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MTN’s insurance unit delivers

• Group is seeking to capitalise on African countries with low insurance penetration in push to diversify its business

Mudiwa Gavaza Technology Writer gavazam@businesslive.co.za

MTN, which has been pursuing new areas of growth beyond its traditional mobile business, says its micro-insurance unit now has more than 12-million users as it seeks to capitalise on African countries with low insurance penetration.

MTN, which has been pursuing new areas of growth beyond its traditional mobile business, says its microinsurance unit now has more than 12-million users as it seeks to capitalise on African countries with low insurance penetration.

The group pushed strongly in recent years to diversify its business, pursuing new revenue streams in mobile data, technology and related communications services to businesses, wholesale network services, fintech and digital services. On Thursday aYo, a microinsurance fintech operator, run jointly by MTN and MMH, said it had crossed the 12-million customer mark, having started in 2017. The business recorded its 10-millionth customer in the second half of 2020, translating to growth of 20% in its users in less than a year. aYo operates in Ghana, Uganda and Zambia.

In the year to December 2020 aYo had R106m in service revenue and R172m premium income. Having started aYo as a 50-50 partnership, MMH recently took its stake down to 25%, while MTN now holds 75%. At an investor presentation earlier this month, MTN group CEO Ralph Mupita said they had done a deal that would see the mobile operator take full ownership of the venture. At its inception the partnership had piggybacked on MTN’s mobile and distribution networks in its operating countries, while using MMH’s insurance expertise.

MTN has indicated it will work with other insurers on the venture. In 2019 it announced a plan to offer life insurance products in partnership with Sanlam. The two JSE-listed companies said at the time they would work together to target people who do not have insurance as MTN tries to grow its financial services revenue and Sanlam looks to expand into the rest of Africa. One area of opportunity MTN identified is device insurance.

In recent years, insurance has been lucrative for competitor Vodacom. In the last financial year, insurance policies rose almost a quarter, up 23.4% to 2million, with revenue up 13.5%.

Marius Botha, CEO at Ayo, said in a statement that mobile operators “are creating direct distribution channels to billions of people who were largely off the financial services radar a couple of decades ago”. “Mobile networks are the real drivers of financial inclusion on the African continent. As opposed to traditional financial services structures, the services provided via mobile phones are not restricted by region or working hours. This has led to the creation of a mass market of financial services for previously underbanked and unserved people.”

In making the case for insurers partnering with MTN, Botha says mobile operators can boost an insurer’s ability to manage customer data and provide geographic and demographic insights that help insurers tailor offerings to potential markets.

“Our challenge right now is that many customers across the continent still want to engage with physical channels from a trust point of view. Insurance is still a brand-new concept for most African people. They want to be able to see and interact with it. They want to know who to come to if they have a problem, or if they want to claim,” Botha says, like the early days of mobile money.

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2021-06-18T07:00:00.0000000Z

2021-06-18T07:00:00.0000000Z

https://bd.pressreader.com/article/281487869304081

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