MARKET SURVEY: THE DEMAND SIDE Results From a Survey of Microinsurance Clients in Ghana Dr. Adobea Owusu Dr. Charles Ackah Institute of Statistical, Social and Economic Research (ISSER) University of Ghana May 23 rd, 2012 International Microinsurance Conference Learning Sessions Ghana
Outline Methodology Quantitative Outcomes Qualitative Outcomes Conclusions and Recommendations
Methodology Survey of microinsurance clients only Quantitative: 870 questionnaire interviews Qualitative: 9 Focus Group Discussions (N = 60) Insurance Awareness Index Toolkit Knowledge Score Attitude Score Sampling and Coverage: Based on Supply Side Survey 7 Regions 14 Products Rural & Urban Communities
QUANTITATIVE OUTCOMES
Client Profile Mostly self-employed (86.80%) in the informal sector Median personal income: GHS 200 400 / month Female: 65.52% Male: 34.48% (Semi)Urban: 83.1% Rural: 16.9% Average age: 44 years Education: Up to primary: 24.9% Up to secondary: 69.5% Above secondary: 5.4%
Clients Income Level 35 30 25 % 20 15 10 5 0 Below 200 201-400 401-600 601-800 801-1000 1001-1500 Personal Income (GHS) 1501-2000 over 2000 Missing
Insurance Knowledge Overall Knowledge Index: 0.570 (scale from 0 to 1) Life, Health, Property insurance most widely known Knowledge of basic insurance principles is often lacking 43.1% of client believe they get premiums back if no claim is made Clients of linked products often not aware of insurance component: Savings-linked: 39.7% not aware Credit-linked: 17.5% not aware Many clients do not understand product terms & conditions
Insurance Attitude Positive attitude towards insurance concept (Index: 0.763 on a scale from 0 to 1) Example: 'Insurance is necessary to protect your family': 94.9 % (fully) agree 1.2 % neutral 3.6 % (fully) disagree Mixed attitude towards insurance companies (Index: 0.591 on a scale from 0 to 1) Example: 'When it comes to paying claims, insurance companies will always try to delay and / or make it difficult' 46.8 % (fully) agree 8.3 % neutral 33.3 % (fully) disagree
Selected Results of Quantitative Analysis Insurance Knowledge Index Education Level Product Type (Credit- or Savings-Linked) Location (Rural) Attitude Index (Insurance Concept) Attitude towards insurance companies Attitude Index (Insurance Companies) Satisfaction with current product Gender (Female) Region (Greater Accra)
QUALITATIVE OUTCOMES
Perceptions of Risk & Insurance Respondents feel exposed to many risks at the same time See risk especially in relation to their business: (Traffic) accidents, health problems or disability means one cannot attend to business Fire, flood or theft may cause the sudden loss of business assets Informal insurance and solidarity schemes exist especially for funerals Loans are least preferred risk management option Insurance is seen as a possible solution, but trust is often lacking
Risk and Insurance Preference Ranking 6 5 Ranking Points (N = 60) 4 3 2 1 Death / Funeral Fire / Flood Theft / Crime Risk Disability / Unable to work Traffic Accident Health Care Risk perception Insurance preference
Perceptions of Insurance What is insurance?: > Generally, a safetynet for the future ( something that will help you in case of need ): "I think it is like being part of a welfare and if you are paying for a welfare you don t go for the money anytime you want to. It is like saving for a group of people."
Perceptions of Insurance Companies What do people in your community think about insurance companies? > Overwhelming negative view: general mistrust and suspicion for insurance companies-- "Most people think that the insurance companies cannot readily help them because of the experiences and stories that they have heard from members of insurance schemes. They think that the companies take a long time to pay them their claims."
Perceptions of Insurance In insurance schemes you sometimes contribute for a long time, yet if the insured event does not occur, you will not get a payout. Do you think this is fair? > Majority of the discussants did not think the proposition was fair: "I don t know much about insurance but from what I have heard today I will say that it is very unfair because if for instance you contribute for 10 years and the event you insured against is not occurring the company will not give you anything then that is not good enough because nobody will insure against car accident and pray to engage in an accident"
CONCLUSIONS
Microinsurance Regulation: Key Findings Criteria Designed for low income sector: Many clients have medium incomes, but most of them work in informal sector Accessible: Concentrated in urban areas / markets Affordable: Flexible premium payment highly appreciated Requirements Fast claims payment Extremely important for client satisfaction and trust Simple language and few exclusions Avoids misunderstandings and dissatisfaction
Other Findings & Recommendations Clients are often not aware of their insurance component Savings / credit-linked products need more explanation Clients are initially distrustful of insurance companies Fast claims payments demonstrate reliability Clients want to see tangible benefits of insurance Pure risk products that are not linked to other services will be harder to sell For many identified risks (Accident, Property etc.) no (micro)insurance cover available Consider offering more diverse / composite products