The Second Wave of Mobile Financial Services in Africa and Asia: LeapFrog Announces Investment in BIMA, Bringing Insurance to Millions

Feb 21, 2013, 02:58 ET from LeapFrog Investments

LONDON, Feb. 21, 2013 /PRNewswire-USNewswire/ -- LeapFrog Investments, the world's largest investor in insurance for emerging consumers, today announced an investment in BIMA. Launched in 2010 by Kinnevik, a leading emerging markets investor, BIMA was built on the simple idea of bringing more affordable insurance to people in emerging markets via their mobile phones. 18 months later, the firm is one of the largest mobile insurance platforms in the world, reaching and protecting nearly 4 million people in Ghana, Tanzania, Senegal, Mauritius, Bangladesh and Sri Lanka. The total equity investment amounts to $7m of which $4.25m comes from LeapFrog, and the remainder from existing shareholders.

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Both investment firms are backing BIMA to lead a second wave of mobile financial services. The first wave saw a cascade of mobile payments and banking across emerging markets. "Just as banks ultimately embraced mobile money, insurers will become rapid adopters of mobile technology," explains Gustaf Agartsson, CEO of BIMA. "LeapFrog provides us with world-leading expertise in product design and distribution, plus access to its portfolio of insurance companies. This distinctive support will enable us to innovate and scale in current markets and roll out in many new markets in the coming two years."

This is LeapFrog's seventh insurance investment, with the fund's portfolio companies now spanning 10 markets in East, West and South Africa as well as South Asia.

"BIMA has harnessed the mobile revolution to dramatically reduce the price of premiums. Products such as life, accident and health insurance are provided on a commercial basis for as little as $0.20 to $6.00 a month," said LeapFrog partner, Stewart Langdon. "This radical affordability puts the safety net of insurance within reach of millions of low-income customers in emerging markets for the first time."

BIMA does not replace traditional insurance companies or mobile network operators. Instead, the business uses technology to bridge the two, and provides further support on distribution, product development and daily management. The resulting partnership, connecting two very different industries, means the insurer is able to access a vast new customer base while the mobile operator bolsters its revenue and performance. 

"BIMA is leading the way with a disruptive, profitable and high-impact innovation. It reaches customers who have been excluded from the economy for far too long, whether because of their income, rural location or lack of a bank account," explains LeapFrog's founder, Dr. Andrew Kuper. "The company is a perfect embodiment of our profit-with-purpose approach to investing."

Case Study: Why mobile-based insurance matters – from a Ghanaian who relied on it

Nana YaaKonadu, a young Ghanaian woman, is one of BIMA's customers. A few years ago, she subscribed to a loyalty product offering free life insurance based on her usage of Tigo (Millicom) Mobile, a telecoms operator. Nana received an SMS message once per month to inform her of how much insurance cover she had earned based on her network usage. Nana regularly earned between 600 and 1,000 Ghanaian Cedis (US$300- 500) as her monthly insurance cover, and was able to cover her own life and that of one family member: her father, Eugene. When he passed away on Christmas morning 2010, Tigo presented Nana with a cheque for 800 Ghanaian Cedis (US $420) at her workplace.

In a country where huge cultural significance and expense is attached to funerals, the insurance offered via her mobile phone allowed Nana to pay for her father's burial costs without crippling her financially. Tigo's network has 30 million customers globally and 3.7 million alone in Ghana, many of whom face risks and tragedies similar to Nana's.

The case for mobile-based insurance in emerging markets

Three billion mobile phone users live in emerging markets, yet according to McKinsey & Co., over 1 billion of them have no access to financial services such as bank accounts. The number of untapped potential insurance customers is even higher –analysis by Lloyds & Swiss Re estimates that as many as 3 billion emerging consumers would acquire affordable insurance if offered it.

Insurance seems to matter more for people's life choices and for economic development than previously understood. A recent study by the ILO found that farmers in Ghana who were randomly assigned to receive insurance cover increased their agricultural investment significantly, in some cases up to 65%. By contrast, those assigned to receive credit demonstrated little change in their investment behavior.

The study indicates that often the problem is not the absence of capital, but the omnipresence of risks, preventing people from making worthwhile investments in the future. With severe and often catastrophic risks removed, low-income people can take leaps such as planting higher-yield crops or starting businesses. They can raise their incomes and permanently change their families' prospects.

About LeapFrog Investments
LeapFrog invests in high-growth financial services companies in Africa and Asia that serve the next billion emerging consumers. The fund pursues profit-with-purpose, targeting top-tier returns from its portfolio companies while reaching 8 million people, most of whom are low-income, with essential financial tools. Launched in 2008 with President Bill Clinton, LeapFrog recently won the Investor of the Year award from Business Insider and the Sustainable Investor of the Year special commendation award from the Financial Times and IFC.

Investors in LeapFrog's high impact investment fund include global banks such as JP Morgan, the European Investment Bank and Triodos; leading funds such as Soros EDF, Omidyar Network, and Calvert; global reinsurers and pension funds such as SCOR, Haverford, and TIAA-CREF; and leading development financiers including FMO, IFC, KfW, Proparco and Accion Frontier Investments Group.

About BIMA
BIMA, meaning 'insurance' in Swahili, Bengali and Hindi, provides an end-to-end mobile insurance solution for mobile operators and insurance companies in emerging markets. This includes product design, a proprietary mobile insurance technical platform, distribution, marketing guidelines, claims administration and insurance underwriting. BIMA's objective is to increase the penetration of insurance in the emerging world by using specially designed mobile insurance products, which also help mobile operators with the improvement of their core metrics. The company was founded in 2010 and launched its first product with Tigo Ghana in Aug 2010. Currently, BIMA operates in Ghana, Senegal, Tanzania, Mauritius, Sri Lanka and Bangladesh. 

SOURCE LeapFrog Investments