BIMA transforming insurance in Pakistan


Fuelling access and driving trust in microinsurance

Javed Iqbal was a regular Warid customer who heard of MILVIK: an insurance package available through a simple SMS service. Iqbal decided to opt for the service, which was promising to charge a bare minimum each month. He texted “BIMA” to 9878, and within minutes, got a call from an agent who helped him subscribe to a plan.

Unfortunately, Iqbal was killed in September last year, during a crossfire between his friend and people targeting him. But his family of four dependents remembered they could contact the insurance provider.

Iqbal’s family contacted MILVIK's claims team, and soon after heard back from an agent. In 48 hours, the claim was processed. Iqbal’s wife Gulnaz Shehzadi, the beneficiary of the claim, received a payout of Rs300,000.

Although he only paid Rs60 plus tax for the service, Iqbal’s family now have the money to take care of themselves, and especially to pay for the oldest son’s education.

BIMA claim Pakistan Javed Iqbal

What is MILVIK?

The international insurance startup MILVIK is a microinsurance success story with a mission of making insurance affordable to low income families. With a presence in 13 other markets globally, it has amassed 20 million subscribers over five years. In Pakistan, the company was launched in 2015 and has already had one successful claim — Javed Iqbal’s widow — and several others are in the pipeline.

Unlike conventional insurance companies, the start-up's take on insurance is novel: it has reduced the cost of distribution to a bare minimum, with a premium as low as a rupee a day.

How it works

When Iqbal signed on, he learned that the premium cost would be deducted from his airtime balance —without any need to go through banks and complicated accounts.

Iqbal settled on the Gold plan, which would charge him Rs60 plus tax each month for a Rs300,000 payout in case of loss of life or disability.

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Even though MILVIK is currently only available to Warid customers, it has registered over 100,000 subscribers in less than seven months of operations.

Currently, their insurance covers accidental death and disability, but the company plans to extend its coverage to hospitalisation and health facilities.

There are, however, no plans for corporate or asset coverage, since they want to “concentrate on making insurance accessible and affordable to the public”.

Is it easy to launch a startup in Pakistan?

Osman Haneef, the Lahore-based CEO of MILVIK Pakistan, was initially met with resistance when he shared his idea with family and friends.

"People who worked at various MNOs and even potential insurance partners thought it was doomed,” he says, recalling how he was told the market wasn’t mature enough for the idea.

“This will fail because of the high incidence of fraud in the country,” he remembers people warning him. Yet, here they are, a year and a half later, having successfully processed their first claim.

So how did it happen?

“Resilience is the key,” Haneef advises. MILVIK AB, the Swedish parent company, hired Haneef as their first employee in Pakistan in January 2015, and since then, the team has grown to 250 members.

Most of this expansion took place in the past seven months alone, he says, adding that they have added 100,000 new signups.

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CEO Haneef feels Pakistan is ridden with talent. “There are a lot of people here doing a lot of good work,” he says.

In one incident where he had a hard time with a regulatory authority, Haneef was asked to approach a senior bureaucrat to explain the idea before it could be approved. “It was nothing problematic or unethical,” he recalls.

“They just had concerns stemming out of not understanding the idea, and were afraid to approve something they couldn’t understand.”

Explaining insurance to first-time buyers

99% of Milvik's customers are first time buyers who had never heard of insurance before. The start-up's approach to explaining this likens the situation to hiring a guard: if your house doesn’t get robbed in a particular month, you still have to pay the guard his salary.

It helps to have a smart marketing strategy, too. According to its online terms and conditions, Milvik sells itself as being hassle-free and paper-free. Still, many prospective clients do not understand why they have to pay a premium even if they don’t make a claim.

“We were sceptical at first,” Shehzadi admits, “But we realise the product is legitimate.”

Its agents now explain insurance as a communal welfare idea: everyone who participates pools this money together, to be used in case any of the members suffer a setback. MILVIK has to educate most of its clientele about how its insurance works, especially on misconceptions regarding insurance being unIslamic.

The company is underwritten by Alfalah Insurance, which is Takaful certified. They emphasise how they do not charge interest, and unlike conventional insurance models, they do not have a maturity payout, which is said to violate Shariah laws.

Tapping into Pakistan's talent pool

The best part about launching a startup in Pakistan, Haneef feels, is that Pakistan is ridden with talent. “There are a lot of people here doing a lot of good work,” he says.

Haneef conducted most of his initial hiring at a local café, keeping an eye out for people who took a proactive approach to problems, and those who liked to get involved.

“It doesn’t matter if the person has trouble solving a particular problem,” he reveals the philosophy behind the company's hiring, “I just want to see initiative.”

With plans to expand their coverage to other cities, MILVIK's CEO is confident that the startup will perform and grow further, inching towards its next milestone of one million start ups.