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> Posted by Sonja Kelly, Fellow, CFI
Since the release of our paper, Aging and Financial Inclusion: An Opportunity, I have been considering the challenge of market segmentation using the life course. This is not unexplored terrain at the Center for Financial Inclusion. Beth Rhyne articulated a life course approach during our Looking Through the Demographic Window project, which we have captured in the infographic embedded at right. I have been hearing from microfinance institutions that some efforts are underway to segment clients by their life stage, though this remains a relatively untouched area in the industry. For a great example of segmentation, however, I only had to look to the spam filter on my email.
Most of the emails that get caught in my spam filter are about body image. I receive messages advertising dieting pills, on the one quick fix to reduce belly fat (you won’t believe which celebrities use it!), and how to get toned abs within a week. This makes sense—I work out regularly, and I (try to) watch what I eat. The emails are tailored to me.
In chatting with my colleagues, I find that they also receive targeted emails. Some women in our office who are older than me receive emails for walk-in tubs. Singles get emails that point them to dating websites. Some of the younger men in our office get emails that refer to “satisfying” their girlfriends. And the spam filters of older men in our office collect emails about (ahem) performance-enhancing pills.
These are, of course, gross generalizations—the life course cannot possibly be reduced to dieting, walk-in tubs, and bedroom performance. But why is it that the email caught in my spam filter is more skilled at customer segmentation using the life course than my financial institution’s product line? Even more than being successful at segmenting a potential client base, spam marketers are successful at moving this potential client base to action, according to MailChimp. They have a simple message and a call to action. Their “click rates,” or the rate at which people click on links, are higher than average.
> Posted by Center Staff
A new micro-pension platform targeting those working as domestic laborers, appropriately named Gift a Pension, launched in India last month. The platform is run by the Micro Pension Foundation (MPF) nonprofit and gives employers of domestic laborers a convenient way to support their workers in enrolling for the National Pension Scheme (NPS) Lite government product, a smaller version of the NPS offering. Across the country an estimated 40 million work for households in roles including maids, guards, cooks, and drivers. In the weeks since the program opened, over 1,000 domestic employers have registered themselves and gifted pensions to their workers. The platform offers more than its name suggests, as gifting workers five-year term life insurance is also available.
Here’s how the service works. First, MPF encourages employers ensure that their workers understand the structure and benefits of any accounts before enrollment happens. The Gift a Pension site includes a collection of educational tools and videos for employers to use to aid their workers’ familiarity with products and with the importance of managing finances for the long-term. Once this initial learning phase is complete, the employer registers themselves with the Gift a Pension site and enrolls their worker using information from the various documents that satisfy the necessary know-your-customer requirements. To open the account, the employer pays a one-time servicing fee (Rs 300) as well as the first contribution into the account. The worker then receives in the mail a guide to go along with their new account and their personal prepaid pension card. In a few weeks’ time the worker will also receive a government-issued Permanent Retirement Account Number (PRAN).
> Posted by Olivia Caverly, Microinsurance Network
The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process, and highlights findings from “Mapping the Invisible Market.”
The microinsurance sector has grown rapidly over the past 10 years and is expected to double by 2020, producing coverage for over 1 billion people. With it, this significant growth brings new and exciting innovations in products addressing health, agricultural, and property insurance, as well as new business models that find unique delivery methods to be sustainable.
Endowment Products Assist People to Finance Their Old Age
As life expectancy continues to rise globally, endowment products, which pay a lump sum upon maturity or death, are becoming more relevant. People need to find ways of financing their old age. Historically, standard endowment products have had limited uptake because of their lack of value compared to other saving options, mainly due to the high commissions that agents are paid. However, a new wave of products combining savings and insurance are becoming popular.
These new endowment products are more appealing to low-income clients because they counter the notion that investing the money is in “vain” when the insured event doesn’t happen. They do this by combining insurance with savings over time. Grameen Shakti, SBI Life Insurance’s product, for example, bundles a term life product that is the same price regardless of the age or gender of the policy holder, with a cash benefit on survival of the pre-determined policy term. The simple terms of the product, which include limited choices of term and of death benefit, help it reach a wider audience by allowing people who might be less familiar with insurance to better understand what they are paying for. Grameen Shakti is now offered throughout India (Rusconi).
Technology Plays a Key Role
Technology has proven to be a huge enabler for microinsurance distribution, especially through mobile telephones. This is particularly true for those microinsurance target customers who reside in rural and semi-urban areas of developing countries with limited access to traditional sales and management methods.
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