n°21
Newsletter - The Microinsurance Trilogy summer 2010 This edition of the Microinsurance Trilogy will focus on the work carried out by the Microinsurance Network’s Insurance Education Working Group. The importance of insurance education for the promotion of microinsurance has been recognised as one of the main challenges the sector needs to address. This newsletter will provide an insight into the field of insurance education by presenting the main findings of two recently released publications. The Landscape Study of Microinsurance Education will examine the main challenges insurance educators face and a case study of the insurance education programme of CARE-India will look into the lessons learnt.
A LANDSCAPE STUDY OF INSURANCE EDUCATION................................. p.1 Case Study: CARE-INDIA’S CONSUMER EDUCATION PROGRAMME............................... p.2 ANNUAL SNAPSHOT 2009................................ p.3 Network News.............................................. p.4
QUICK OVERVIEW OF SURVEY The goal of the survey, which was conducted in English, French and Spanish, received over 1000 responses and involved over 100 in-depth interviews, was to get a picture of what is being done internationally to increase awareness of insurance concepts and products, and the methods in use to achieve this. The results of the project help to understand perceived best practices and gaps in international (micro) insurance education efforts, through a detailed study of common objectives, themes, tools and reach of current programmes. Of the 377 participating organisations, which include NGOs, insurance companies, microfinance institutions, regulators, governments, health care providers, universities, and banks, 242 said that they were involved in insurance education and roughly half claimed to offer microinsurance products or services. In terms of the types of risks addressed by insurance education programmes, the most prevalent was health, followed by life, property and funeral. With regard to the kinds of teaching tools employed, of the 32 choices provided to them in the survey, the top five education tools were group discussions, lectures using classroom training, meetings in pre-existing group settings, presentations, and brochures.
A LANDSCAPE STUDY OF INSURANCE EDUCATION This article is based on the study ‘A Landscape Study of Microinsurance Education’, published in 2010 by the Micro Insurance Academy (MIA), with the support of the Microinsurance Network, the Aga Khan Agency for Microfinance (AKAM), the Financial Access Initiative (FAI) and ILO’s Microinsurance Innovation Facility (MIF). The study is based on a survey, which was designed to explore the insurance education practices that organisations are employing, specifically with respect to low-income populations.
DUAL BENEFIT OF INSURANCE EDUCATION The study found that the relationship between insurance education programme operators and clients was often not the donor-recipient model that one might expect but more symbiotic, meaning that both parties benefit from insurance education programmes. The community benefits because it allows them a greater understanding of tools available to them for managing risks. Insurance companies and MFIs simultaneously benefit from insurance education programmes because it increases awareness and ultimately makes it more likely that people in the targeted community will enrol in their insurance schemes. As a respondent from Alternative Insurance Company Haiti (AIC) said, “a well educated consumer is our best customer (...)”.
THE CHALLENGES Organisations face various challenges in imparting insurance education. These can take the form of externalities, which the organisation can try to adapt to by further designing and revising their educational strategies and operational model(s). Internal challenges at the organisational level, which need to be addressed within the organisation, also affect insurance education. External challenges - Social and cultural. Much of the challenge of insurance education lies in convincing communities to consider the idea of insurance, and to change their behaviour towards risk as a consequence. Low-income communities often do not perceive insurance as a financial priority, as
Working Against Provision of Asymmetrical Information Quadrant Consultants emphasise that an informed consumer is always an opportunity for insurance companies, not a threat. The organisation works to promote the concept that an informed consumer is in the interests of everyone, both on the demand and supply sides. A consumer that fully comprehends the concept of insurance is likely to subscribe for more policies. Having collaborated with a number of consumer organisations, Quadrant Consultants note that [in India] nearly all platforms currently providing information on insurance are run by commercial entities and/or are affiliated with insurance providers. This means that the consumer often receives asymmetrical information regarding insurance. To offer a perspective from the demand side, Quadrant Consultants are working on a website that will serve as a free resource for insurance consumers, providing information on general risk management and various insurance products without affiliations to insurance providers.
