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ADB TECHNICAL ASSISTANCE TO SRI LANKA
FOR
MICROINSURANCE SECTOR DEVELOPMENT
MARKET RESEARCH ON
MICROINSURANCE DEMAND
October 2006
Prepared by: MOSLEH UDDIN AHMED FCA
International Market Research Specialist 4 Telford Court, Alma Road, St. Albans AL1 3BP, UK
Tel: +441727 842262; +44771 7044129 Email: [email protected]
Table of Contents
1. EXECUTIVE SUMMARY ........................................................................................................ 4 1.1 Low-income households’ need for microinsurance.........................................................................................4 1.2 Insurance and the low income households......................................................................................................5 1.3 Market development projections.......................................................................................................................5 1.4 Conclusions and recommendations .................................................................................................................5
2. RESEARCH OBJECTIVES AND METHODOLOGY .......................................................... 6
3. CONTEXT................................................................................................................................... 9 3.1 Low-income households ...................................................................................................................................9 3.2 Social security in Sri Lanka ............................................................................................................................9
4. INFORMATION ON HOUSEHOLDS................................................................................... 10 4.1 Demographics of households surveyed ..........................................................................................................10 4.2 Income level ....................................................................................................................................................11 4.3 Income source.................................................................................................................................................13 4.4 Disposable income ..........................................................................................................................................14 4.5 Permanent disability and chronic illness .......................................................................................................15
5 THE NEED FOR MICROINSURANCE ............................................................................... 16 5.1 Risk exposures ................................................................................................................................................16 5.2 Risk frequencies..............................................................................................................................................18 5.3 Risk impact......................................................................................................................................................19 5.4 Risk perception................................................................................................................................................20 5.5 Source of fund to face risk event....................................................................................................................20
6 INSURANCE AND LOW INCOME HOUSEHOLDS ......................................................... 22 6.1 Awareness of insurance..................................................................................................................................22 6.2 Usage of insurance .........................................................................................................................................24 6.3 Present and past usage of insurance..............................................................................................................26 6.4 Reasons for not buying insurance..................................................................................................................27 6.5 Attitude towards insurance.............................................................................................................................28 6.6 Opinion about insurance and insurers ..........................................................................................................29 6.7 Names of insurers ...........................................................................................................................................30 6.8 Insurance Products.........................................................................................................................................30 6.9 Qualitative survey ...........................................................................................................................................32 6.10 Quantitative survey .........................................................................................................................................33
7 FINANCIAL HABBITS........................................................................................................... 37
8 MARKET DEVELOPMENT PROJECTIONS AND STRATEGIES ................................ 40 8.1 The Access Frontier as a tool in making markets work for the poor............................................................40
2
8.2 Application of Access Frontier in this study ..................................................................................................40 8.3 Market development projections.....................................................................................................................41
9. CONCLUSIONS AND RECOMMENDATIONS.................................................................. 42 ANNEX: 1 ................................................................................................................................................................43 ANNEX: 2 ................................................................................................................................................................44 ANNEX: 3 ................................................................................................................................................................49 ANNEX: 4 ................................................................................................................................................................66 ANNEX: 5 ................................................................................................................................................................71 ANNEX: 6 ................................................................................................................................................................80 ANNEX: 7 ................................................................................................................................................................82
