Still smarting from a public spat with Zimbabwe’s largest mobile telephony company Econet Wireless over the ill-fated EcoLife life assurance product, listed insurance group First Mutual Holdings Limited (FMHL) has waded back into the mobile insurance waters by introducing a cellphone-based funeral assurance policy.
FMHL CEO Douglas Hoto told businessdigest in an interview this week the insurance group was working on a system that allows customers to pay all their premiums anytime of the day via their cellphones.
In 2010, FMHL partnered the country’s largest mobile network provider Econet Wireless (Econet) and Namibian firm Trust Co to provide the country’s first free life assurance cover called EcoLife, but the deal fell through in 2010 when the tenure of agreements signed among the three parties expired.
Differences on the interpretations of the terms of the contract, in particular between Econet and FMHL, led to an acrimonious public fight which spilled into the media and saw the two parties dragging each other to court.
However, having barely finished licking its wounds from the tiff with Econet, FMHL is back with a product that will see it having to deal with all the country’s three cellular networks.
“This product is coming on stream definitely in the last quarter of the year and is called Electronic Smart Mutual Life (ESMLl),” FMHL chief executive officer Douglas Hoto told businessdigest this week. He said customers would use air time scratch cards from across all networks to pay their insurance premiums.
Although he could not be drawn into giving specifics on the nature of the deal, he said FMHL was partnering a local technology company called E-Top Up. This partner would bring in the necessary technological know-how into the project.
Hoto said the new product required capital of less than US$500 000.
Earlier this year, Hoto was quoted as saying FMHL had plans to launch a mobile funeral policy which required an investment of at least US$250 000. The money would be used to acquire necessary software for the specific product as other infrastructure was already in place.
At the time, Hoto forecasted two million customers would have subscribed to the product in its first 24 months. The new product was part of a five-year strategic transformation exercise which was expected to strengthen the group’s market position.
At the company’s half year to June 30, 2013 results briefing, Hoto said management intended to reposition the group to be first or second in any area in which it was participating.
“We are also looking at engaging partners in the region. The way we look at it is that the partners should come with knowledge and technical assistance to help us and at the moment we have some coming from South Africa,” Hoto said. “This will enable us to deal with the big competitors like Old Mutual. We need international flavour.”
FMHL, according to Hoto, was also looking at pursuing new opportunities in asset management after the country ratified the Micro Finance Act.
In the first six months of 2013, FMHL said group revenue grew 16% to US$56 million compared to US$48,4 million in the previous comparative period.
Life assurance revenue was US$13,4 million while reinsurance and health insurance revenues amounted to US$15 million and US$19,4 million respectively.
After-tax profit slid to US$2,4 million from US$3,9 million in the first half of 2013, while earnings per share also slid to US$0,042 compared to US$0,0149 after the number of shares in issue almost doubled in the period under review following a rights issue carried out last year.
Group net premium for the period was US$41,8 million, 18% above the previous comparative period, while the technical profit remained flat at US$6,4 million.
In terms of technical profit contribution, First Mutual Life’s contribution to the group grew 114% to US$5,1 million while First Mutual Health care moved 95% into the negative to US$201 000.
Tristar Insurance shed 3% in technical profit contribution to US$414 000.