Microinsurance: Exploring Ways to Assess its Impact

The purpose of this study was to identify and refine indicators that can be used to assess the impact of microinsurance on the poor. Specifically, it examined changes in household financial behavior and risk coping strategies among insurance policyholders compared to non-policyholders.

The research methods consisted of focus group discussions with members of FINCA Uganda, Save for Health Uganda, and two groups of non-members (one rural, one urban), in addition to individual interviews with key informants. This study relied on qualitative techniques. While the results cannot be generalized, they do indicate areas of potential impact of insurance, and will be used to inform the design of future studies on the impact of microinsurance. Respondents with health coverage, through either microinsurance or emergency credit, were more likely to report seeking medical treatment early on and following the full and appropriate course of treatment than respondents without cover. Insurance policyholders also indicated an increased feeling of safety and a greater likelihood of taking preventative health precautions, such as boiling water. Health insurance was also said to help decrease the financial burden associated with a health shock. Customers of FINCA’s group accident policy did not report behavior changes. This may be due to the short policy term, which was limited to the loan term, and to the fact that many FINCA clients lacked knowledge of this product.

Current measures for assessing the impact of microfinance, especially credit, are inadequate to assess microinsurance. Microinsurance has a particular effect on client attitude and behavior. While it is difficult to measure the extent to which microinsurance can impact a client’s sense of security, behavioral changes, such as seeking health treatment early on, can be assessed. It is also essential to consider how the client’s knowledge and awareness of the insurance product affect its impact on the client, such as in FINCA’s group accident policy. Finally, assessment techniques and the indicators used to measure the impact of microinsurance need to take into consideration the variability of types of insurance products available.