Demand for Microinsurance

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Demand for Microinsurance in Transition Settings
- Potential, Challenges and Solutions Georgian
Case Study
Michal Matul MFC conference 26-28 May 2005,
Bucharest
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METHODOLOGYfor understanding and estimating
demand for microinsurance

• Qualitative exploratory research (January 04)
• Goal understand importance of risks, gaps in
  risk-management strategies and general attitude
  towards insurance
• 8 focus group discussions and 8 in-depth
  individual interviews with poorer MFI clients.
• Quantitative concept test survey (March 05)
• Goal project market development and segment it.
• Sample of 1000 households representative for 8
  biggest regions in Georgia.
• 40-minute face-to-face questionnaire

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NEEDS FOR MICROINSURANCEa big development role
Share of households affected by different risks
in the last 3 years

• Risk importance
• basic healthcare costs,
• death of main family breadwinner
• coverage of property loss

• Risk-management gap
• reactive borrowing gt over indebtedness
• Groups in biggest need
• lower income in rural areas and small towns

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Microinsurance product concepts tested

• Health microinsurance
• Coverage health care costs of the policyholder,
  including all expenses related to emergency
  service and all expenses related to
  hospitalization.
• Benefit official and informal costs.
• Claim processing within 3 days (in cash).
• Price 4,80 GEL per month
• Life microinsurance
• Coverage death of the policyholder during the
  fixed term
• Benefit family receives a fixed benefit of 3000
  GEL.
• Claim processing within one month
• Price 3 GEL per person per month.
• Property microinsurance
• Coverage a loss or damage (due to theft/fire) of
  asset(s) of the value in between 300 and 10 000
  GEL.
• Benefit 70 of current market value of insured
  asset(s).
• Claim processing within one month
• Price 5.5 of the current value of the insured
  assets.

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CURRENT EFFECTIVE DEMANDbased on willingness to
buy
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CHALLENGESlimited use
Use of insurance in the past 15 years
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CHALLENGEStrust and attitude
Trust in insurers
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CHALLENGES gaps in understanding of insurance
concept
Reasons of lack of willingness to buy suggested
products.
Percentage of households who mentioned given
reason. Responses do not sum to 100 as multiple
response was possible.
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CHALLENGESpoor money management undermining
capacity to pay for microinsurance
Saving behavior by income level.
Indebtedness by income level.
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MARKET DEVELOPMENTprojections for health
microinsurance

Natural limit (those who do not want / need
microinsurance)
90
Supra-market group (those who do not have
capacities to pay for microinsurance)
65
Group within access frontier in the future
Self-employed 53 700 households 141 700 policies
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Group within access frontier now
330 000 households 850 000 policies
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Now
10 years ago
Short-term
Medium- term
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SOLUTIONeffective marketing strategies based on
psychographic segmentation
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CONCLUSIONS

• Low-income people extremely need it
• Lots of them already want it
• But we need to carefully design new products and
  show them the value through sophisticated
  marketing strategies

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THANK YOU

• For more information please contact
• Michal Matul at michal_at_mfc.org.pl