Research & Analysis

Responsible Bundling of Microfinance Services

Financial institutions serving the poor can offer a range of savings, insurance, and even nonfinancial products in addition to their core credit products. Bundling these products into one packaged sale can be a cost-effective distribution strategy and a means to differentiate the provider’s offering by its added value to clients. However, it may also raise the risk of confusing clients who receive too much information at once and do not fully understand the secondary products they are offered or the risk that clients feel pressure (whether direct or indirect) to purchase those ancillary products.

We partnered with Crezcamos, a microfinance institution in rural Colombia, to explore the influence of a joint sales strategy on the uptake, understanding, and recall of crop insurance products. Our mixed-methods research design combined qualitative interviews with end clients, loan officers, and other Crezcamos staff with a randomized intervention testing the impact of “unbundling,” or separating the insurance offer from the loan application process on take-up and understanding of the insurance. We worked with Crezcamos to develop a standardized approach to offering the insurance product, which relied on an explanatory video and other tools and emphasized crucial information about the product while underscoring the voluntary nature of the client’s decision.


Overall take-up of the crop insurance was 23 percent for our full sample over the study period, which compares favorably to take-up of similar products in other countries. However, clients purchased relatively small amounts of coverage when compared to the maximum amounts they could have purchased. Price was an extremely relevant consideration in purchase decisions, and our findings suggest a high degree of price sensitivity, which may have been exacerbated by the fact that premiums (while highly subsidized and quite low for the coverage offered) were much higher than those charged for insurance products with which clients were more familiar. The novelty of the insurance product seems also to have contributed to clients’ decisions to purchase low amounts of coverage. Perceptions of the product and coverage were generally positive, even among nonpurchasers, although a small minority of clients did not find the product useful. Relevance of the coverage seems to have been the single most important determinant of purchase decisions.

Although most clients understood at the time of the offer the product features they needed to make an informed purchase decision, later survey data reveal low recall of product information that is suggestive of a possible gap in clients’ ability to maintain and use their policies effectively without additional support from Crezcamos.

Direct pressure from loan officers or Crezcamos to purchase the product was almost completely absent. Most clients did not perceive indirect pressure to purchase the insurance, although we found some suggestion that some borrowers who were less empowered, more vulnerable, or more worried about the loan approval may have felt indirect pressure.

Contrary to our hypothesis, offering insurance separately from the loan application process did not increase take-up of the product, nor did it improve clients’ understanding or recall of purchase decisions or product details. Distraction was not a relevant influence for Crezcamos clients during either the joint or separate insurance offer.