it only protects against possible situations. Despite often overwhelming social and cultural challenges mainly due to limited financial literacy, there are many organisations that have found innovative ways to work within the constraints laid out by particular communities’ characteristics. In fact, there are organisations that have experienced great success by integrating what they had at first considered challenging community qualities into the approach of the programmes, such as using films, songs and games as a way to overcome illiteracy. External challenges - Insurance infrastructure. Institutional and structural challenges were frequently mentioned in the in-depth interviews, and include lack of government support, low access to education, accessibility to dispersed communities in rural areas, as well as poor road and other physical infrastructure. On top of this, insurance companies (or other organisations involved in the delivery of microinsurance) can present another
form of external challenge due to their lack of understanding of the low-income market. This can materialise in marketing highly detailed product information before potential clients understand any of the fundamentals of insurance. This can lead to misunderstanding of the product, and later disappointment due to erroneous expectations from the insurance cover, which can negatively affect the community’s perceptions of insurance in the long term. Internal challenges. Lack of expertise is a common impediment to organisational growth, especially among organisations that do not have previous experience with insurance or with adult education practices. Lack of resources was also identified as a challenge. Some organisations mentioned difficulties with finding qualified trainers for all the languages in the region in which they work.
Conclusion
clear that there are a number of issues that need to be addressed. The study examines these in much more detail, using examples to illustrate the different practices, tools and models. A very important aspect that must be noted is that insurance education cannot be a one-time effort, but needs to be an ongoing activity. In the authors’ view, insurance education should really begin only after the individuals have enrolled in the scheme, as people constantly need to be replenished with information. Unfortunately, the survey found that only a handful of organisations specifically mentioned that they are actively involved in continuous insurance education with their target community.
Source: Iddo Dror, Kathleen Jenkins, Keiju Motegi, Juho Siltanen, 2010: A Landscape Study of Microinsurance Education published by the Micro Insurance Academy.
In bringing together the challenges that insurance education provider’s face, it is
Case Study: CARE-INDIA’S CONSUMER EDUCATION PROGRAMME This case study, published by the Financial Access Initiative (FAI) with the support from the Microinsurance Network, the ILO’s Microinsurance Innovation Facility and the Micro Insurance Academy (MIA), examines CARE-India’s microinsurance programme in Tamil-Nadu, India.
INTRODUCTION As a response to the tsunami of 2004 and the recognition of the lack of access to appropriate protection tools, CARE-India, an affiliate of CARE International, launched a microinsurance programme in Tamil Nadu called Insure Lives and Livelihoods (ILAL). The programme in terms of product takeup has been a success. Eighteen months after they initiated microinsurance operations, CARE’s field partners had insured 130,000 households, 90% of which were first-time users of insurance. But, CARE is clear that their objective was not just to distribute policies. Though CARE designed and offered specific products, their ultimate objective was to improve communities’ risk management abilities by improving their understanding of insurance. CARE emphasised demand creation – the idea that clients’ understanding of the value of insurance is more relevant than whether they ultimately purchase a policy. This emphasis, backed by voluntary enrolment and programme content broadly dedicated to risk management, distinguishes their approach from pure commercial marketing.
Context CARE worked with Bajaj Allianz and its NGO partners to design comprehensive programme content that included four components, all of which are topics
considered to be indispensible to its aim of creating a culture of insurance and are illustrated in figure 1. The field officers commenced the programme with a discussion about risk. They helped clients to appreciate the difference between manageable and unmanageable risk, how much they were currently spending to manage risks, and the impact of that spending on their household budgets. The second phase presented different ways to manage risks proactively and efficiently, including savings and insurance. In the third phase, field officers introduced the ILAL products and contextualised them by discussing how they were relevant to the risks faced by the clients and their families. The fourth and final phase covered logistics. Field officers defined the features of the insurance products they were offering, like premium collection and claims processes.