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1. EXECUTIVE SUMMARY This research, under the Asian Development Bank funded Technical Assistance to Sri Lanka for Microinsurance Sector Development, sought to identify the potential microinsurance clients’ socioeconomic status, income and expenditure patterns, perception and understanding of insurance risks, affordability of insurance premiums, and risk mitigation measures, as well as other issues and constraints on access to microinsurance services. It covered both rural and urban areas with attention paid to remote rural areas and a special focus on tsunami and the war affected areas. The research used both qualitative and quantitative market research techniques and applied the Access Frontier Methodology to arrive at the market development projections. 1.1 Low-income households’ need for microinsurance Sri Lanka’s national poverty line is 22.7%1. There is a disparity in income level between the south & western provinces and north & eastern provinces, where in some areas the poverty line rises to 55%2. In spite of a commendable UNDP HDI (0.740 or 96th out of 177 countries), 66% of the population lives on less than US$ 1 a day and 45.5% live on less than US$ 2 a day3. 80% of the households surveyed earn less than the national average income per person per month. In the north and eastern provinces, some people earn less than LKR 1,000 a month. Only 36% of the working-age population is covered under any social insurance scheme and Samurdhis provide benefits to around 46% of Sri Lankan households4. Though the state provides free hospitalisation and treatment facilities in government hospitals and clinics, charges have to pay for lab tests and medicine. 39% of the low-income households surveyed do not have sufficient disposable income to buy some of the exiting microinsurance products available in the country. Household disposable income varies between LKR 50 per month (2.1% - mostly in the north and eastern provinces) and LKR 500 per month (34.5% - mostly in the south and western provinces). 32.2% of the households with disposable income have shown interest to purchase at least one concept microinsurance product offered to them and 28.5% are not interested to purchase the products for various reasons. Most low-income households are exposed to health related risks, followed by property. In addition to illnesses requiring a visit to a doctor (76.9%), 39.8% required hospitalisation with surgery. 33.9% of the low-income household had minor illnesses, 27.5% of them met with accidents leading to temporary disability, 26% required hospitalisation and surgery, 25.6% required hospitalisation and treatment more than once in the last 3 years. Damage to property (54.4%) due to natural calamities and war affected the economic standard of a household most. 78.7% of those affected by the tsunami live in the south and western provinces and 21.3% live in the north and eastern provinces. The low income households find it hard to cope with the financial pressure of unexpected shock and losses due to risk events. Most people use own funds (69.2%) to cope with risk events. This leaves them more vulnerable to future risks as their own resources would be depleted. People also pledge or sell their assets (39.5%) borrow from banks, microfinance institutions and friends/relations. A very small percentage (2.4%) mentioned insurance as their source of funds. 1 Department of Census and Statistics, Sri Lanka 2004 Report 2 Narayan and Yoshida 2004 3 International Centre for Ethnic Studies 4 Department of Census and Statistics, Sri Lanka 2004 Report
4
Microinsurance can give low-income households a tool to cope with financial pressures of risk events. To be effective and acceptable by the low-income households, microinsurance has to be appropriate for them in relation to cost, coverage, payment terms and delivery mechanism. 1.2 Insurance and the low income households Awareness about insurance of insurance products (88.6%) and insurance companies (83.1%) is high in the households but knowledge about the products and its benefits are quite low. Usage of insurance is quite low in the low-income households (19.7%). 81.4% had life insurance in the past 15 years but only 29.5% have continued with it. Many low-income households find microinsurance currently available in the country expensive (47.6%). A substantial number of low-income households do not trust the insurers (27.5%) and 21.3% do not have confidence on the financial ability of the insurers (21.3%). 17.5% said they did not buy insurance because no one approached them. 25.3% were found to be skeptic about insurance, 33.3% uneducated and 41.4% enthusiastic. 1.3 Market development projections We applied Access Frontier methodology to divide the low-income market into those who currently use or demand it (market enablement zone), those who could have but do not use it (market development zone), and those outside the reach of the market because of their low income or strong personal objections/opinion (market redistribution zone). The market enablement zone varied between 5.5% for property insurance and 41.8% for funeral insurance. The market development zone is the area that can be covered by microinsurance products that are appropriate for the market in relation to cost, coverage, payment terms and delivery mechanism. This zone varied between 18.7% for property insurance and 59.0% for health insurance. The market enablement zone and the market development zone define the possible market size for the existing and any new microinsurance products. Market redistribution zone is outside the reach of microinsurance either because the low-income households do not have or will not have the income in the foreseeable future to buy insurance, and hence beyond the reach of microinsurance providers. This segment of the market should be served by the state social security programme, People who are determined not to buy any microinsurance products because of their strong personal convictions also fall under this category. 1.4 Conclusions and recommendations Usage of microinsurance is quite low amongst the low-income households in spite of high awareness about insurance and the insurers. The occurrence of risk events, its frequency and its severity indicate that there is a need for microinsurance by the low-income households. The microinsurance products currently available are not suitable in terms of cost and terms. Low-income households are also skeptical about insurers. Therefore the usage of microinsurance at present is very low. Any newly designed microinsurance product has to be inexpensive, easy to understand, with appropriate terms and marketed through a low-cost mechanism. The scenario calls for an insurer-agent model of partnership where both the partners have to be well known in the market with high reputation. A massive awareness campaign is required to change the mindset of low-income households and generate confidence about the products and the insurance providers.
5
2. RESEARCH OBJECTIVES AND METHODOLOGY This research sought to identify the potential microinsurance clients’ socioeconomic status, income and expenditure patterns, perception and understanding of insurance risks, affordability of insurance premiums, and risk mitigation measures, as well as other issues and constraints on access to microinsurance services. It covered both rural and urban areas with attention paid to remote rural areas and a special focus on tsunami and the war affected areas. The study used both qualitative and quantitative market research techniques and applied the Access Frontier Methodology5 to arrive at the market development projections. In identifying the objectives, the research addressed the following questions in depth:
• What is the low-income households’ perception of insurance as a risk management instrument?
• What is their attitude towards insurance and are they prepared to look at insurance as an alternative to their present coping mechanisms?
• What characteristics in a microinsurance product would attract the low-income households?
• What are their experiences and apprehensions regarding insurance, if any? • What motivated those that are insured to purchase insurance? • What are the reasons behind the decision for those that decided to discontinue? • Are they able to afford and are willing to pay for insurance? • If a new insurance product were specifically developed for them, would it be accepted
by them? • What is needed to maintain their continued loyalty to a service provider? • What measures must be taken to change the mind-set of the low-income households?
