Maximizing Insurance Service Adoption Through Agent Networks

Agent networks can be a powerful tool for banking services providers, telecom companies, and insurers to distribute their products and services, particularly in underserved areas such as rural communities.

Agent networks can be a powerful tool for banking services providers, telecom companies, and insurers to distribute their products and services, particularly in underserved areas such as rural communities. They have been particularly effective across the globe in providing underserved markets with banking and digital financial services.

A joint publication by ILO and Social Finance discusses how insurers can start and manage agent networks as an alternative service distribution channel drawing experiences from banks, MFIs, and insurers in Kenya, Brazil, India, Ethiopia, and Colombia.

In countries such as India and Kenya, insurers commonly use existing agent networks of Banks and MFIs to increase their accessibility.  

The report suggests it is essential to ensure that the working conditions of the partnering institution meet prevailing labor standards.

In addition, it suggests caution should be taken not to overstaff the network as this will increase competition between agents, making some of them inactive.

Insurers should, therefore, carefully design a recruiting criterion to avoid financial drain and maintain their reputation. It is advisable to start by aligning simple insurance products with the agents’ business and the concerns of their existing customers. Existing network agents should be adequately trained before moving to the next batch of recruits, with additional products being introduced gradually.

Although insurers want to reach remote areas, signing up agents close to their brick-and-mortar branches may be beneficial before expanding. This will allow them to support their early adopters better and refine their process. Up on expansion, digital tools and mobile technology can be used to support and monitor agents in distant places.

Insurance company representatives usually carry out the task of agent management and support. Insurers can also adopt a “multiplier” strategy that has proved helpful by Bradesco Seguros, an insurer in Brazil.

“Multipliers are local people employed by the bank who monitor and support a number of banking correspondents. These individuals can keep the outlets active and functioning effectively by providing ongoing support and training, setting incentives, providing sales materials and enrolment forms, and carrying out promotion activities and troubleshooting,” reads the report.  

In addition to supporting agents, multipliers clarify insurance services to customers. This has effectively reduced the burden shouldered by network agents of educating customers and explaining product details. In other cases, insurers may consider carrying out separate customer education and awareness efforts.

The document states a similar experience In Ethiopia, where Kifiya Financial Technology increased farmers’ understanding of agricultural insurance through utilizing agent networks and Village Insurance Promoters (VIPs). VIPs, and staff of the Ministry of Agriculture working at the village level, provide information to farmers and answer their questions.

It is often challenging for insurers to provide incentives that compete with those provided by other services offered by the same agents. Insurers have found the following approaches to be useful in offering incentives:

  • Providing instant commissions, complementary and value-added services (ex., certifications and technology support) to agents, and
  • devising a flexible incentive structure.

Read the full publication here.

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