Considering the varied causes of poverty, the lack of access to financial services represents a major hindrance to improving the socio-economic choices of the poor.
Access to appropriate insurance products has a marked impact on how low-income households face unexpected shocks, smooth their income, protect their assets, and avoid falling into debt traps. When products are well-designed and -delivered, insurance can represent a more cost-effective and efficient instrument than savings. As demonstrated by numerous studies in several countries, there is tremendous unmet demand from low-income people for health, life, and agriculture-based insurance products to help manage the financial risks that plague them.
Microfinance Centre (MFC) together with MicroInsurance Centre promotes partner-agent model of microinsurance delivery that links microfinance providers that have access to and the trust of low-income clients with regulated insurance companies that have the expertise to professionally manage insurance activities.
- For microfinance providers (MFPs), working with an insurer allows them to offer risk management products without either bearing the cost of the actuarial analyses inherent in product design or assuming the insurance risk associated with product delivery. Being outside the insurance laws, MFPs also overcome the legal impediments to their provision of microinsurance. In addition, the very nature of MFP activities ensures that the needs of the poor are addressed in both the product and its processes and delivery.
- For private insurers, working with MFPs offers more direct, efficient access to an enormous market that has otherwise been inaccessible to them.
By linking these two entities—microfinance providers and private insurers—it is possible to provide professional, regulated insurance products to the poor with maximum efficiency and minimum transaction costs, thereby reducing customer premiums. Overall, for MFPs, insurers, and low-income customers seeking risk management products, the Partner-Agent relationship can be a win-win-win situation.
A three-year project (2007-2010) „Facilitating Widespread Access to Microinsurance Services” funded by International Fund for Agricultural Development (IFAD) was conducted by MFC, MIC and MFO in Armenia and Vietnam. The project combined the development of microinsurance products with market education.
Armenia
Insurance product pilot test
The insurance company Cascade developed prototype insurance products for low-income market (medical insurance and personal accident insurance) and pilot-tested their delivery in Kotayk region through the partnership with AREGAK microfinance institution. At the time of the evaluation 102 policies - 40 medical and 62 accident insurance - were sold.
Training and orientation meetings
Before the pilot test of the insurance product financial education training in “Risk management and insurance” were conducted in the kotayk region. They aimed to equip low-income families with knowledge, skills and necessary attitudes towards risk management and insurance, as well as prepare low-income market for microinsurance products by building skills to analyze and select appropriate microinsurance offers. Trainings were carried out by local NGOs in 18 villages of the Kotayk region of Armenia. Altogether, 400 people were trained.
One-hour orientation meetings organized jointly by the MFI AREGAK (delivery channel) and Cascade Insurance (microinsurance provider) aimed at marketing the microinsurance products included a presentation of insurance products with related information. Over 200 people participated in the orientation series. Usually active discussions took place in the audience around topics of insurance and specifically around products themselves. At the time of the pilot test of the insurance products sales were seen in 7 out of 10 locations were orientation meetings were held and in 2 locations where both training and orientation meetings were held.
Social campaign
During the pilot-test a public information campaign was conducted. The social campaign aimed at attracting the attention of low-income people to insurance, raising their interest towards insurance in general and raising their awareness on microinsurance by providing explicit information on its main principles of functioning. The slogan -“Insurance for All: Awareness Campaign” was accompanied by the campaign’s logo – a symbol of care and trust with a message “Protect Yourself and Your Closest”.
Carried out in Kotayk region of Armenia, the social campaign included a set of tools and PR techniques: Public Service Announcement (PSA): “Think once and thoroughly: be insured!”
The PSA (social advertisement) reinforcing positive attitudes towards insurance was broadcast on local TV for a month. Its script was based on the conversation of a cook and a waiter, who speak about their friend, who has broken his leg and is in hospital. The idea then develops towards accumulating money for rainy days with a special emphasis on insurance.
- The TV spot can be viewed here:
- TV competition
The competition was based on the concept of a quiz – questions about insurance were announced on TV and the viewer who first called to the studio with the right answer was awarded a prize – micro-insurance product. There were brief announcements aired four times a day right after the PSA.
- Talk-show
The TV talk-show consisted of interviews with people, who previously had an insurance and in case of an accident benefited from it, the theatrical performance highlighting families facing problems with debts; interviews with representatives of insurance industry and experts and vox-populi in Kotayk region;
- Leaflets with a comic strip and a crossword
Leaflets contained several separate blocks of information and content elements, which made the product informative, illustrative, engaging and interactive. The blocks were: a comic strip, a crossword, theory and terms, information, logo, tagline.
