MILK Brief #33: "The Right Touch" - Reducing Distribution Costs in Alternative Channels for Microinsurance
Insurers often look to alternative channels – such as financial institutions, utility companies, retail chains, and even telecoms – to reduce costs and expand the scale of microinsurance. However, ensuring that clients trust and perceive value in a product can be difficult and can require a higher touch approach to distribution, at consequently higher costs. Can we effectively sell insurance to low-income clients without significant levels of interaction or “touch” with the buyer and / or end user? What kinds of clients might be willing to buy insurance through lower cost, lower touch channels?
The MILK project partnered with regional insurance company Suramericana in Colombia to implement an exploratory study of insurance demand in two of its alternative distribution channels with distinct touch levels (a high touch and a lower touch mechanism). Our observations have important implications for those considering ways to economize costs of microinsurance distribution.
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