Market research for the Northern and the Eastern provinces was carried out by Independent Marketing & Research Services, with Mr. Amirthalingam Raviraj assisted by a team of 10 members. The Professional Consortium conducted the research for the Southern and Western provinces, with Mr. Daminda P K Geeganage assisted by a team of 15 members. Qualitative research The qualitative study in the Eastern province consisted of 4 focus groups (FG) of between 5 and 10 members each. For the quantitative survey both teams used face-to-face interview techniques, using purpose-designed questionnaires6, show cards and concept study cards. The study was carried out in rural areas in Batticaloa and Ampara districts using 1 all male group, 1 all female group and 2 male-female mixed groups. 5 FGs were originally planned for the team but 1 was subsequently cancelled because of security problems in the conflict areas. The quantitative study in the Southern and Western provinces qualitative study consisted of 5 FGs, (2 rural areas, 2 tsunami affected rural areas and 1 in a tsunami affected urban area) in Galle, Matara, Hambantota and Kalutara districts. The FGs consisted of 5 to 10 members in male-female mixed groups. Both teams initially identified the FG leaders with the help of the Grama Savak/Niladhari in advance and then with the leader’s support and cooperation, assembled a group on the day of the session.
5 Developed by David Porteus; Access Development methodology is further explained in Annex 5. 6Adapted from materials developed by Michal Matul, Microfinance Centre for CEE and the NIS, and Microinsurance Centre
6
Both teams used participatory rapid appraisal tools and purpose-designed questionnaires7 to conduct the FG sessions, and used audio equipment to record the discussions. Quantitative research For the quantitative survey, both teams used face-to-face interview techniques using purpose-designed questionnaires8, show cards and concept study cards. The districts of Kalutara, Galle, Matara, Hambantota, Vavuniya. Batticaloa, Ampara, Trincomalee and Jafna were selected for the survey after consultation with the Team Leader, the International Product Development Specialist and the Domestic Market Research Specialists. The sample size was set at 1,250 households – 750 for the Southern and Western provinces and 500 for the Northern and Western provinces. The sample size in each district was allocated in proportion to the district population. Surveys in Jafna and Trincomalee were subsequently cancelled due to security concerns in those areas and as a result, the sample size was reduced to 272 households for the Northern and Eastern provinces. To comply with the TOR, special effort was made to include remote rural, tsunami affected and conflict affected households in the sample selection. Stratified sampling methodology was employed. The households were randomly selected from the Grama Savak/Niladhari’s (Village Headman) list of affected people in both rural and urban areas. Table 1: Distribution of sample - %
TOTAL RR R AR U AU % % % % %
100.0 7.2 27.8 25.5 7.2 32.2 RR = Remote rural; R = Rural; AR = Affected Rural; U = Urban; AU = Affected Urban Table1 above shows the distribution of population by settlement type. The sample did not include any households from Tea/Rubber Estates or Coconut Plantations. Table 2: Sample distribution by settlement type
SURVEY AREA Total Rural Urban South & West Kalutara 239 123 116 Galle 225 120 105 Matara 176 121 55 Hambantota 110 74 36 North & East Vavuniya 50 28 22 Batticaloa 125 88 37 Ampara 97 65 32 TOTAL 1,022 619 403
% 100.0 60.6 39.4
7 Adapted from materials developed by Michal Matul, Microfinance Centre for CEE and the NIS, and Microinsurance Centre 8 ibid
7
Map 1: Districts surveyed and sample sizes
8
3. CONTEXT
3.1 Low-income households A typical profile of a low-income household is one that is employed in low-skill occupations, has diversified income sources, lacks ownership or access to productive assets, has low level of education, and has a large household size. A sizeable percentage of Sri Lanka’s population fits this profile. There is very little abject poverty in Sri Lanka – in terms of starvation and destitutation but there are specific pockets within the population that fall under a category called “extreme poor”. Unemployed estate workers, low-income households displaced by the tsunami and the conflict, in remote and isolated villages affected by flood, landslides and damage by wild animals, and marginalised social groups fall under this category. National poverty level is around 22.7%9 and that in the north and east is estimated to be between 25% and 55% - with the higher figure applicable to the poorest province (Uva) in the country10. 66% of the population lives on less than US$ 1 per day and 45.4% live on less than US$ 2 a day11. The UNDP HDI is estimated at 0.740 and Sri Lanka is ranked 96th out of 177 countries. 3.2 Social security in Sri Lanka Sri Lanka’s commendable human development in terms of life expectancy, high education level and low population growth has created a population pyramid with a young generation at its base with a rapidly growing elderly population at the top. This growing aged population is making increasing demands on the country’s welfare system. A major challenge the country faces is ensuring income security and social services to this growing pyramid of senior citizens. Sri Lanka’s social insurance provides some protection, but coverage is limited and benefits are inadequate. Only 36% of the working-age population is covered under one or more formal schemes12. The schemes that do exist are inadequate and have major deficiencies. Samurdhis are Sri Lanka’s main social security programme, and it provides benefits to around 46% of Sri Lankan households13. Social security also provides income support for disabled persons. Hospitalisation and medical treatment at government hospitals is provided free to every citizen. Charges for clinical tests and medicines have to be paid for.
