Emerging Insight: Partnering with an insurer: A client perspective
4 August 2017
Barry Callebaut, a cocoa-trading company, works with 65,000 cocoa farmers in Cote d’Ivoire. The company developed a financial inclusion strategy to allow farmers to build savings and make productive investments on their farms through input credits, coupled with a programme of trainings and peer coaching. Given the unpredictable climatic and life events faced by the farmers, the company then decided to introduce insurance to protect the farmers and their households, and hopefully to act as an incentive for farmers to sell their harvest to the company.
Barry Callebaut aimed to start with a simple product, allowing it to find out if insurance worked as a loyalty incentive, as well as giving its insurance partner a chance to test a new market. The partnership represents a significant opportunity for an insurer, due to Barry Callebaut’s large client base, its depth of understanding of those clients, and its network of over a thousand field agents. Finding a suitable insurer, however, proved a challenge. The microinsurance market in Cote d’Ivoire is in its infancy, covering just 0.7% of the population (Microinsurance Network, 2015). The industry sees the strategic importance of reaching out to the low-income market, but lacks the knowledge, skills and business model needed to do so.
How, then, did Barry Callebaut select an insurer to work with?
The company met with several insurers over a month, explaining its structure and the needs of its clients before asking for offers. Barry Callebaut then developed a simple tool to evaluate the offers from each insurer. The following criteria were used to make the final choice:
Barry Callebaut aimed to start with a simple product, allowing it to find out if insurance worked as a loyalty incentive, as well as giving its insurance partner a chance to test a new market. The partnership represents a significant opportunity for an insurer, due to Barry Callebaut’s large client base, its depth of understanding of those clients, and its network of over a thousand field agents. Finding a suitable insurer, however, proved a challenge. The microinsurance market in Cote d’Ivoire is in its infancy, covering just 0.7% of the population (Microinsurance Network, 2015). The industry sees the strategic importance of reaching out to the low-income market, but lacks the knowledge, skills and business model needed to do so.
How, then, did Barry Callebaut select an insurer to work with?
The company met with several insurers over a month, explaining its structure and the needs of its clients before asking for offers. Barry Callebaut then developed a simple tool to evaluate the offers from each insurer. The following criteria were used to make the final choice:
- A long-term partnership – one of the key factors in choosing the insurer was their interest in forming a long-term partnership. Barry Callebaut knew that its insurer partner would need to invest in marketing and communication, capacity building for field agents, and a commission scheme. It needed a partner that saw these initial costs as a long-term investment in reaching a new client segment. The insurer it finally chose had a long-term interest in working with value chains in the country, and saw its partnership with Barry Callebaut as an important learning experience.
- Commitment of the entire group – The group that the insurer belonged to saw the pilot as a way to test a new way of doing business that would be relevant to the entire group. This makes it more likely that the project will continue to be a strategic priority.
- Willingness to understand Barry Callebaut’s structure and clients – the insurance companies Barry Callebaut approached initially struggled to understand its structure and the farmers it worked with. Nonetheless, the selected insurer showed a willingness to understand the structure of the company and its operations and to understand the specific needs of cocoa farmers. Most importantly, the insurer was willing to adapt its processes and invest in meeting these needs. In this case, understanding was made easier by the fact that Barry Callebaut had an insurance professional (the ILO fellow) working for them, allowing a touch point between the two companies that understood both sides.