Bima plans to use its latest funding to get more people in emerging markets to obtain insurance by making it possible to pay their insurance premiums on mobile phones.

"There is demand among mobile consumers for insurance and financial services," says Bima CEO Gustaf Agartson, who estimates about 5% of residents of Africa have insurance, while 70% have mobile phones.

Stockholm-based Bima lets consumers use mobile air time to pay their insurance premiums. It received a new $22 million cash infusion last month from a group of investors led by LeapFrog Investments and Kinnevik; and from Millicom, a telecom and media company. Bima will use the funds to expand into new markets.

Bima acts as a go-between for telecoms and insurance companies in underinsured regions in Africa, Asia and Latin America. Its platform integrates with the mobile operator to tie prepaid airtime to the life, accident, health and other products. Consumers in these regions typically make about $3 per day in wages and are prone to financial shocks—any unexpected expense can push a person into poverty, Agartson says.

"By taking the premiums from the mobile air time, we can break down the payments into micropayments of very small amounts. They can pay the equivalent of a few cents per day, which is more manageable than the monthly payments that consumers pay for insurance in other parts of the world," Agartson says.

Bima is responsible for managing transactions, onboarding, customer service, risk and regulatory compliance. It receives a license from local regulators to provide insurance services.

Bima's revenue comes from sharing agreements with the stakeholders in each country. Bima's network of countries includes Tanzania, Senegal, Honduras, Paraguay, Bangladesh and Indonesia. It plans to add more territories in the coming months, Agartson says.

"[Insurance] is one of the new business models that mobile enables," says Julie Ask, an analyst at Forrester Research. "It allows otherwise unbanked individuals to have access to funds and the ability to send electronic payments. It also allows for pay as you go. In my mind, it's a very game changing concept."

The Bima model also takes risk management and relationship building into account, says Denee Carrington, a senior analyst at Forrester Research.

Mobile transaction types are typically lower-value and/or prefunded, she says.

"The Bima model is consistent with this because they are focused on micro-insurance payments and they insulate the mobile carrier from any claims liabilities," Carrington says. "But it is unique because Bima is providing more than the connection for discrete transactions but instead facilitating an ongoing relationship between the consumer and the insurance company."

Mobile technology has been a catalyst for financial services in emerging markets. Telecoms, financial institutions and card networks are all pursuing the underbanked in regions such as India, Africa, and Latin America.

Pairing insurance with mobile money is a relatively new concept. Most of the mobile money initiatives thus far have involved person-to-person payments and shopping. But there is still room for much more expansion, says Stewart Langdon, a partner at LeapFrog Investments.

"We're at the beginning of the development now, the challenge is how you reach such a large group of people," Langdon says. "But if you look at the innovation that is going on, it's getting easier to reach consumers."

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