Does microinsurance provide value to low-income policyholders and their families?
Much research has been done on client value microinsurance, but many gaps in understanding of client value remain. Our Landscape Matrix aggregates findings from existing studies and highlights gaps in understanding. MILK is focusing on two important questions that are reflected in these gaps:
- Does microinsurance help protect people from large shocks (high cost events) in comparison to other alternatives?
- To what extent is microinsurance effective in smoothing income or protecting assets of the poor when smaller shocks (low cost events) occur and if it is not, are there demand factors that are worthy of considering that make a case for value to clients of covering these small shocks with microinsurance?
MILK's client value work consists primarily of:
- Conducting "client math" studies, which evaluate responses to large shocks, such as, death, fire, natural disasters, by people with and without insurance.
- Collaborating with other researchers in the design of research methods and analysis of data.
- Conducting original research to fill additional gaps.
MILK Working Definition of Client Value
The value of microinsurance, either direct or indirect, represents the added value in comparison to other available risk coping mechanisms, of having insurance either when claims are made or as a result of the changed behavior caused by owning a policy and trusting that it will be honored. Client value is comprised of:
- Expected value: the value clients may get from a product through behavioral incentives and “peace of mind”, even if claims are not made
- Financial value: the value of the product when claims are made as it compares to other coping strategies
- Service quality value: the externalities created by providing access to product-related services