9 Department of Census and Statistics, Sri Lanka 2004; Food poverty line LKR 973; Lower poverty line LKR 1,267; Upper poverty line LKR 1,579; Official poverty line LKR 1,423 (average of LKR 973 and LKR 1,579) 10 Narayan and Yoshida 2004 11 International Centre for Ethnic Studies 2004 12 Ibid 13 Ibid
9
4. INFORMATION ON HOUSEHOLDS Sri Lanka has a population of 19.7 million, with around 80% living in rural areas, 15% living in urban areas and another 5% living on estates and plantations. 52.4% of the population is female and 47.6% is male. 29.9% of the population has achieved up to primary level education and 41% has achieved up to secondary level education. 21.2% has achieved above secondary level education while 7.9% has had no schooling at all14. The 2005 World Bank Report estimates the GDP per capita in 2003 (purchasing power parity) to be US$ 930.00 or LKR 7,750 per month15. The mean national average income per person per month in 2003/2004 was LKR 3,95816. The 2003 Poverty line per person per month is LKR 1,29417. The official poverty line is quoted in the Central Bank of Sri Lanka Report 2005 as LKR 1,423 based on 2002 prices. 4.1 Demographics of households surveyed Table 3: Demographics - %
Categories % Male household head 87.5 Gender
Female Household head 12.5 Single 1.2 Married/with partner 85.6 Separated/divorced 2.4
Marital status of household heads
Widowed 10.8 None 3.2 Up to Grade 5 15.5 Grade 6 to 9 30.4 GCE/ O level 32.5 A level 16.6
Education level completed by household heads
College/University 1.8 Less than 20 0.1 20 to 44 52.6 45 to 60 37.9
Age of household heads
Over 60 9.4 Disability Household heads 1.9 Chronic illness Household heads 13.1
1 1.1 2 12.5 3 28.0 4 33.5 5 16.2
Household size
More than 5 8.7 14 Central Bank of Sri Lanka Report 2005 15 Exchange rate used 1 US$ = LKR 100.00 16 Central Bank of Sri Lanka Report 2005 17 Asian Development Bank Economics and Research Department Working Papers No. 58, October 2004; Minimum required adult food expenditure is used as the national poverty line and is calculated for households that are (i) in the lowest income quartile, (ii) whose food expenditure is over 50% of total expenditure, and (iii) whose daily caloric intake is between 2,475 – 2,750.
10
4.2 Income level Graph 1: Household income by poverty level and income per person - %
10.7
25.1
20.0
44.2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Non Poor: householdincome over LKR9,001
Vulnerable Poor:household income LKR 6,001 - 9,000
Poor: householdincome LKR 3,001 -6,000
Extreme poor:household incomebelow LKR 3,000
Non-poor Over LKR 2,581 per person per month
Vulnerable poor LKR 1,701 to 2,580 per person per month
Poor LKR 866 to 1,700 per person per month
Extreme poor below LKR 865 per person per month
Graph 1 above shows income per person per month of the households surveyed. This was calculated based on the average number of persons per household18. Income per person can be used in assessing and analyzing low-income market potential. 80.0% of households surveyed are well below the mean national average income per person per month. 25.3% of the households live below the 2004 poverty line defined in the Asian Development Bank Economics and Research Department Working Papers No. 58, October 2004 Report19.
18 2 adults plus average 2.1 children per household; equivalence scale used: adult = 1; child = 0.7 19 See footnote 17.
11
Graph 2a: Household poverty level by district - %
0.9
13.3
28.331
3.7
10.6
21.721.2
15.7
11.8 8.4
2.8
14.1
2.5
53.2
18
1.6 6.9
39.4
17.3
2.2
31.9 32.5
11
0%
20%
40%
60%
80%
100%
Extreme poor
Poor
Vulnerable poor
Non poor
Kalutara Galle Matara Hambantota Vavuniya Batticaloa Ampara
There is a large income disparity between north & eastern and the south & western provinces. Some households in the north & eastern provinces earn less than LKR 1,000 a month. Of the households in the extreme poor group, 95.4% live in the north & eastern provinces. These households have been affected by both the tsunami and the on-going conflict. Almost all of the vulnerable poor and non-poor households live in the south & western provinces.
