“Insurance company processes are all geared towards the top of the pyramid“

The Grid: As the name suggests, the mission of your startup, Democrance, is to democratize insurance. Mobile Micro Insurance (MMI) is ushering in a new age of insurance that serves the middle and lower income brackets through smart phones. Tell us more about the gap it is aiming to fill.

Michele Grosso: The reality for this demographic, particularly across the MENA region, is that they have no risk protection. To date, insurance companies have overlooked these segments as outreach and attaining critical mass for profitability has been too difficult to achieve without a paradigm shift. Our model revolutionizes the whole insurance value chain, by making it accessible for everyone through their mobile phones and also affordable. By using our technology, insurance companies can save money versus resorting to their traditional selling and servicing channels.

The Grid: As an insurance industry professional, yourself, and now a disruptor to it, how does your model actually work?

Michele Grosso: We source products with insurance companies and then establish distribution channels with mobile network operators (MNO’s), remittance houses or any business that serves large pools of middle and lower income customers. It’s a three-way partnership model with the final product being offered through our technology on the feature phone or smart phone of the end user.

The Grid: What is your ongoing role in this partnership after sourcing the policies and setting up the delivery channels?

Michele Grosso: We have developed proprietary software from scratch. This platform takes care of the whole value chain from sales and marketing, policy administration, premium collection, customer service to the management of claims. Ultimately, we act as a technology provider and enabler for the insurance company.

Michele Grosso, Founder & CEO, Democrance, second from right at Venture Cafe Talks at The Cribb 

The Grid: What is the upside for the insurance industry?

Michele Grosso: Through our model, we unlock the potential of a 99% unserved market in MENA. Products vary according to the different needs of each specific segments in each country, but it would always be simple protection products targeting the low- and middle-income population: health, life, savings and accident policies

The Grid: What are the most common delivery channels and what is the upside for them?

Michele Grosso: The distribution channels are usually mobile operators, which are actually driving MMI penetration in these markets more than the insurance companies.

They can white label the insurance product and sell it on at a low premium to the end user. They can also offer it for free to increase the loyalty or core revenues from these segments.  Remember, this is a notoriously fickle customer demographic as they are price-driven out of necessity.

The Grid: So potentially a significant number of people; those who traditionally have not been able to afford any sort of insurance, can now access affordable cover or receive it for free?

Michele Grosso: Yes, and this is how we are democratizing insurance. Low- and middle-income segments typically live under circumstances where public healthcare is inefficient and social security is very limited, which makes insurance the only risk protection available potentially for them.

As you know, medical insurance has recently become a mandatory requirement in some Gulf Countries (paid for by the employer) but the rest of the region is woefully lagging behind. If people get sick, they end up in debt and that can often the best case scenario!

In certain countries, some are scared to go to hospital for fear of being mis-diagnosed or dying in the emergency room. Even in the Gulf countries, there are so many other protection needs that could improve the lives of lower-income workers and their family: life, accident, savings

Micro-insurance is an underlying but unserved need for so many people. Insurance company processes are all geared towards the top of the pyramid but that will change. With mobile penetration in MENA is as high as 122% and micro-insurance as low as less than 1% so there’s certainly a gap in the market!

This is an extract from an interview with Michele Grosso, Founder & CEO, Democrance.

Democrance is a Dubai-based startup whose mission is to democratize insurance by making it accessible to a wider population.

Interview by May Khizam, Founder & Chief Strategist, The Grid Media Ltd

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