AS part of its ongoing activities, the Monthly Financial Sector Bulletin (MFSB) — an e-mail-based financial information service which I edit — monitors new product initiatives and rates them according to a set of 10 criteria. The product, which ticks the highest number of boxes becomes the product of the month. The main objective of this initiative is not only to recognise, but also promote product innovation in the financial services sector, while helping the banking public to understand new products. Accordingly, the product of the month for March 2016 is Zimnat Life’s My Legacy Plan, a life cover product targeted at people living with HIV. It achieved a score of 7/10 and is reviewed hereunder, to reveal how well it measures up to innovation and utility criteria?
Omen Muza
Innovation
“The plan is the first of its kind in Zimbabwe and second in the region after South Africa. Previously HIV-positive people were excluded and could not access Life products in Zimbabwe,” says Zimnat Life. Although the Commissioner of Insurance at one time directed that the ill-fated Ecolife should also cover HIV-positive people and those who had pre-existing ailments, that amounted to nothing more than an afterthought. Additionally, in terms of value proposition, coverage under EcoLife did not match My Legacy Plan’s current offering which, depending on an individuals’ needs, ranges from $10 000 to $250 000.
Financial inclusion
The Reserve Bank of Zimbabwe’s January 2016 Monetary Policy Statement notes that: “Financial inclusion gaps have been pronounced among some special groups who are currently under-served. Against this background, there is a need for increased responsiveness of the providers of financial services to the unique needs of financial consumers in this country.” As far as insurance goes, HIV-positive people definitely have “unique needs” and Zimnat is seen as rising to the occasion to advance the cause of a previously disadvantaged demographic through My Legacy Plan. One of the four pillars of the National Financial Inclusion Strategy is financial innovation, which “entails financial institutions taking advantage of new information and communication strategies to reach out to the excluded segments of the population.” The MFSB sees My Legacy Plan as a response to new information about the success of anti-retroviral treatment (ART), empowering the insurer to include HIV positive people in its target market for insurance services.
Affordability /cost reduction
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Premiums start from as low as $25 and come with flexible payment terms. Ordinarily, this would be considered affordable, but current economic challenges in Zimbabwe could render many of those targeted unable to afford life policies. Though some would call for reduced premiums, it is difficult for Zimnat to reduce them to the desired levels due to the administrative requirements associated with such policies. Epidemiologist Leigh Johnson of the University of Cape Town confirms that a key factor determining higher insurance premiums for people with chronic diseases is administration costs. In terms of reducing the cost of delivering this service, Zimnat says applications can be made through its 200 agents nationwide, including trained corporate agents and organisations already working with the HIV community, which should go a long way in ensuring that prospective customers do not incur transport costs in the quest to access the product.
International utility /versatility
The plan is open to anyone between the ages of 18 and 60 who is on anti-retroviral treatment. Theoretically, this means any HIV positive person anywhere is eligible for the product but meaningful uptake will most likely be confined to Zimbabwe as it would presumably be difficult for the insurer to monitor compliance with ART for those living beyond the country’s borders. However, those living in the Diaspora could financially assist their relatives resident in Zimbabwe to acquire this policy.
Convenience
For marketing purposes, Zimnat has partnered organisations that already work with the HIV community. This enhances convenience for HIV-positive people as they deal with parties they are already familiar with — something that is particularly important given the need for the insurer to safeguard the highly sensitive personal information they will be entrusted with by their customers. Free will writing where 12 months’ premiums have been paid means HIV-positive people do not have to go elsewhere for the service — they have access to a one-stop shop. The existence of a flexible premium payment plan, ranging from monthly to annual, is also another of the company’s efforts to enhance customer convenience. Employment creation
Zimnat Life requires new skills such as specialised medical and counselling resource persons to cater for this new market segment. However, in order to ensure sustainability, recruitment will probably not be at a large scale as the company is unlikely to create a structure that increases its cost base before the product has gained traction. The will writing service offered as part of the plan however creates demand for estate planning services. Collaboration/partnerships
For marketing and distribution Zimnat relies on 200 Zimnat agents nationwide, including trained corporate agents and organisations already working with the HIV community, which is a sensible arrangement given the sensitivities around HIV/Aids. The company will also have to work very closely with doctors and other health professionals in pursuit of adherence to drug intake, something critical for the sustainability of My Legacy Plan. Tech-savvy credentials The product does not appear to be technology-based in any significant way and we have not seen a roll out plan leveraging significantly on technology. Zimnat has opted instead to use existing relationships to create awareness of the product. Since launch of the product on March 31, 2016, the company has relied mainly on the print media and not nearly enough on technological platforms including electronic and social media.
Integration with existing products/services
Without life insurance as security, financial institutions are reluctant to lend money to buy a house or start a business but this plan can also be used for Estate Duty Purposes, Collateral Security and Business Protection Assurance.
Scale/impact
According to Dr. Owen Mugurungi, the HIV and TB unit director in the Ministry of Health: “1,3 million people are currently living with HIV/Aids and of that figure 187 000 are children below the age of 15”. Out of these, 600 000 are on anti-retroviral treatment. However, not all of these are financially included in line with the national financial inclusion statistics. Zimnat says it needs between 10 000 and 15 000 clients for the business to attain viability and sustainability. Having worked on the product for over one-and-a-half years, the company has attained competitive advantage and certainly has first mover advantage so it should be able to attract a significant number of HIV positive people into its fold, with a significant positive impact on their lives and those of their dependents. Omen edits the MFSB. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8 or initiate contact through [email protected]
