Increasing the Immediate Value of Microinsurance for the Poor

CGAP has recently concluded an Applied Product Innovation project with insurance intermediary MicroEnsure and design firm Continuum. MicroEnsure and mobile network operator Airtel have a partnership to deliver insurance to Airtel customers in 17 countries in Africa over the next three years. Our challenge: using human centered design techniques to figure out how to deliver relevant insurance products to the mass market, leveraging mobile phones. Watch our video or read through our presentation below for an overview of the entire project. 

Microinsurance, the provision of insurance services to low-income people, can help poor households protect themselves against the risks and shocks that life inevitably brings. Without access to risk mitigation tools, insurance or adequate social security services, poor people are extremely vulnerable and ill-equipped to meet unexpected and potentially devastating losses. Only a tiny fraction of people in Africa have insurance policies today. Although MicroEnsure has already had good success with launching innovative microinsurance products over mobile, their ambitious partnership with Airtel required them to learn from customers and develop new products in a faster and more systematic way. Continuum was brought in to help the MicroEnsure team use human-centered design techniques to create and iterate product concepts over mobile. 

To begin understanding how low- and medium- income people living in Africa perceive risk and protect themselves against this risk, we conducted in-depth interviews with 24 people living on $4-10 a day in Nairobi, Kenya and Lilongwe, Malawi. 

One person we met was Metrine, who lives in Jericho, a housing complex on the outskirts of Nairobi, where she lives with her husband, 5 year-old daughter and teenage niece. Metrine’s husband is out of work. She does laundry to make money but she struggles to pay bills and relies on family members to make ends meet. On the day we’re visiting, Metrine’s daughter is sick. She fell and hurt her leg and also has a fever. The girl is lethargic and softly crying as she sits on her mother’s lap for the two hours that we are there. Metrine tells us she struggles with the decision of whether to take her to the doctor. It costs 1,000 KES ($11.50) and she doesn’t have the money. Maybe she will make enough on Saturday when she gets most of her laundry clients. But, she asks, which is more important: should she pay money to take her daughter to the hospital or should she put food on the table? Prioritizing limited resources is a constant challenge for Metrine and one misstep or unplanned event can bring about a disruption in savings, spending and planning that affects families for weeks or even months at a time. 

Mothers like Metrine wanted to understand how insurance could help them today. Photo Credit: Caitlin Toombs
So where and how does insurance fit in? 
Although someone like Metrine is much more vulnerable to financial setbacks than people with higher incomes, she does not think that an insurance product can protect her. Insurance does not feel necessary or realistic for her life today. People in this income bracket often think they don’t have enough worth protecting with insurance. Instead, they perceive that insurance is for people that have more. As we interviewed people throughout Nairobi and Lilongwe, we heard a common refrain, “Maybe if I had a car… a house… more money.” But for now, insurance is a distant need, something that is aspirational at best. Instead of insurance, people use their informal networks for help when setbacks arise. They are experts at juggling loans and gifts from friends and family. Prioritizing insurance is a hard sell as it could be beneficial someday down the road, but it fails to deliver on the immediate needs that people face on a daily basis. 
In order to be successful, microinsurance products need to provide both near-term and long-term benefits to be more relevant to the poor in African countries. How could we help MicroEnsure add short-term value to their insurance products to prove the worth and relevance of what is mostly considered a long-term product?
Watch the video for an overview of the project:
Harnessing the importance of education
As we talked with people about their values, education was identified as a main driver to achieve a better life. Education quickly becomes a luxury as families struggle to put food on the table. School fees increase as kids grow older and when setbacks occur, young girls especially, are taken out of school to help provide for the family. 
Dorcas, a 24 year-old woman living alone in the suburbs of Nairobi, had to give up school when her father died. She now works as a teaching assistant at a primary school and sends money home to her mother to help pay for her brothers’ and sister’s education. Dorcas wants to go back to school but she does not have the ability to save; she can only focus on making enough money to send to her mother each week. Instead of pursuing formal education, she gets information through informal networks. She gets tips and news on her mobile phone, and she talks to her friends and employer to get advice. It’s the way she continues to learn and grow even when she can’t seek a formal education.
We tested different near-term benefits to understand if they helped changed the perception of insurance. Photo Credit: Carin Stimolo
This appreciation for informal education provides an interesting opportunity for microinsurance, which has the opportunity to not only protect in the long-term but also educate in the short-term. Providing snippets of advice on relevant topics via mobile devices – medical, business, education, and even love – insurance can provide a more immediate benefit that keeps it at top of mind. This in turn creates a dialogue with people that are unfamiliar with insurance’s long-term benefits. Positioning microinsurance products as sources of relevant and helpful information helps potential customers see more value in the product and provides ways to engage with people over time that helps build a relationship
When we tested different kinds of benefits with people, we found that access to 24-hour doctor’s advice was more valuable than generic health tips. While health tips are already widely available, they don’t always answer the unique needs of individuals. The real value comes in when people are given access to information that is specifically related to their lives and situations. Creating easy access to educational content and acting as an empowering partner can help insurance companies satisfy their customers’ immediate needs. By providing both immediate benefits and the longer-term value of insurance, they can help people understand how insurance fits in their lives now. It rewards people’s behavior and gives them a reason to stay engaged with insurance - thanking them today for protecting their family in the future. The presentation below includes more information on the entire project. Stay tuned for our next blog that highlights how insurance can leverage mobile phones for much more than just receiving or making payments.


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