12
Graph 2b: Household poverty level by settlement type - %
7.1
10 4.9
2
815.3
49.5
43.1
14.714.8
45.9
29 33.726.6
38.433.518.8
3.70.9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Extreme poor
Poor
Vulnerablepoor
Non poor
Affected Urban
Affected Rural
Urban
Rural
Remote Rural
Analysis of low-income households by settlement type shows a high concentration of extreme poor households in the rural (49.5%) and urban (45.9%) areas affected by tsunami and war. Similarly, the concentration of poor and vulnerable poor households is also found in affected rural and urban areas. 4.3 Income source The survey revealed that 73.0% of the household members were employed in either permanent or temporary jobs. 68.5% were self-employed and 28.7% received social benefits or grants from government or other organizations. 57.8% of the households have more than one source of income. A large number of the rural households grow small quantities of high value cash crops such as cinnamon, cardamom, cloves, tea etc and fruits such as coconuts, bananas, papaya, avocado and lime on their household plots. Many rural households also grow rice for their own consumption and sell their surpluses. These are quite popular in the south and western provinces and are regular sources of income for many households in those areas. This also accounts for a high percentage of non-poor households in remote rural areas. Table 6: Multiple income source - % Table 7: Assets owned - %
% 1 Source 42.2 2 Sources 32.5 3 Sources 20.1 Over 3 Sources 5.2
: TOTAL % S&W % N&E % CD Player 78.7 62.6 16.1 Colour TV 66.3 57.2 9.1 Bi-cycle 60.9 41.8 19.1 Motorbike 21.4 18.6 2.8 Telephone 21.1 20.2 0.9 Gas Cooker 9.4 9.0 0.4 Fridge 8.9 7.9 1.0
13
Table 8: Income source - %
% Employment 73.0
Permanent Temporary
26.9 46.1
Self employment 68.5
Farming, Fishing, Livestock etc Trading, Manufacturing Services (garage/cleaning etc)
12.7 28.4
Trade/Vocation (masons, carpenter etc) 4.8 22.6
Pensioners 3.5 Social benefits/grants 28.7 Remittances 5.8
External
Internal 1.9
3.9 Others 9.2
Ownership of assets such as compact disc players, colour televisions, motorbikes, telephones etc. is an indication of the level of disposable income in a household. Table 7 above lists some of the assets owned by the households surveyed. Most of these households are in the south and western provinces. Focus group (FG) discussions revealed that some of these assets were purchased with compensation funds received after the tsunami. 4.4 Disposable income In order to assess whether the households are able to pay for the insurance products they are interested in buying, we computed the disposable income of the households by deducting their declared expenditure from their declared income. On that basis 39% of the households do not have any disposable income and are not able to buy any insurance. The remaining 61.0% households have disposable income which varies from under LKR 50 per month (2.1%) to over LKR 500 (35.4%) per month. Of the households with disposable income, 32.5% have shown interest to buy at least one concept insurance product and 28.5% have no interest any insurance. Graph 3a: Disposable income by district - %
24.6 41.5
55.640
24.5
77.6
17.6
68
26
75.3
20.6
23.1
24.1
57.4
0
50
100
150
200
250
300
350
None Under50
50-100
101-150
151-200
201-250
251-300
301-350
351-400
401-450
451-500
Over500
AmparaVavuniyaBatticaloaKalutaraHambantotaGalleMatara
14
Graph 3b: Disposable income by region - %
26.25.2
48.3
75
20.2
39
9.3
35.4
0
20
40
60
80
100
120
140
160
None Under50
50-100 101-150
151-200
200-250
251-300
301-350
351-400
401-450
451-500
Over500
TotalNorth & EastSouth & West
4.5 Permanent disability and chronic illness 83 or 8.1% of household members, which includes 19 or 1.9% of household heads, have permanent disabilities and 316 or 31.0% of members, which includes 133 or 13.0% of household heads, suffer from chronic illness such as asthma, cancer, diabetes, heart attack, stroke, hepatitis, and AIDS/HIV. Disability is higher in the south and western provinces and in the poor households. Chronic illness is also higher in the south and western provinces and in the vulnerable poor and non-poor household income groups. Graph 4: Households with permanent disability and chronic illness - %
1.96.2
1318
0%
20%
40%
60%
80%
100%
Householdheads
Othermembers
Chronic illnessPermanent disability
15
5 THE NEED FOR MICROINSURANCE The financial ability of a household is depleted whenever a member is faced with a risk situation. Low-income households face the greatest impact of risks, as they do not have the financial ability to cope with risk events – especially recurrent risks. Microinsurance attempts to mitigate such situations and help such low-income households to cope with risk events. Microinsurance protects the low-income households against specific shocks using risk pooling in return for regular affordable premium payments20. The premiums are proportionate to the likelihood and cost of the risks involved. Characteristics of microinsurance are affordable premium, low-cost delivery mechanism, transparent procedures, appropriate coverage and terms that respond to the limited and variable cash flow and the low-income households’ unstable economic environments. When considering the potential for microinsurance products, it is important to identify the risk events the low-income households face, and the magnitude and frequency of such risks, and the effect of those risks on the households’ financial ability. 5.1 Risk exposures Health is the largest risk faced by the low-income households, followed by property risk (67.4%). 76.9% of the households visited a doctor and 39.8% required hospitalisation and surgery. The property risks were almost wholly due to tsunami. There was no reporting of risk to property due to flood, landslide, fire or wild animals. Exposure to natural death risks (13.8%) and accidental death risks (12.1%) is also considerable. In almost all cases the low-income households in rural areas are more exposed to risk events than those living in urban areas. FG discussions during the qualitative survey also reflected a high exposure of health related risks. Graph 5: Household exposure during last 3 years - %
76.9 67.4 39.8 17.3 13.8 12.1 5 4.9 4.5 4.2 4.1 2.9 1.1
0%
20%
40%
60%
80%
100%
Visitng doctor
Property damage
Surgery
Minor illness
Death (natural)
Death (accidental/unexp...
