The world's population is connected today in more ways than it has ever been, thanks to the Internet and the rapid rise over the last thirty years of web-based methods of communication – except in areas where it is barely connected at all. Internet usage estimates current as at March 2017¹ indicate that Europe contributes 10.9% of the world's population, of which 77.4% has Internet access. In North America, which holds 4.8% of the total population of the world, the number rises to 88.1%. It is probably fair to assume that on both of those continents, the Internet is available (on some basis) to virtually anyone who wants it. The same, though, cannot be said of other regions of the world, with Africa being the most extreme example. Africa holds 16.6% of the global population at almost 1.25 billion people, and only 27.7% of that number are Internet users, i.e. just over one in four.² If those numbers are broken down a little further, the discrepancies between Africa and Europe/North America become even more pronounced. While Kenya is the leading light, at 77.8% population penetration, only one other country (Mauritius) exceeds 60% and 19 countries are below 10%. Those at the bottom of the list are Eritrea at 1.3% and Niger at 2%. Interestingly, the availability of the Internet in African countries appears to be only loosely reflective of the financial strength of those countries. Kenya, for example, has only the 22nd highest GDP per capita and it is 150th in the world^, despite having greater Internet penetration than Europe. Eritrea has the 34th highest GDP per capita (of 53 countries) in Africa, and Niger has the 48th.³

So, if money is not necessarily the reason for low connectivity, what other reasons might there be?

The stark reality is that in many African countries there simply is no Internet, particularly in rural areas. There is a significant lack of investment in the necessary infrastructure, such as broadband cables. In some areas that do have Internet, there can be a lack of content in the local language, and there may also be education issues with potential users not able to use such technology as might be available.⁴ Overall estimates put the number of people worldwide without Internet access at around four billion,⁵ being around 60% of the world population. All of this, though, is changing. Facebook's Free Basic program, which allows mobile users to access Facebook without paying data charges, is now available in 42 countries, of which over half are in Africa. Facebook also has in development a satellite and a solar-powered drone to give Internet access to rural areas without the need for broadband cables.⁶ Google's Project Loon, run by X (formerly Google X), has the goal of using a network of solar-powered balloons to achieve global Internet coverage. This project has been under way since 2013⁷ and in 2015 was named in MIT Technology Review's list of Top Ten Breakthrough Technologies for that year.⁸

Even discounting these advances, and starting from a very low base, Africa still leads the way in growth rates for Internet penetration. Penetration improved by over 7,700% in the years 2000–2017, compared to the already well-serviced North America, which grew by only 196% in the same period, and Europe (500%).⁹

What's this got to do with insurance generally, and microinsurance in particular?

Microinsurance can be generally defined as insurance for low-income people who are not served by social security, and which is characterized by low premiums and coverage limits.¹⁰ The most common types of insurance products offered to this market segment tend to be accident, health, and life covers, with some agricultural and property risks being insured. It can readily be understood that this sector of the world community is the most at risk when catastrophe strikes, and it has also become apparent that it is the poor who will be disproportionately adversely affected by climate change.¹¹ Insurance mitigates against risk and hence reduces vulnerability. Those who are better equipped to recover from financial adversity are also better contributors to national economies, as opposed to being drains on national resources. Hence, the delivery of insurance products to this market is a priority for many countries, particularly in India, Africa, Asia, and South America. The delivery of microinsurance remains a significant challenge, though. Many factors come into play here including delivery costs that make the premium too high; customers being insufficiently savvy on the benefits of insurance; the limited range of products available; lack of access to remote communities; and the lack of bank accounts from which to pay premiums and receive claim benefits. The result is that, despite annual growth rates in microinsurance of around 30%, coverage rates remain woefully low – estimated at 5.43% in Africa for 2014.¹²

Technological advances have certainly assisted in improving the distribution rates. Mobile network operators have for some years now been seen as ideal insurance partners because of their reach into otherwise unconnected sectors of the population for marketing, client acquisition, and premium payment. Mobile technology does though have its own limitations in the context of insurance delivery. Many insurance products, particularly in markets where insurance is a novel and not well-understood concept, are sold as “freemium” products, i.e. policies that are incorporated as an additional benefit to users of the telco's service. Not only does this give rise to the challenge of converting customers into those who pay a premium, it can mean that customers don't even realize that they have the insurance – which means that they then don't claim when they need to. There is also no sales agent in the sales chain, so no product explanation or assistance with enrolment. Premium collection for paid cover can also be an issue, with premium generally taken by way of mobile wallets or by deductions from air-time credit. Mobile wallets are not held by all mobile users so this is a definite limiting factor; and deductions from air-time have the downside of using credit so that customers may need to top up before they can make calls. Despite all this, mobile phone networks offer one of the most successful means currently available to sell insurance outside the developed world.

What, then, if we look ahead a few years to focus not on what is achievable now, but what may be achievable in the future?

The Internet will be a game-changer because it will solve so many of the problems currently besetting the delivery of microinsurance. Once people have access to Internet-enabled smartphones, let alone PCs and tablets, multiple possibilities emerge:

1. The delivery of meaningful education about insurance and risk management, in the language (including the dialect) of the user can be made available. This will not be limited to written material either: video and audio will give access to the same information, for those who struggle with the written word.
2. Of course, those who can't read will not be able to write either so there is likely to still be a role for sales agents, at the very least because they may well be a trusted member of the community who can also explain the nature of the product being purchased. But imagine the credibility of a sales agent with a tablet who can help a client to complete an online proposal, receive immediate acceptance (or otherwise), and generate and print the policy documents on the spot. At the same time, the client data and the financial implications of the cover being purchased are automatically loaded into the insurer's cloud-based policy management system, so there are never any questions over when the risk commenced, and where the paperwork may have got to after having been sent by mail.
3. Premium can be paid by online means and will not be bank- account dependent. PayPal is an obvious example. WhatsApp announced in early 2017 that it is soon to launch online payments as well. And, of course, if money can be sent it can also be received, which will assist with the movement of claim payments.
4. The fact that the insurer will be running a cloud-based policy management system means that it will have reduced its overhead costs and therefore made low-premium insurance more viable. No servers, no IT department, no double-handling of items for processing.
5. The range of insurance products available to consumers will not only be able to be greatly expanded, but policies will be able to be tailored to individual need. Online auto-rating will enable much greater flexibility in terms of sums insured, levels of policy excess, the range of property that can be covered, and so on. At the same time, the insurer will be better able to assess (automatically) individual risk.
6. It will be possible to process online, assisted by the uploading of photos of damage or receipts and invoices.
7. Then, of course, there is data analytics. Once information is online it becomes available to be used by insurers in ways that may not currently be possible. It will become a tool for understanding risk and customer behaviour and as a means for fraud detection.

What is particularly interesting about all of this is that all the technology described here already exists and is gaining some traction in the developed world. Online sales channels are increasingly being seen as essential, particularly as a means of reaching the so-called millennials who expect to be able to do everything online, without having to visit an office or sit on hold with a call centre. While insurers, to a large extent, are not yet using cloud-based policy management systems, that is certainly changing.

It may yet be some time before the less-developed areas of the world start to see the use of the Internet as an essential part of daily life in the same way as is the case in Europe, North America, and countries such as New Zealand and Australia, but in many ways, they will start ahead of the game, with technology that is no longer in its infancy and which can deliver real benefits at significant pace.