Risk-Free Credit Insurance Premium Financing using Mobile Money (M-PESA) & APIs

There is an increasing adoption of Risk Based Pricing for Motor Insurance in African markets, with Kenya amongst the leading African countries to adopt this. This has resulted in differentiated pricing and a general increase in premium rates for comprehensive motor insurance.
The issuance of motor insurance certificates has been automated in the Kenyan market, with insurance certificates sent in real time to a mobile phone number via WhatsApp/email address upon payment of premiums. Insurance providers have been integrated to a centralized industry database via APIs for ease of validation of insurance certificates.
There is a huge appetite for credit within the market and people would rather pay premiums in instalments rather than a steep one-off premium. Current Insurance Premium Financing (IPF) options in the market involves paperwork with a turnaround time of 24-48 hours.
Given the widespread use of mobile money payments in the Kenyan market, I have developed a real time IPF product that enables customers to access financing for premium payment in real time. The solution is fully digital end to end, with customers, insurance companies and lenders integrated through a platform via APIs.
Customers are required to make a partial payment to a lender, which comprises of a mandatory third party insurance component, upfront lender’s fees and 6 weeks’ worth of comprehensive cover. Upon receipt of the partial payment, the lender remits the full premium to the insurer and comprehensive insurance cover is issued in real time. The customer can choose to repay the IPF loan within a period of 1 to 5 months. In the event the customer defaults on the loan repayment, the insurance cover is either cancelled or downgraded to third party, and the unutilized premium (comprising of Unearned Premium Reserves) used to offset the outstanding loan amount. Any residual balance is reimbursed to the customer. This makes the lending credit risk-free to the lender.
The solution is available on USSD/APP/WEB and takes less than 2 minutes access financing and obtain comprehensive insurance premium.
Find the Q&A here: Q&A on 'Insurance and Regulation in Emerging Markets'