«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
The market often perceives insurers as quick to take their money, but slow to pay it out. Low-income persons are particularly susceptible to fraudulent schemes, which in some locations have undermined the credibility of legitimate insurers. Even with respectable insurance companies, the low-income market tends to experience a disproportionate amount of claims delays and rejections. This is, in part, because the poor are not a powerful or influential customer base, so insurers do not have significant incentives to keep them happy.
Microinsurers need to find ways of convincing the target market that they are indeed trustworthy. Conventional insurers often try to create large, visible headquarters as a way to convey the impression that they are a large and stable company. Located in the centres of towns and cities, the headquarters are often far from the areas where the poor live and work, which is not so useful for the low-income market. For microinsurance, perhaps the most effective way of conveying this message is through branding – associating the
insurer with something that is trusted by the poor. For example:
– The logo of TUW SKOK (Poland) resembles the logos of the credit unions with which it works, to draw a connection between the trust that the members have in their credit unions and the credit unions’ insurance company.
– SEWA has a powerful and trusted image among women in the informal economy that has significantly helped VimoSEWA. Even after difficult periods, such as the Gujurat earthquake when there was a surge of claims that exceeded the microinsurer’s capacity and claims payments took three months or more, members gave VimoSEWA a degree of leeway that would not have been extended to most organizations.
– When AIG entered the Indian market, it was fortunate to start a joint venture with the Tata group of companies, one of the most respected and trusted Indian industrial conglomerates. When Tata-AIG entered the low-income market, it exploited the Tata brand: agents selling microinsurance assured potential clients that such a large company would have little interest in stealing their miniscule (in relative terms) premiums. In addition, it collaborated with local NGOs that helped strengthen its local credibility.
2 Marketing techniques To convey these messages, microinsurers use a variety of marketing techniques. To get customers to the point of signing their contracts and paying their premiums, marketing managers have to go through three phases (Figure 13). First, they have to raise awareness about microinsurance and microinsurance providers. Second, they have to help the market understand the products, including the costs and benefits. Lastly, they have to activate the market by turning the increased awareness and understanding into a sale.
2.1 Raise awareness Raising the customer’s awareness of insurance has two aspects: a) a general knowledge of insurance and b) specific familiarity with an insurance provider.
From the experiences of microinsurers, the general receives far less attention
than the specific. Few microinsurers use social marketing techniques to:
– educate their clients more broadly about insurance, – describe how it fits into a broader array of risk-management mechanisms and – illustrate the advantages and disadvantages of insurance relative to other ways of managing risk (e.g. savings or credit).
The only example of creating general awareness that emerged from the case studies was Tata-AIG, which produced brochures explaining insurance without actually mentioning the insurer or its product. The literature was disseminated by its NGO partners, and their credibility in the low-income market helped raised the standing of insurance as a viable intervention for the poor. (Obviously, the success of this approach may be constrained by the literacy levels of potential policyholders.) There are two reasons why creating general awareness is not more common in microinsurance. First, for mainstream insurance providers, it is in their interest for clients to understand their products, but to have little knowledge about the industry in general. Second, general insurance awareness campaigns could equally benefit other insurance providers, so individual insurers will be less likely to undertake such an initiative. Indeed, since general awareness is a public good, the government or an industry association might be better positioned to engage in education campaigns, which is the case in South Africa (see Box 30). This is an area where donors might also be able to make useful contributions.
Creating awareness: The experience of the South African Insurance Box 30 Association Under an industry charter, South African insurers have agreed to allocate resources to delivering insurance products to low-income households. In addition, they contribute 0.2 per cent of net profits for use in financial education. Members of the South African Insurance Association (SAIA), providers of non-life and short-term insurance products, decided to collectively deliver a consumer education programme, which covers seven themes: money management, budgeting, debt, saving, banking, life and short-term insurance and consumer rights and responsibilities. To raise awareness, SAIA has initiated
Marketing microinsurance 183
1. Development of a teacher resource kit targeted at secondary-school students;
2. A one-day financial literacy workshop in rural areas. To date, 10,000 people have received the training;
3. Commuter Net: with 17.5 million people commuting daily, this population has been identified as a priority target group. Several initiatives have
– Television screens have been installed in taxi parks and feature TV spots on the seven themes;
– Radio stations provide interactive education;
– 25,000 cassettes featuring music and financial education messages have been distributed at taxi parks; and – Comic books on financial education have been distributed.
Source: Adapted from the SAIA website.
