MILK RCT - Protecting those Left Behind: An Experimental Study of Life Microinsurance Purchase Decisions of Compartamos Banco's Borrowers in Mexico

Life products are the most common types of microinsurance both worldwide and in Mexico, where almost 14 million people are covered by life microinsurance. For these studies, the MILK team partnered with Compartamos Banco in Mexico to study an innovative life product Compartamos offers with all of its Credito Mujer loans, reaching over 1.8 million borrowers. For this life product, Compartamos subsidizes the basic level of coverage, automatically providing it with the loan, and clients can voluntarily purchase greater levels of coverage.

Using a randomized control trial methodology, "Protecting those Left Behind" evaluates the purchase decisions clients make. This experimental study sought to understand expected value through identifying the effects of different marketing approaches and how providing, or not providing, basic subsidized coverage influences purchase decisions. The paper shows that when the subsidized coverage was removed, clients purchased more coverage, although they did not purchase enough to achieve their previous subsidized coverage level. While the study did not find a significant difference in up-take due to emotional versus factual marketing approaches, a clear benefit was seen simply from formalizing the marketing process. Further, the experience of Compartamos does support the use of subsidies to develop trust and build an insurance culture if the right product value components are evident to clients.