Emerging Insight #32: Sales commissions alone do not ensure success

  • Date Posted: February 22, 2012
  • Organizations: ILO Microinsurance Innovation Facility
  • Document Types: Tool, Other
  • Donor Type: Multilateral Organization

Insurers and their distribution partners need to consider how their programs contribute to the core business of distribution partners— beyond the direct financial benefit of commissions—in order to be successful in the long term; this is a key lesson from a new study on Managing Partnerships in Microinsurance.

Even if microinsurance is not directly related to the partner’s core business, it needs to add value to core operations.  For example, providing microinsurance may attract new members or clients to a partner, or help improve its client satisfaction and loyalty.

The partnership between Old Mutual, the insurer, and Shoprite, the low-cost retailer, was based on the premise that Shoprite would benefit not only from the increased revenue through sales commissions, but also from an enhanced reputation as a result of offering insurance. Shoprite wanted to increase store traffic and one way to achieve it was to build its reputation as a provider of a broad range of products and services, including financial services such as insurance. Though sales commissions needed to offset the direct costs, the strategic goal was to increase store traffic as a result of expanded product offerings.

For more lessons from the study, view a recording of the March 1, 2012, Managing Partnerships in Microinsurance webinar here.

For more on Old Mutual, see their Learning Journey.  The Learning Journey is a narrative account of the lessons being learned by the Facility's innovation partner as it implements its microinsurance project.

Related Resources