Insurance Innovation Trust

Micro-pension Trust

“The number of people who are underserved by insurance alone is between 1.5 and 3 billion.”

source: Lloyds and Swiss RE

It is estimated that the number of people aged over 65 globally will increase from around 580 million to more than 1.5 billion by 2050. For billions around the world, it is already a daily struggle to meet basic needs, not to think of saving for the time when they can no longer work. While many countries have government sponsored social security programs, the swell of retiring baby boomers may lead to the collapse of some systems due to the large inequity in withdrawals over contributions from a smaller, younger generation.

Given the difficulties many face in enrolling in formal pension programs, be it due to location or informal working status, there is a need to provide an easy way for people to either create a pension account or supplement an existing one, especially in developing countries. In addition, with the growing adoption of mobile devices, there is an opportunity to leverage this platform for enrolling in or managing a pension program. By combining such offers with mobile remittance applications, there is a unique opportunity to disrupt the current model and make this process simpler, more affordable and less bureaucratic.

The UNO Insurance Innovation Trust seeks growth through investments in innovative pay-as-you-go insurance systems.

The Need for New Solutions

It is estimated that around 66% of the world’s older people live in less developed regions, a number that is expected to rise to 79% by 2050. The population over 80 years of age is growing at the fastest rate, with the majority of this growth in low income countries. This is a key challenge, as less developed regions have less developed social security programs. There is a great need to offer some form of old-age protection in the regions that are lacking such programs.

A Trust for Building Trust

Adding to a worker’s anxiety when making a living is the lack of trust in the traditional financial system, especially local financial centers in developing countries. With corruption and fraud more prevalent in developing countries, a pension program located in the EU, where pension funds are secured, will offer peace of mind to insured people in those regions.

The UNO Insurance Innovation Trust will invest in opportunities that create a more transparent pension system overall thanks to technology. From processing fees to how contributions are invested, customers can have real time, up-to-date visibility of the status of their pension account on a display at their fingertips. If ever there was an opportunity to disrupt an age-old financial model, it is now. Mobile is the key to unlocking additional opportunities.

With the number of mobile devices in use to exceed the entire global population by 2014, the potential opportunities to develop innovative mobile-based pension platforms is enormous. Mobile devices are increasingly being used as a platform for banking solutions and money transfers like remittances. The widespread adoption of mobile technology (>70% adoption) offers an excellent platform to launch pension programs that are easy to use and manage. Furthermore, they are scalable with additional products and services that can be offered through the same channel, for example other insurances that often have low adoption rates.

The percentage of people benefiting from life, pension, health, accident and disability insurance is typically less than 5%. Low income households in these markets are often not covered because of major obstacles: education, distribution, pricing and premium collection. As a result, when a family member passes away, these households suffer a severe financial setback. A key opportunity for insurance solutions for the poor is overcoming the obstacle of high fees in traditional insurance products. The new offers would be characterized by low premiums and low coverage limits and designed for low-income customers not served by social or commercial insurance schemes. In addition, the potential exists to make pension contributions more automated and hassle-free, including automatic withdrawals from remittance payments and the option to allow participants to stop payments all together if desired, in times of financial difficulties for example. A new technology-driven pension platform can help simplify the entire experience and reduce costs, while increasing adoption of saving for pension purposes.

Timing Is Everything

Clearly there is a need for a more secure retirement system that is easy to use and available to a wider range of customers. The potential peace of mind for millions around the globe, knowing they will have a more secure revenue stream after retirement could unlock tremendous potential and offer something they have been lacking to date: hope for the future. The timing is also right for forming strategic partnerships with smaller insurance companies that are looking to expand into developing countries or poorer nations.

The UNO Insurance Innovation Trust will help reinvent pension programs, bringing this relatively old model into the 21st century – at a time when the existing models may be on the verge of collapse in some places.

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