As of January 2010
Project team: Project planning took place during this period. Team members faced challenges initiating the project, communicating with its distribution partner XB, and reporting to the administration.
Tenger Administration: Lack of support and dedication from Tenger Administration for the Microinsurance project (MI project) caused human resource allocation problems. Only two members were expected to run the MI project in its entirety.
Partnership: Tenger and XB initially had an informal and preliminary agreement to partner on this project. Lack of expertise for the project (this was the first project granted by an international organization) and the need to adhere to western standards of insurance practice caused the unclear situation between XB and the Tenger MI project team. The unclear situation was fueled by a damaged relationship caused by previous Tenger staff, which were responsible for liaising with XB on other products.
As of February 2010
Project: The MI project team now consisted of a project team leader, dedicated project manager, an actuarial student and a representative from the distribution partner organization, as well as an external actuarial consultant (Gerege Partners). The team initiated market research to design the personal accident and health microinsurance product. They developed questionnaires and selected a research organization. Gerege Partners (GP) started gathering data from major hospitals in Ulaanbaatar. The Tenger MI fellow began introducing standards of insurance to the company through oral presentations.
Tenger Administration: Lack of support from administration continued. Team leader, project manager and the Tenger MI fellow presented the MI project and existing problems that could adversely affect the project. The Tenger administration agreed to support with human resources and allocated an actuarial student to the project team office.
Partnership: The champion in XB and her senior staff started to demonstrate disbelief in the MI project. XB’s previous experience in project implementation caused different expectation from the project team. Explaining the MI project, its scope and activity did not have much effect on their point of view on the project. The partner organization demanded the progress result, while the project team continued to engage with XB stakeholders through regular meeting with managers.
As of March 2010
Project: External actuarial consulting company “GeReGe-Partners” LLC collected supply side information and identified four main risk factors (Age, Gender, Occupation and Residence). Current data wasn’t sufficient to analyze the risks concerning occupation and residence. Tenger decided to include Age and Gender as risk factors in their pricing model (with 10 risk classes: male, female with 18-25, 26-35, 36-45, 46-59, over 60 age groups). “GeReGe-Partners” developed a preliminary Personal Accident product pricing model. An external market research firm “New Power” NGO has been contracted with Tenger project team to survey 11 marketplaces in Ulaanbaatar. Tenger prepared for the focus group discussions (FGD) with representatives from those marketplaces. A guideline for the FGD was prepared and, although it was difficult to find a researcher, an experienced researcher for the FGDs was hired. An incentive system for team members was needed with the high workload.
Tenger Administration: Though there were some positive sign of having knowledge and information about project, the expectation of a fast outcome at a low expense with few human resources for the MI project still existed.
Partnership: Project handlers of XB were participating in training sessions organized by the MI fellow.
As of April 2010
Project: Tenger carried out a quantitative market survey of 501 families (1897 people). Tenger organized 5 FGDs with representatives from the marketplace (33 people). The importance of planning and organizing logistics of FGD was realized as there were challenges in choosing participants and gathering information from them. It was important to have a discussant with a similar background and intelligence level. Scarce human resource allocation due to planning errors and inexperience resulted in a high workload for team members. Only two members (actuary and project manager) worked full time on the project while other members spent half or less time on the project causing further delays. Lack of experience and communication errors from New Power NGO delayed the result of the survey several times and the outcome could not meet the requirements. The Tenger MI team analyzed the quantitative and qualitative market research data. The data verification and clean-up process delayed the next tasks by almost two months.
Tenger Administration: To gain buy-in from Tenger management the project team decided to report to management every two weeks. Expectations of a fast outcome still existed. The MI fellow held a training session for the staff of Tenger. At this point the administration team started to react to the MI project with more understanding.
As of May 2010
Project: Based on the market research data and international microinsurance research experience, the Tenger MI team agreed on a bundled product instead of standalone health and accident insurance products. The bundled product includes accidental death and hospitalization cash benefits. Traditionally, the product development process has been different in Mongolia than the standard practice. Rather than basing products on market and demand research they have been based on opportunity without adequate risk analysis.
Partnership: Senior management of both Tenger and XB committed to collaboration, but no formal MoU was foreseen. An unofficial meeting was held with XB where the mid-level management’s understanding of microinsurance was seen as very limited. At this point it became clear that a lot more communication was needed. The Tenger MI team started to collect health data and GeReGe-Partners updated the pricing model. Tenger got XB’s loan client data and country hospital data from the state health statistical office to analyze the target market proportion, family composition, and sales assumptions.
As of June 2010
Project: The project team started the definition process and prepared the enrollment and claim forms. Knowledge sharing helped build internal and partner capacity.
Partnership: The MI project team, Tenger staff members, management and XB management agreed upon product design. XB senior staff agreed officially on cooperation of XB, regular meetings with XB assigned managers to the project, and maintaining supportive relationship.
Tenger Administration: Presentations by actuaries on business models, and constant reports had an influencing effect on the administration`s support and its expectation.
As of July 2010
Project: Hospital staff survey was started. Marketing planning was started.
As ofJuly 2011
Staffing:There has been considerable staff turnover. The entire project team has changed including the project manager and CEO. The microinsurance correspondents at XB have also changed, although the project manager remains as the one that came on board in late 2010. Therefore there is a lack of knowledge in the current staff about the product development process, the monitoring required, and the assumptions that should be reviewed going forward. There is considerable risk that without this background, and without achieving any technological efficiencies (since the processing is largely manual), Tenger will proceed with expansion plans that are unsustainable. The team also needs to monitor claims experience, but may not be sufficiently trained to do this; therefore, there is a risk of mispricing going forward.
Project: All three options for the product have been sold, with the cheapest option being most popular. Over 400 policies have been sold with a total premium written of over 18.2million MNT. Eighteen claims have been paid with total claims paid of around 5million MNT. The product is being sold through four branches of XB and there are plans of expanding it to three more branches. Summary sales and claims information as of June 2011 is provided in Appendix A.
Plans: XB plans to introduce new financial transaction tools (such as mobile banking) for which they are looking for grants or investment. On the risk carrier side, Tenger Insurance is considering attracting strategic investors to help in enhancing new innovative technology for distribution, such as the use of mobile phones for selling insurance and collecting premium and paying claims. However, at this time, due to regulations, it is not possible to sell insurance without the involvement of an agent.
Tenger Insurance is also considering leveraging Petrovis (petrol stations) outlets as another distribution channel for the product. Implementation of such an alternative payment option could expand Tenger’s microinsurance outreach.
Date of last Learning Journey update: September 2011