Emerging Insight: Choosing quality over quantity
14 December 2022
A new publication presents ten lessons from the experiences of banks, microfinance institutions (MFIs) and insurers on how to establish or leverage existing agent networks. It outlines different ways these networks can operate and presents emerging lessons from their experiences.
One resounding lesson from MFIs’ experiences in establishing agent networks is to start small. Many of the MFIs that were establishing agent networks fell into the trap of wanting a large network as quickly as possible. This proved to be a mistake and MFIs were more successful when they gradually expanded. In fact, large numbers of inactive agents were found to be a financial drain as well as a reputational risk, since inexperienced agents providing very few transactions for the MFI were more likely to provide poor service.
In many cases, insurers are not building their own networks from scratch, and a partnership might provide them with access to a large existing agent network. However, it is not necessary for insurers to instantly convert all members of that network to insurance sales.
Rather, insurers should gradually recruit existing agents, and make sure they are properly trained before moving on to the next batch. Insurers should also be careful to analyse which agents within a network are most likely to be successful selling and servicing insurance, and focus their energies on developing those agents. APA Insurance is a leader in agriculture and livestock insurance in Kenya and offers a range of other general insurance products. For agriculture and livestock insurance, APA needs to work with agents on a seasonal basis. It uses the following criteria in selecting agents:
One resounding lesson from MFIs’ experiences in establishing agent networks is to start small. Many of the MFIs that were establishing agent networks fell into the trap of wanting a large network as quickly as possible. This proved to be a mistake and MFIs were more successful when they gradually expanded. In fact, large numbers of inactive agents were found to be a financial drain as well as a reputational risk, since inexperienced agents providing very few transactions for the MFI were more likely to provide poor service.
In many cases, insurers are not building their own networks from scratch, and a partnership might provide them with access to a large existing agent network. However, it is not necessary for insurers to instantly convert all members of that network to insurance sales.
Rather, insurers should gradually recruit existing agents, and make sure they are properly trained before moving on to the next batch. Insurers should also be careful to analyse which agents within a network are most likely to be successful selling and servicing insurance, and focus their energies on developing those agents. APA Insurance is a leader in agriculture and livestock insurance in Kenya and offers a range of other general insurance products. For agriculture and livestock insurance, APA needs to work with agents on a seasonal basis. It uses the following criteria in selecting agents:
- Hiring agents who have worked with farmer groups before.
- Aligning the insurance sales with other services that the agents may already be providing. For instance, some agents provide services for other development/NGO partners. In this case the insurance product is a complementary service that they can provide.
- Using referrals from village heads or other local opinion leaders.