Temporary disability
Crop damage
Death of bread winner
Treatment
Theft of assets
Permanent disability
Livestock
Risk exposure
Exposure to health related risks is higher in the rural areas and in the south and western provinces, and significantly lower in the north and eastern provinces. For treatment including a visit to doctor the exposures are: Kalutara 30.2%, Galle 28.1%, Matara 21.2%, Hambantota 13.9%, Vavuniya
20 The CGAP Working Group on Microinsurance: “Donor Guidelines for Funding Microinsurance (2003)
16
0.5%, Batticaloa 2.8% and Ampara 3.3%. For illness requiring hospitalization and/or emergency service and surgical treatment the exposures are Kalutara 17.9%, Galle 28.3%, Matara 27.5%, Hambantota 16.7%, Vavuniya 0.5%, Batticaloa 8.1% and Ampara 1.0%. For illness requiring hospitalisation and/or emergency service and therapeutic treatment the exposures are: Matara 41.9%, Galle 20.9%, Kalutara 21.4%. Hambantota 16.7%, Ampara 11.9% and Batticaloa 2.4%. In addition, households in the vulnerable poor income group are more frequently affected by health related risks than other income groups. FG discussions during the qualitative survey also reflected more exposure to health related risks in the south and western provinces than the north and eastern provinces. Graph 6: Household exposure during last 3 years - % (distribution by settlement type)
74.551.4 59.6 62.7
88.7
45.776.3 70.7
44.871.4
30.848.5 47.5
25.548.6 40.4 37.3
11.3
54.323.7 29.3
55.228.6
52.551.569.2
0102030405060708090
100
Illness without hospitalisa...
Damage to property
Illness requiring hospitalis...
Minor illness
Death (natural)
Death (accidental/unexpected
Accident leading to tempo...
Weather affecting agricultur..
Death of bread winner
Illness with hospitalisatio...
Theft of asset over LKR 5,000
Accident leading to perm...
Livestock diseases
Rural Urban
Graph 7: Household exposure to risks during last 3 years - % (distribution by districts)
21.2 18.7 27.5 20.3 23.4 18.5 27.544
15.241.9
21.4 16.7 27.322.2
28.39.6
19.1 32.3 27.518
32.6
20.9
26.220
27.213.9
15.116.7
18.6
30.5 19.4 17.6 815.2
9.316.7 46.6 18.2
30.224.1
17.9
10.7
17 27.4 11.8 34.8 11.6 21.46.7 18.2
2.88
8.1
32.82.1
2.24.7 2.4
9.13.3 11.9 1 6.8 7.8 2.4 9.8 4 9.3 11.9
28.1
26
0%
20%
40%
60%
80%
100%
Illness needing doctor
Damage to property
Major illness - surgery
Minor illnessDeath (natural)Death (accidental/unexpe...
Accident - temporary disab...
Weather affecting agricult...
Death of bread winner
Major illness - treatment
Theft of assets valued mor...
Accident - permanent disab...
Livestock diseases
Mantara Galle Hambantota Kalutara Batticaloa Vavuniya Ampara
17
5.2 Risk frequencies Households are more frequently affected by health related risks, accidentS with temporary disability (27.5%), hospitalisation requiring surgery (26.0%), hospitalisation requiring treatment (25.6%), agricultural production related risks (20%) and accidental/unexpected death (16.1%) affect households than any other risks. Risk related to death of a breadwinner and properties are not frequent. Graph 8: Occurrence of more than 1 risk of the same type – %
33.9
27.526 25.6
20
16.120
11.3 10.6
4.82.2
0
30
40
Minor illnessAccident leading to temporary disability
Illness requiring hospitalisation and/or surgical treatment
Illness requiring hospitalisation and/or treatment
Weather conditions affecting agricultural production
Accidental/unexpected death
Illness without hospitalisation, but needed visit to a doctor
Natural deathLivestock diseases
Theft of assets valued more than LKR 5,000
Death of breadwinner
9.110
18
5.3 Risk impact Damage to property due to natural calamities and conflict affected the economic standard of living of the households most. 54.4% of the households were affected. This reflects the devastation caused by the tsunami and damage to property in the conflict areas. Of the households that were affected by tsunami and conflict, 58.6% lost all their assets and 41.4% lost part of their assets. 78.7% of those affected by tsunami live in the south and western provinces and 21.3% live in the north and eastern provinces. The conflict damages are all in the north and eastern provinces. Health related risks (hospitalization with surgery 28.0% and illness requiring visit to a doctor 20.2%) and life related risks (unexpected death 11.1%, natural death 8.5%) also put the households under relatively more financial pressure than other risk events. Graph 9: Risks that reduced household economic standard of living most t- %
54.4
28
20.2
6.411.1
4.3 4.3 3.5
8.5
2.6 2.6 2.2 0.80
10
20
30
40
50
60
Damage to property
Illness requiring hospitalisation and/or surgical treatment
Illness without hospitalisation, but needed visit to a doctor
Minosr illness
Aaccidental/unexpected death
Death of breadwinner
Weather affecting agricultrual production
Theft of assets valued more than LKR 5,000
Natural death
Accident leading to temporary disability
Accident leading to permanent disability
Illness requiring hospitalisation and/or treatment
Livestock diseases
19
5.4 Risk perception Difficulties of coping with risks reflect a households’ perception of the importance of a risk event.
