MR Microinsurance_2012_03_29.indd - International Labour ...

344 Insurance and the low-income market
way to ensure more complete coverage for clients and raise the number of policies
sold through MFIs to non-borrowing members, although this raises adverse
selection risks.
Voluntary enrolment
Poor women often express dislike for mandatory life microinsurance programmes,
particularly when cover does not meet their needs and when they are
not fully aware of the benefits. The latter problem was observed in Uganda where
women paid mandatory premiums without being aware of the cover, resulting in
a misconception that premiums were actually loan-processing fees (Young et al.,
2006). With limited information on how to use the policy, women did not reap
any benefit from it.
Nevertheless, mandatory life microinsurance programmes are common.
MFIs value the protection they offer on their loan portfolios and/or are motivated
by the revenue potential from commissions. They also may not want to
invest resources into convincing clients of the wisdom of buying the products
voluntarily. These products, however, do feature an important upside for clients:
because administration costs are kept low, the premiums tend to be significantly
lower than for voluntary schemes. It is thus critical for MFIs and other delivery
outlets to closely examine their clients’ willingness to pay, in order to assess
whether voluntary products are appropriate in the local context. SEWA in India
and BancoSol in Bolivia both found that their clients were willing to pay for voluntary
microinsurance if they valued the benefits and found the premiums good
value (Chatterjee, 2005).
Gender-sensitive client communication
Effective gender-sensitive microinsurance programmes must contain an
educational element to explain how microinsurance works and how it can offer
valuable benefits to women and their households. Microinsurance will be a new
concept for most and many may be reluctant or suspicious of it. They must be
provided with easy-to-understand information on costs, eligibility, claims
processing, cover, and long- and short-term benefits (see Chapter 14).
Communications must address the most common misunderstanding about
microinsurance, expressed by a Jordanian woman when she says, “I joined an
insurance scheme. We paid an amount for three children and my husband. The
year finished [and] we did not benefit. So we saw we did not benefit from it and
left the scheme. We paid 50JD (US$70) per year for each individual” (WWB,
2006c). Educational messaging can help convince women that there is a benefit
from microinsurance even if they do not claim.
Messaging for women should also take into consideration the tendency, in
many cultural contexts, for women to require more information than men before