CARE’s comprehensive approach aligns with one of the fundamental principles of adult learning: learners can only accommodate new material when they already have related information in their long-term memory. Merely introducing an insurance product and its features to a community with little to no prior exposure to insurance does not amount to education, as clients will be unlikely to remember what was discussed. In order for information to be remembered, it needs to be comparable to what learners already know. Thus, laying a foundation is critical to teaching foreign concepts. In microinsurance education, that foundation is dual, with risk management as the bricks and financial literacy as the mortar.
KEY LESSONS Understand communities’ existing knowledge and past experiences. Education for demand
Risk Education
Insurance Education
Product Education
Product Logistics
- What are risks? - Risk management mechanisms - Risk mechanisms in practice - Difference between savings and insurance
- What is microinsurance? - Principles of insurance - Why microinsurance? - Explain life and general products
- Introduce CARE, Bajaj Allianz - What is ILAL? - Explain life and general products - What is premium, claim, exclusion, inclusion?
- How to pay premiums? - When should premiums be collected? - How to file claims? - Documentation requirements
Figure 1: Content areas for ILAL education
creation is about more than simply memorising product details. For concepts to be integrated into clients’ long-term memories, they need to relate to what they already know. When information is wholly new – as insurance is for communities with little, if any, experience with it – clients don’t have a good, existing frame of reference. Thus, educators can encourage synthesis of new information and existing knowledge by providing a frame of reference for clients. To do so, they need to make explicit connections between insurance and the risk management strategies communities already use, like saving and credit. When educators take time to lay the foundation for understanding insurance, concepts will be more readily understood and remembered. Insurance will have a relevance it would lack in the absence of such a foundation. Training intermediaries thoroughly is a worthwhile upfront investment. Intermediaries, and in particular their field staff, interface with clients and are their main source of information, but they need to accommodate new information to execute their roles. In this context, their understanding of concepts and systems is essential and warrants more than perfunctory attention. Allow flexibility and customisation. CARE’s experience demonstrates the need to find a
balance between micromanaging partners’ approaches and making sure they think about every aspect of consumer education. CARE maintained consistency in quality by meeting regularly with its NGO partners and requiring regular progress reports. Training shouldn’t be used as an opportunity to prescribe intermediaries’ approaches in detail. Rather, training is an opportunity to provide them with a comprehensive framework for developing consumer education strategies. The key is to steer intermediaries towards thinking about each element of an effective outreach strategy without telling them that they have to follow one approach or another. Flexibility in the programmes allow intermediaries to tailor their approaches to the client communities they work with. Supplement information with workable tools. Providing intermediaries with information is good, but providing them with information and reference materials is better. CARE created Information, Education and Communication (IEC) materials for client outreach, but these materials were also useful as documentation of product features for NGO staff.
CONCLUSION This case study has identified two common challenges that insurance education programmes need to be aware of and address.
The first challenge concerns sustainability. Throughout the programme’s operation, CARE addressed the challenge of sustainability by encouraging its NGO partners to develop business plans based on grant support from CARE and complemented by service revenues. The programme was successful in demand creation because CARE used its initial grant to make significant upfront investments in programme development. The second challenge revolves around measuring impact and in order to measure the role insurance education plays in improving a household’s overall risk management capabilities, additional indicators beyond product sales are needed. In general, this case study illustrates clear strategies that organisations can employ to effectively design and implement insurance education programmes. By investing in capacity building, upfront planning, and careful implementation, CARE expanded outreach to thousands of low-income households.