he tsunami was most unexpected and therefore 60.5% of the households surveyed perceived that as ami is quite a rare,
e looked at the ranking after removing tsunami from the responses. In the alternative calculation, health risks (63.5%) were revealed to be the most difficult to cope with in the respondents’ perception. Graph 10: Risks most difficult to cope with - %
Tbeing the most difficult risk event to cope with. Because of the incidence of tsunw
60.5
8.8 7.33.8 3.5 3.2 2.5 2.3 1.4 1.3 1.2 0.8 0.3
0
10
20
30
40
50
60
70
Damage to property
Illness requiring hospitalisation and/or surgical treatment
Illness without hospitalisation, but needed visit to a doctor
Minor illness
Death accidental
Death of breadwinner
Weather affecting agricultrual production
Theft of assets valued more than LKR 5,000
Death-natural
Accident of household members leading to temporary disability
Accident leading to permanent disability
Illness requiring hospitalisation and/or treatment
Livestock diseases
5.5 Source of fund to face risk event Low-income households all over the world have been found to be very innovative when it cinding fund
omes to s to cope with risk situations. They use a variety of risk management techniques and
ise funds from multiple sources. Households surveyed used more than one source of funds to cope fra
20
with the risks they faced. 69.2% used their own funds together with funds from other sources. 60.4% ombined this with grants from the government, Samurdhis, NGOs, CBOs and national and
international charitable organisations. The majorities of these are tsunami and conflicted affected households. A very small percentage (2.4%) received funds from insurance. Using own funds and pledging household or income generating assets severely weaken the low- income households’ ability to cope with further risk situation in the. Microinsurance can mitigate such situations. Graph 11: Source of fund to deal with risk events – %
c
0.6
69.2
60.4
49.6
39.5
31.1
17.4 16.2 14.5 13.6 12.6 12.3 10.57.7
3.9 3.5 2.40
10
20
30
40
50
60
70
80
Using own funds, depleting savings, etc
Grants from
Governm
ent, Samurdhi, NG
O, CB
ate pe
s (incO
Donation from relatives, friends and priv
r
Pledging household assets in pawnshop
lsons
uding jewe
Borrowing w
ithout interest from relative
Getting additional job (or w
orking more)
Borrowing w
ith interest from relatives/friends
Using rotating saving associations
Getting assistance from
the employer (package
Borrowing from
money lenders
Borrowing from
CBOBorrow
ing from banks
Selling animals, fruits and other stored agricult
s and friends
s and ...
ural produ
Selling household assets (including jewellery,
Going abroad for w
orkInsuranceO
ther
house...
FG discussions during qualitative survey also reflected use of own funds to cope with risk situatioA large number of householders mentioned that their insurance claims were rejected by the insure
. This could be one of the reasons for low use of insurance fu
ns. rs
nds for risk because of technicalitiessituations and low confidence on the insurers.
21
6 INSURANCE AND LOW INCOME HOUSEHOLDS
6.1 Awareness of insurance Households are well aware of different types of insurance products. 76.5% are aware of life insurance, 30.2% are aware of funeral insurance, 25.4% are aware of health insurance and 25.0% are aware of disability (accident) insurance. Only 11.4% of the households are not aware of any insurance products at all. Awareness is high in the poor and vulnerable poor income group, and very low in the extreme poor income group. Households in the south and western provinces are more aware of insurance products than those in the north and eastern provinces. The qualitative survey also revealed that households are aware of different insurance products but are not knowledgeable about their benefits and the risks covered. They also reported reservations about the reliability and dependability of the insurers. Commercial insurance agents regularly visit the households in an effort to sell their products. Graph 12: Awareness of insurance products - %
76.5
30.225.4 25
17.2
3.4 1.9 1.4 0.5
11.4
0
10
20
30
40
50
60
70
80
90
Life
Funeral, BurialHealth
Disability
Property - houses, boats, business asnt - boat, nets,
stock
urance producsets
Insurance for Fisherme
acci...
