MILK Brief #9: What is Client Math?

MILK’s “Client Math” methodology aims to address some of these open questions about the value of microinsurance. We seek to understand what financial tools households use to cope with a shock, exploring differences between insured and uninsured households. Client Math provides a quantitative assessment of the plausible gains to having insurance. It is not a method to determine impact in a causal sense (i.e., it does not prove that the insured are better or worse off relative to a situation without insurance), but plays a role that is complementary to that of impact studies by answering different questions in different contexts. It aims to describe how both clients and nonclients cope with financial shocks. It offers insight into the ways that insurance is used, and explores the role insurance plays compared to alternative mechanisms as people cope with the financial consequences of a shock.