19th February 2020

Could Airtel Life Insurance Pave Way for Airtel Zambia’s Domination?

Poster MicAirtel Zambia recently announced the introduction of Airtel life insurance to their product portfolio. This is being enabled by a partnership with Focus General Insurance Limited and MicroEnsure. The details of the launch and what Airtel life insurance is all about can be found here. We’ll consider it a similar type of business venture as mobile money for instance. This is because it is a shift away from standard procedural business of voice, data, and messaging services. A telecommunications company is venturing off into another arena of the economic sector, namely, insurance. It is a very significant business move in that Airtel Zambia is the first company to do something of this magnitude in the country and perhaps region.

Let the chess game begin. It is popularly said that the devil you know is better than the one you don’t know. In terms of competition, this could deal a lethal blow to the other telecommunication companies by sky-rocketing Airtel Zambia’s mobile subscription numbers. This is the theory behind the Airtel life insurance launch. Interestingly, Airtel Zambia’s foot is also in the insurance business boat, meaning that they are attacking from behind. Watch out insurance companies there’s a new competitor in town. This could essentially go two ways: extremely well or horribly wrong!

It could go well considering that Airtel Zambia is the first telecommunications company to break ground with this kind of innovative strategy. History also has a number of records for companies which have broken into other arenas and cleaned the bank by doing so. For example, consider Apple Inc.’s daylight robbery of the portable music device industry. They demolished the competition and totally came to own the sector with the iPod line. We won’t even talk about the iPhone because everybody knows about it! Additionally, think M-pesa. The mobile phone based money transfer and microfinancing service is so huge that not only is everybody talking about it but using it in Kenya. The finance world is going biserck trying to crack the success behind M-pesa. The mobile money service is drawing attention internationally and has truly become a phenomenon. If Airtel Zambia plays its cards right that could be them in a few years time.

On the continental front, MTN is already present on the insurance playground and things seem to be going smoothly. Although not ground-breaking, milife is surviving. The milife mobile insurance is powered by the mobile money division and the Premium payment for insurance gets deducted from the MTN Mobile Money wallet once per month. Just like the Airtel life insurance, milife coverage lasts for one calendar month from each premium payment or subscription. The difference is that Airtel life insurance will not cost you any more than you already spend on your airtime when topping up. The month-to-month only coverage demonstrates a high level of risk aversion. But is a strategy to get people to continuously and consistently top-up their phones every month should they find the life insurance a beneficial option. Consequently, we can’t resist wondering that if the telecoms are not willing to jump high enough then how do they expect to revolutionize the insurance sector? Or are they just thinking more subscribers, more money, end of story?

Alternatively, it could go south. Did you hear about the Econet and Trustco fallout? The fallout of the partnership was so big that it went to the Supreme Court of Zimbabwe. The details you need to know, among others, are provided below.

A summary of the reasons that Econet says amounted to breach of contract as reported by TechZim are that:

  • The widely disliked 31,111 messages that infuriated Econet subscribes so much a Facebook protest group was created and within days it was followed by thousands of Zimbabweans.

  • Trustco demanded more fees for Ecolife subscribers and some additional fees for subscribers that only express an interest in registering for Ecolife. Trustco wanted the fees per subscriber to be upped from US$ 1 to US$ 1.11.

  • Trustco overstated the number of Ecolife subscribers when it announced its financial results some weeks ago. Trustco announced the number of Ecolife subscribers had reached 1.6 million. Econet says that correct number is 1.2 million.

  • Trustco disclosed to the press some information which the two companies had agreed was confidential.

Of this partnership, Trustco had anticipated a rapid increase in subscribers as discussions with telecommunication operators and financial service providers developed into new business opportunities across the African continent. Lessons for Airtel Zambia, please have your logistics worked out with your partners we beg. It will be a disaster to see a media bloodbath of a fallout between Airtel Zambia and its partners, Focus Group Insurance and MicroEnsure. Yes it supposedly is a free service to the customers, but we all know there is money involved regardless of the magnitude of Corporate Social Responsibility (CSR). We can only hope that the kinks have been ironed out.