Importance of Consumer Education in micro insurance

From- http://www.microfinancefocus.com

Microfinance Focus, November 3, 2011: Interview with Elizabeth McGuinness from Microfinance Opportunities and Sarah Bel from the ILO’s Microinsurance Innovation Facility

How did you become involved in microinsurance and what is your current role?

Sarah Bel: I joined the ILO’s Microinsurance Innovation Facility at its creation in 2008. I’m part of the Knowledge team, in charge of communication and outreach, and also managing several projects that focus on insurance literacy in partnership with Fasecolda (Colombia) and CNseg (Brazil).

Elizabeth McGuinness: I started to work in microinsurance in 2005 when I conducted research on the opportunities for microinsurance in Indonesia and Laos. I worked with Michael McCord and Gabby Ramm on this study. However, Microfinance Opportunities (MFO) has been involved in microinsurance since its founding. My work in microinsurance has evolved from demand studies, to designing client satisfaction studies and finally to conducting assessments of health insurance. Additionally, I have been managing most of MFO’s insurance education projects ever since we started to develop our curriculum.

Why is consumer education so important in microinsurance?

Sarah Bel: One of the key objectives of the Facility is to promote insurance literacy efforts so that low-income clients can understand the characteristics of insurance products and make use of them in an appropriate manner. Insurance education should help customers understand the difference between the variety of risk management tools they can find on the market and choose what suits them best.

Elizabeth McGuinness: The lack of awareness and understanding of insurance is believed to be one of the key constraints to uptake of microinsurance products by the low-income market. I think there is still a perception out there that insurance is for the rich only.

What are the most effective ways of educating the low-income populations about insurance in terms of outreach and quality?

Sarah Bel: The Facility is partnering with several organisations that develop insurance literacy campaigns. CNseg in Brazil, Fasecolda in Colombia and the Kenyan Insurance Association have all worked with the mass media to assess the cost benefits of radio and video over face-to-face interventions. I don’t think we have yet a clear answer as there are different tools for different learning styles and different objectives. It is obvious that through a radio campaign you will reach a wider audience than a training session, but how deep can you really go in terms of knowledge change?

I think the point is to combine different sets of actions and work over a long time period so that low-income customers can really have a chance to digest such abstract concepts and develop the skills to choose between credit, savings and insurance. However, CNseg during the evaluation of its project, highlighted two important points: on one hand it was very important to combine mass media and interpersonal communication to yield results in terms of behaviour change; on the other hand, what prompted people to buy insurance was not the media intervention per se, but the word of mouth (or the ‘Buzz’) that the campaign created.

What aspects of an insurance education programme are essential for its success?

Sarah Bel: It is important to have the insurance products and sales team in place before you launch the campaign. Regarding mass media campaigns, it proved important to collaborate with radio or TV producers to get the concepts of the campaign right. They understand how to format and package a programme so that the audience like it. Saying that, there is also a need to assist them to ensure the insurance content is accurate. Eventually, involving the community to design, produce and roll out the education programme can, in some situations, pay off. At the level of a radio programme, inserting elements of interactivity and promoting participation can definitely boost the impact of a campaign.

What are the main challenges in consumer education over the next 5 years?

Elizabeth McGuinness: I think Sarah touched on one of the main challenges earlier. Our challenge will be to reach large numbers of people with effective and economical insurance education messages. There are two areas we should look at in particular – and we are starting to do this at Microfinance Opportunities – one is to embed insurance education into the marketing and promotion materials and activities. The other is to find those points of contact where the delivery channels have face-to-face contact with potential or active policyholders, and are able to deliver insurance and risk management education in short, concise messages by someone who has had a minimal level of training on the subject.

In other words, the insurance education should be integrated in the operations of the delivery channel. For example, we have just completed some work with the Banco Solidario de Ecuador (BSE) in which we developed materials for loan officers to use to educate borrowers during regular group meetings. We are also developing materials on mobile banking for retailers to use to educate consumers who visit them to carry out mobile money transactions. These materials are designed so that the content can be communicated within minutes rather than hours or days, saving time and money.

In light of the upcoming 7th International Microinsurance Conference, which will be taking place in Rio de Janeiro, Brazil from 8 to 10 November 2011, the organisers, Munich Re Foundation and the Microinsurance Network, are interviewing selected speakers at the conference to highlight the content that will be discussed.

This interview with Elizabeth McGuinness (EM) from Microfinance Opportunities and Sarah Bel (SB) from the ILO’s Microinsurance Innovation Facility, highlights the content of the session 11 of the conference, which is entitled "Consumer education: How to make mass media work for insurance education".

(Disclaimer: This interview was contributed by Microinsurance Network. Microfinance Focus is not responsible for the content correctness.)

Interviewed Person Name: 

Elizabeth McGuinness