MILK Brief #25: Keep Your Insurance Close, and Your Friends and Family Closer
In this latest MILK Brief, the Client Math team draws out insights from across multiple Client Math studies. Using data from ten studies covering seven countries and three product types, we explore the interplay of microinsurance and social network support (loans and gifts from family and friends) in diverse country contexts.
We conclude that microinsurance and social network support are generally complementary, and not competing, forms of protection for low-income individuals, each with its relative strengths and weaknesses in different situations. We find that microinsurance is best used to cover high cost risks, as well as in other situations where informal networks fall short, such as after large or frequent catastrophic events. We see that clients can often leverage microinsurance to crowd in additional support (particularly informal loans) from friends and family. Furthermore, we find that cashless insurance can significantly reduce the need to “bridge” financing through the social network, while slightly delayed cash payments are useful to replace income. With this in mind, microinsurance providers and promoters can increase the value of their microinsurance products and services by enhancing elements such as claims times, cashless services, or catastrophic coverage, among others.
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