MR Microinsurance_2012_03_29.indd - International Labour ...

Emerging practices in consumer education
practitioners to create a business strategy to make the scheme sustainable so that
the content can continue to be delivered once the initial funding runs out.
Old Mutual’s “On the Money” in South Africa provides a different example
of an insurer providing general financial education that is funded by its corporate
social responsibility arm. This programme has a longer-term goal and a broader
mandate than the previous examples, as its goal is to improve the financial
practices of low-income South Africans; it is not focused only on insurance. The
initiative has provided general financial education to over 50 000 South Africans
since inception through workshops on how to manage finances.
14.3.1 Make use of existing institutions and pool resources
An improvement in a community’s understanding of insurance is a public good,
which means that many institutions could benefit from it. It may be difficult for
one insurer to justify investing in a broad programme when competitors might
equally benefit from the expense. If so, insurance associations, governments,
donors, or non-profit organizations might be better suited to deliver broad programmes.
One approach is to pool industry resources at national level and have the
education programme administered by an independent agency such as an insurance
association. South Africa has adopted this approach. The South African
Financial Services Charter requires all insurance companies to spend 0.2 per cent
of post-tax profits on financial education. SAIA took this opportunity to promote
a collaborative effort. It pooled the resources from various insurance companies
and oversaw the consumer education efforts for the industry. The programme
achieved impressive scale. However, the Charter placed limitations on
insurers since it promoted generic education to the lowest income segments and
did not allow insurers to build on the programme with their products. These
constraints prevented insurers from thinking about education as a business
opportunity and threatened the effectiveness of the scheme.
When a programme is delivered by an independent agency or insurance association,
it is important to define its objective to ensure that all parties agree and
guarantee continuous support. After four years of operations, SAIA changed its
strategic direction to encourage its members to continue contributing resources
while still pursuing a broader mission to educate consumers. SAIA re-evaluated
its approach mostly because some insurers were concerned that the programme’s
design would not meet their commercial goal – educating potential clients in
insurance to the point where they can make informed insurance decisions and
thus promote insurance take-up. An evaluation of SAIA’s programme also raised
questions on whether it made sense for SAIA to focus on generic content, as
other institutions may be better positioned to address this category of financial
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