Source: Catherine Burns, Aparna Dalal, 2010: Explaining Insurance: Implementing Consumer Education in CARE-India’s Insure Lives & Livelihoods Programmes published by Financial Access Initiative For additional information, watch Aparna Dalal being interviewed on YouTube: www.youtube.com/watch?v=RqCx_9xV-mI
ANNUAL SNAPSHOT 2009 The Microinsurance Network Annual Snapshot 2009 provides a brief overview of the Network’s activities and make-up over the past year. Two more detailed notes entitled HIGHLIGHTS and IN NUMBERS are available on the Network’s website. institutional member types
where are Members based? 29%
(2 %) - research institutions consultant services
5%
33%
north america
6%
47%
ASIA
europe
NGOs and NTFPs
23% 12%
networks
12% Insurance companies
9%
donors and international organisations
5% financial institutions and investors government agencies
Website numbers
12%
6%
latin america
africa
INSTITUTIONAL & INDIVIDUAL MEMBERS
number of unique visitors
20 000
Average staff members for institutional members
16 250
Total number of people active in Network
12 500
8 750
5 000
DEC
AUGU
ST
APRIL (laun
ch)
3
43 137 16
Institutional members
Individual members
EMB
ER
The Annual Snapshots 2009 and other notes can be found at: www.microinsurancenetwork.org/networkpublications
Network News Registration for the 6th International Microinsurance Conference in Manila Registration for the 6th International Microinsurance Conference is open. The conference, which will take place from 9 to 11 November 2010, will be hosted by the Munich Re Foundation and the Microinsurance Network, in Manila, the Philippines. Around 500 participants and experts from around the world are expected to attend the event to exchange experiences and discuss the different challenges of microinsurance. The conference agenda will be divided into three main themes: Scientific track – Economic analysis of microinsurance markets; Case studies on innovative and sustainable microinsurance programmes and /or products and; Specific thematic issues (new distribution channels, claims handling, strategies to develop microinsurance, microinsurance solutions for natural disasters, and insurance literacy. For details and registration visit: www.microinsuranceconference2010.org Read Dirk Reinhard’s (Munich Re Foundation) interview about the past, present and future of the International Microinsurance Conference: www.microinsurancenetwork.org/challenge11.php
Identifying the Network’s cross-cutting issues The Microinsurance Network held a member meeting in Königstein near Frankfurt, Germany from 2 to 3 June 2010, which was attended by more than 35 members from 23 organisations. The aim of the meeting was to identify the cross-cutting issues that all Working Groups and members need to address. Six topics were identified (client protection, PPP, marketplace, impact, social performance and climate change), and will be addressed in a number of different ways, for example:
• Client protection – A task force was created; • Climate change and PPP – Initial paper to be produced; • Marketplace – Website to be developed for sharing microinsurance tools.
For more information on any of the above topics, please contact the Secretariat
Microinsurance Technology Inventory launched The Microinsurance Network Technology Working Group launched the first online microinsurance technology inventory which both centralises and reviews software systems that can be used for microinsurance. Funded by the Inter-American Development Bank MIF-Fomin, the ILO’s Microinsurance Innovation Facility and the Microinsurance Network, the objective of the microinsurance technology inventory is to provide the microinsurance community with an overview of technologies that can be used for the administration of insurance products for the low-income population. For details visit: www.microinsurancenetwork.org/Technology-Inventory
NetworkFlash: A Microinsurance Network Twitter account The Microinsurance Network is tweeting about the activities of the Network and its Working Groups. Stay up-to-date with Network by following us on Twitter! For details visit: www.twitter.com/NetworkFlash
The Microinsurance Network newsletter is published three times per year. The Microinsurance Network is a member-based network and its mission is to promote the development and proliferation of goodvalue insurance products for low income persons by providing a platform for information sharing and stakeholder coordiantion with the aim of creating public goods. To suscribe to this publication in English, French or Spanish, send an email to info@microinsurancenetwork.org To view all the back issues and other Microinsurance Network publications, visit its website at www.microinsurancenetwork.org This publication is protected by the law from the 18th of April 2001 of the Grand-Duchy of Luxembourg concerning copyright, databases and related laws. It is strictly prohibited to reproduce an article from this publication, in whole or in part, without the written consent of the author. The articles represent th authors’ opinion; the latter is therefore solely responsible and liable for his / her works. This publication is edited by the Microinsurance Network / ADA asbl. © Microinsurance Network/ADA asbl 2010 all rights reserved.