Value addition and new innovations in Micro Insurance Presentation by H.M.R.M.Herath, Senior Manager – IR Sanasa Insurance Company limited, At AOA 30 th Anniversary Seminar th Aug 26 th 26 ugust t 20 2014 at at Cinn nnamon Lak akeside de Hote otel l Colo olombo.
Contents of the presentation • Definition of added value. • Objectives of value addition. • Types of value added. • Necessity of added value in micro insurance. • Application of value additions in Agricultural Insurance of SICL. • Conclusion..
Definition of value addition The enhancement a company gives its product or service before offering the product to customers. Value added is used to describe instances where a firm takes a product that may be considered a homogeneous product, with few differences (if any) from that of a competitor, and provides potential customers with a feature or add-on that gives it a greater sense of value.
Objective of value addition in Micro insurance • To improve performance of insurance products or services in order to make happy the customer. “ any activities that do not add value to the customer are considered waste”.
Types of Value addition • There are two types of added value 1. Value-added (VA) Activities/Processes: Any activity or process the customer will be willing to pay for. Eg: Customer can receive insurance policy at the same time it is filled. (issuing policy in the field) 2. Non-value-added (NVA) Activities/Processes: Any activity or process the customer would not want to pay for, but which cannot be eliminated in the process of value added. Eg: Regulatory processes may be considered business-value- added.
Basic requirements of value addition • Identifying Customer perception about product and services. • Identifying and eliminating root cause of the problems of the Company. • Cost benefit analysis (it is affordable to the customer and at the same time company can run with profit).
SICL-Value addition and new innovation in Micro insurance. “Insurance is an abstract concept about an intangible promise to pay, which makes it difficult to convince clients of its value .” To address this issue, SICL is bundling value-added services along with risk protection to make products tangible and to provide more frequent “benefits”.
SICL-Value addition and new innovation in Micro insurance. Cont.. • Introduction of Weather Index insurance (WII) to the Paddy and Tea farmers as a new innovation. “The weather insurance products are very specific to the area, the season, crop and peril insured. Payouts for the decreased revenues from cultivation of the specified crop happening due to excess or deficit in rainfall in the specified location are made to the customer .”
SICL-Value addition and new innovation in Micro insurance. Cont.. Special features of Weather Index Insurance Automated Claim calculation No claim request Farmer can receive Rainfall data of their weather station though the insurer 100% transparent
SICL-Value addition and new innovation in Micro insurance. Cont.. WII Tea has been bundled with 4 rider covers. Hospitaliza tion cover Property cover Value addition Personal Funeral aid accident insurance cover
SICL-Value addition and new innovation in Micro insurance. Cont.. Progress of weather Index Insurance for Paddy Number of Farmers enrolled Premium Collected 4000 2,500,000.00 3500 2,000,000.00 3000 2500 1,500,000.00 2000 1500 1,000,000.00 1000 500,000.00 500 0 LK -
SICL-Value addition and new innovation in Micro insurance. Cont.. Progress of weather Index Insurance for Tea Number of Farmers enrolled Premium collected 12000 7,000,000.00 10000 6,000,000.00 5,000,000.00 8000 4,000,000.00 6000 3,000,000.00 4000 2,000,000.00 2000 1,000,000.00 - LKR 0 2012 2013 2014 Number of Farmers 2012 2013 2014
SICL-Value addition and new innovation in Micro insurance. Cont.. SICL-livestock insurance 1 st time in Sri Lanka SICL introduced the RFID microchips Trace a specific animal and ultimately prevents fraudulent claims Technical training programs for Livestock farmers Fast claim settlement
SICL-Value addition and new innovation in Micro insurance. Cont.. • Added value in Crop insurance - claim settlement In the event of Crop damage, settlement of claim to be done on the recommendation of a village based claim committee consisting SICl Agri officer and 3 other members nominated by the farmers organization. Advantages; - No complains after assessment. - Estimation is transperent and easy. - High renewal percentage.
SICL-Value addition and new innovation in Micro insurance. Cont.. • Value added in SICL funeral expenses Insurance. Fast claim settlement for funeral expenses insurance. All the Sanasa primary societies are advised to settle the cash payment to the insure after verification by society and reimburse from Insurer.
Conclusion 1. Value additions include easily- operated strategy, free from defects of delays, lack of transparency, presence of human error, free from bureaucracy and easy procedures in claims settlement. 2. Micro insurance products linked to large package of risk management strategies and services are more effective.
Thank you
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