Raising awareness about specific microinsurance providers is more prevalent than the promotion of general insurance literacy. The three most common
approaches are through branding, public relations and prevention campaigns:
– Branding is an effective way of acquainting a market with an organization.
To promote their brand, microinsurers tend to use signboards, in front of their offices or on billboards, with recognizable colours and perhaps a symbol. Another component of the brand is the tagline used in marketing materials to convey a general message about the organization to clients and potential clients; for example, Delta’s materials say, “Delta Life, Prosperous Life”, and similarly Tata-AIG’s tagline is “A New Look at Life”. Simple branding that uses illustrations or pictures is an effective way to convey a marketing message to both literate and illiterate market segments.
– Most microinsurers are engaged in public relations in one way or another.
The most common public relations activity for life insurers is to hold claims award ceremonies, where a beneficiary receives an insurance payout at a public event. Larger microinsurers are also engaged in corporate sponsorship.
For example, TUW SKOK supports a youth football team and an annual children’s painting and drawing competition, low-key events intended to promote TUW SKOK’s image as a community-based institution. Spandana (India) uses some of the surplus generated from its insurance scheme to finance education bursaries. These types of programmes demonstrate the organizations’ commitment to the community in a tangible way without the need for glossy brochures and handouts.
– As described in Chapter 3.9, prevention campaigns can also raise awareness about a microinsurer. Shepherd (India) runs cattle care camps, partly funded 184 Microinsurance operations through a surcharge on each insurance policy, to promote the proper maintenance of animals and to provide free immunization and deworming. These camps are for the general public, not just members. Besides preventing claims, the camps also serve as a marketing vehicle. Similarly, ServiPerú has mobile medical units that visit cooperatives and other affinity groups to provide free medical consultations. Alongside these mobile facilities, a kiosk promotes its insurance services. BRAC MHIB and Grameen Kalyan (GK), both in Bangladesh, participate in the government’s immunization campaign.
Health authorities provide vaccines free of charge and a small contribution to cover the cost of promoting the campaign. Such participation strengthens the microinsurers’ own prevention programme and enhances their image.
Creating awareness in the community-based model (Chapter 4.3) is a bit different because the microinsurer is not just asking prospective clients to buy insurance, it is also asking them to participate in the design and management of the insurance scheme (see Box 31).
UMSGF’s three-tiered marketing strategy Box 31 With a community-based model, marketing involves more than just trying to persuade someone to sign a contract and pay a premium. It is necessary to work with the community to help them reach the conclusion that by working together they will be able to collectively solve individual problems. In the case of Guinea’s UMSGF, which promotes mutuelles de santé, the problem that they are trying to solve is the affordability of access to health care.
UMSGF uses a three-tiered marketing strategy to activate and engage the
community in creating mutuelles de santé or MHOs:
The first tier is at the community level, where promoters give presentations about the problem and possible solutions, and try to stimulate interest in insurance. This level is akin to general awareness raising.
The second tier involves two group-level approaches, both of which aim to explain how health insurance works in a little more detail. With the first approach, the promoters meet existing groups – ROSCAs or tontines, religious associations, women’s groups, business associations and so on – to see if they wish to form an MHO. With the second approach, promoters encourage individuals who want health insurance to create their own mutual group with others they trust. Where possible, the objective is to work with the community’s social groups, whether pre-existing or organized around the mutuelles de santé activities. In this way, they build on an existing infrastructure and leadership.
The third tier is the individual households, beginning with those persons whom organizers have identified as opinion leaders. Some people are not Marketing microinsurance 185 comfortable asking personal questions, for example about their particular health needs, in front of others. Therefore, organizers have to follow up the group meetings with household-level discussions. Once they have been able to acquire a few influential converts, the promoters can then also involve these community leaders in persuading their neighbours to participate in the scheme.
Source: Adapted from Galland, 2005a.
2.2 Increase understanding When the market has a general awareness of insurance and is familiar with the insurance provider, the next step in the marketing process is to increase its understanding of the specific products available, including product features and the costs and benefits of insurance relative to other risk-management strategies. This requires insurance education, which is particularly challenging in markets with low literacy levels.
Ultimately, one would hope that education would lead to shifts in knowledge, skills and attitudes, and in turn the adoption of microinsurance by the target market. Unfortunately, microinsurance providers tend to limit themselves primarily to information provision rather than education. There are, however, some notable exceptions. BRAC has pioneered the use of street theatre to educate target groups on the benefits of health microinsurance.