Telecom operator Smart has become the country’s top life insurance provider. But is mobile-delivered insurance smart for consumers?

In the year since it was first introduced in Cambodia, mobile-delivered insurance has proven to be one of the fastest-growing segments of the Kingdom’s insurance industry, providing affordable coverage to people who might not otherwise have access to insurance.

Telecom operator Smart Axiata has been at the forefront of the innovative model, offering its 7.5 million subscribers the option of purchasing insurance policies underwritten by BIMA and Forte by dialling a short code on their mobile phone. Premiums start at as little as $0.60 per month, and payments are deducted automatically from the subscriber’s mobile credit on a daily basis.

Smart’s partnership with BIMA, the Cambodian arm of Swedish microinsurance provider Milvik, began in October 2014. Since then, more than 430,000 people have registered for Smart Life Insurance, a mobile-delivered product underwritten by BIMA, and the number is growing by 60,000 a month, according to Kieran Cooney, general manager of Milvik (Cambodia) Plc.

“To place this in context, we estimate that Smart Life Insurance now accounts for about 40 to 50 per cent of total individual life insurance policies in Cambodia,” he said.

The impressive growth has created an unusual scenario where a telecom has risen to become the country’s top life insurance policy provider.

“Smart is – by the number of insured persons – the biggest life insurer in Cambodia,” Smart chief executive Thomas Hundt claims confidently.

And while the individual premiums of the microinsurance policies delivered to subscribers are quite low, the volume adds up to a hefty total premium.

“Having [hundreds of thousands] of life-insured individuals paying a monthly insurance premium of up to $1.60 [means that] Smart’s insured subscribers are significant contributors to the insurance premium volume,” Hundt said.

The deeper penetration of the insurance market lies in the increased accessibility and ease to register, particularly in rural areas, where insurers do not have offices.

According to a study released this week, Mobile Phones and Internet in Cambodia 2015, over 94 per cent of Cambodians own at least one mobile phone and nearly 40 per cent own a smartphone.

Jenny Huynh, assistant vice president of marketing and communication at Forte Insurance, said the company has seen strong growth of policy sales of its personal accident insurance since partnering with Smart in July 2014 to deliver the product via mobile phone.

Personal accident insurance is now the company’s top-growing product by total new policyholders, and it has also seen significant growth in gross premiums.

“Our partnership with Smart contributes a lot to the growth of individual policyholders, because people now understand more about the risks and benefits of having an insurance policy, as they want to take care of themselves and their family,” she said.

Yet not everyone is convinced mobile-delivered insurance is a good idea. Some argue that, while the model makes insurance more accessible to people, consumers should receive a face-to-face consultation with an independent insurance agent able to help them understand the complexities of coverage and differences between varying policies before making a purchase.

San Chey, founder and director of the Khmer Institute of National Development, said the consultations and a written contract would solidify the legality of the insurance contract and help uniformed consumers avoid potential difficulties they might face when submitting claims on mobile-delivered policies.

“When consumers need compensation, they may face issues because of the very poor legality [of the contract] between the individual and the company,” he said. “If applicable, [new policyholders] should register officially offline first, with acknowledgement by the mobile phone company.”

Chey also argued that deducting money from people’s phone credit to pay for the insurance could create confusion over billing.

“No one can control the balance on their mobile phone all of the time, and people may feel upset when there is any irregular deduction,” he said.

But while running out of credit is a constant issue for most pre-paid mobile phone subscribers, Smart has added measures to ensure that insurance coverage is not terminated unexpectedly.

According to its website, BIMA policyholders are given three months to cover their premium payments, while Forte policyholders have 21 days to top up before their coverage is terminated.

To date, BIMA and Forte are the only insurance companies offering mobile-delivered insurance products.

Another insurer, Manulife, has adopted mobile technology as a platform for its insurance products, though not for the sale of policies.

Manulife partnered with electronic payment system Wing last year to allow its policyholders to pay their life insurance premiums using their mobile phone.

Neither Manulife nor Wing responded to interview requests.