MR Microinsurance_2012_03_29.indd - International Labour ...

36 Emerging issues
the necessary information. Such products generally have excessively low claims
ratios, seemingly the result of people not knowing that they are covered. As one
rural banker in Ghana noted, “If we tell people all about the cover, we’d be
flooded with claims.” Apparently, there remains greater scope for raising awareness
for intermediaries as well as for the insured, because bad practices can fuel
distrust that will affect all players on the market.
1.5 There is greater concern that insurance provides value to the insured
The fifth trend is the increasing interest in ensuring that the poor are obtaining
value from insurance, and that they are protected from possible abuse. The focus
during the early days of microinsurance was on understanding how it worked,
the operational tricks of the trade, and improving access. Now that nearly half a
billion low-income persons have cover and the sector is maturing, more attention
is being paid to assessing whether they are actually benefiting from insurance.
Interest in value is coming from different stakeholders and is articulated in
different ways. Donors and policymakers are keen to understand impact. If, for
example, they are going to provide subsidies, they want to know whether these
interventions really benefit low-income households. In theory, insurance is an
efficient way to manage certain risks, and there is considerable anecdotal evidence
to support the theory. Moving from theory into practice, findings from
rigorous research now provide evidence that microinsurance actually benefits
poor households, although the findings are limited to the impact of health insurance
for the time being (see Chapters 3 and 5). A number of additional impact
studies with rigorous methodologies are currently under way, suggesting that
more tangible results will be emerging in the coming years.
The Microinsurance Network is tackling this client value issue from two
angles, which coincide with efforts to prove and improve impact. To support
efforts to prove the value of insurance, the Network’s Impact Working Group is
developing guidelines on how to conduct impact studies properly, not only to
improve the effectiveness of the studies, but also to promote common
approaches that will facilitate meta-analyses across studies (Radermacher et al.,
2012). Second, the Performance Working Group has proposed a set of social performance
indicators that practitioners, donors and investors can monitor
(Simanowitz and Sandmark, 2011). These indicators will not prove that insurance
has an economic and social impact, but they can enable stakeholders to monitor
whether their performance is efficient as well as socially relevant so that it can be
improved over time.
Given the rapid evolution of microinsurance products described in the previous
section, it might be premature to invest heavily in the “proving” agenda at
this stage, since rigorous methodologies also tend to be expensive. Efforts now