success in microinsurance

distribution:

Crafting and implementing win-win-winpropositions for clients, distribution channelsand insurers;

Joint investments in product development; and

Participation of distribution channels in thevalue chain.

Lemmy Manje – Inclusive insurance in Africa: Products and distribution

channels (AIO Journal 2016)

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What Do We Need To Do?

We need to think and do things differently:

• Appropriateness and Affordability of products and

services;

• Simple, Effective and Responsive Service Levels to our

target market;

• Data Management System Design;

• Training for Our Staff;

• Look at Our Communication;

• New ways to Reach Our Focus Markets; and

• Medical Service Provider Network Building.

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Our Approach

• Long Term Focus and approach to product

innovation.

• Tailored IT Platform and MIS

Development.

• Scheme Administration and Service

Delivery.

• Constantly Look at Opportunities for

Improvement.

• Ensure Responsiveness to changing

market needs and requirements.

• Conscious Decision to Improve Access to

Quality Healthcare on the African

Continent.

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Conclusion

Private Health Insurance, is a specialised field, loss ratios can be particularly high - sound and tested risk

management principles have to be applied.

Larger inclusion and proving greater access to quality private healthcare, will reduce Africa’s position as the

unhealthiest continent in the world. This is the (significant) untapped potential of insurance on our Continent.

"The Model T car was a pioneer. There was no conscious public need of motor cars when we first made it. There

were few good roads. This car blazed the way for the motor industry & started the movement for good roads

everywhere.”Subject: Model A, Source: Ford News, p. 1. "New Ford Car

Announced Details Forthcoming Soon", Date: 6/1/1927”

Thank You!

Buphe International 17 Premier in Healthcare Solutions

Access to Quality Healthcare Anywhere In

The World*

*Through strategic partnerships with Leading Insurers and Providers of Healthcare in various countries.

Email: [email protected]

Web: www.buphe.com

mailto:[email protected]

http://www.buphe.com/

d vd merwe airc presentation 2016

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