Educational SupportAgricultural - crop, liveOther policiesDo not know any of ins
ts
22
Graph 13: Awareness of insurance products by district - %
26.9
26.5
23.9
25
14.5
21.1
21.4
12.8
11.5
15.7
21
4.3
21.1
12.814.2
21.7
29.8
24.414.8 14.833.3
12
21.7
26.9
3.4
12.9
12.7
21.9
17.8
22.7
14.9
17.8
42.1
17.1
19.713.3
14.9
26.937.121.4
14.2
28.626.9
28.8
0%
10%
20%
30%
40%
50%
60%
70%
80%
Life
Funeral, burialH
ealthD
isability (accident)PropertyInsurance for Fisherm
enEducational SupportA
gricultural - crop, livestockO
ther policiesD
o not know any of insurance products
12.96.2
8.6
4.5
4.2
0.3 1.52
1.1
4.2
0.36.7 7.317.1
15.8
3.5 3.91.13.9
7.3
90%
100%
AmparaVavuniyaBatticaloaKalutaraHambantotaGalleMatara
23
6.2 Usage of insurance Of the households that are aware of life insurance products, 81.4% have or had life insurance in the last 15 years; funeral - 23.2%; health - 21.6%; disability (accident) - 20.7%. Present and past usage of educational support insurance (5.2%), property insurance (5.1%), insurance for fishermen (3.2%) and agricultural (crop) insurance (0.8%) are quite low. Graph 14: Types of insurance held in last 15 years - %
22 20.5 13.3 11.79.4
12.5
51.6 65.959.4 65.6
7060 66.7
48.6 65.6
33.340
3018.82526.6
17.828.823.3
0%
20%
40%
60%
80%
100%
Life
Funeral, b
urial
Health
Disabilit
y (ac
ciden
t)
Propert
y - house
s, boats
, busin
ess a
ssets
Insuran
ce fo
r Fish
ermen
- boat,
nets, a
cciden
ts
Educatio
nal Support
Agricultu
ral - c
rop, li
vesto
ck
Other polic
ies
Non-poorVulnerable poorPoorExtreme poor
Usage of insurance is higher in the vulnerable poor and non-poor households and very low in the extreme poor households. Usage of insurance is highest in Galle, followed by Kalutara and Matara and very low in Vavuniaya, Batticaloa and Ampara.
24
Graph 15: Types of insurance held in last 15 years - distribution by district (%)
18.3 19.6 18.4 21.916.8
24.2 21.9 2533.3
30.336.7 27
30.5
36.4
28.1
55
55.6
11.112.4
8.2
10.2 12.2
9.1
6.3
15
31.9 27.832.7
37.2 37.4
30.3
37.5
53.2 3.3
11.1
30
0%
20%
40%
60%
80%
Life
Funera
l, bur
ial
Health
sabilit
y (ac
ciden
t)
ho
busines
s asse
ts
Ins
sherm
, nets
, acc
idents
ucatio
nal S
upport
Ag
al - c
rop, li
vesto
ck
Other polic
ies
3 3.7 3.12.5 2.9 3.6 3.6 3.1
0.82.3100%
AmparaDi
uses,
boats,
en - b
oat Ed
ricultu
r VavuniyaBatticaloaKalutara
Propert
y -
urance
for F
iHambantotaGalleMatara
25
6.3 Present and past usage of insurance 30.7% of the households that were surveyed discontinued one or more insurance policies in the last 15 years for various reasons. 59.3% of those discontinued are in the vulnerable poor household group. The majority of the households are in the south and western provinces. Usage of insurance is very low in Batticaloa, Vavuniya and Ampara districts. When considering all households, usage of insurance is relatively high in the vulnerable poor and non-poor households. During FG discussions, some of the households that discontinued insurance mentioned cost and unsatisfactory service as being the reasons for discontinuing their insurance. Graph 16: Usage of insurance - current and past (%)
1
35.3 33.817.3 21.5
47.1
31.259.345
11.8
11.6
18.932.6
5.9
23.5
4.50%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Used to have insurance
Have now
Hard to say
Do/did not have insurance
Non-poorVulnerable poorPoorExtreme poor
Graph 17: Usage of insurance- present and past ownership (%)
30.7 24.7
29.5
19.7
010203040506070
Total Low-income
Total
Yes, have now
Yes, used to have in last 15years
26
6.4 Reasons for not buying insurance We asked those households that did not have any insurance in the last 15 years about their reasons for not buying insurance. 47.6% responded saying that they found insurance too expensive, while 33.2% said they had not heard about insurance. 27.5% said they did not trust an insurer and 21.3%
ought an insurer might go bankrupt or run away with their money. Lack of awareness,
d them. The poor and e vulnerable poor group appear to be more unaware, misinformed and have the greatest mistrust of
Many of households formed their opinion because of personal experience or information received through word of mouth or hearsay. Many formed opinion out of ignorance. Most of the unfavorable experience arose due to non-transparent/complicated policy terms which led to rejection of claims, reduction in benefits and disputes. Graph 18: Attitude towards insurance by income group - %
thmisinformation and lack of trust are the main reasons for their not having insurance. 17.5% responded saying they did not buy policies because no insurers had approachethinsurers.
4 7.6
3 3 .2
2 7.5
2 1.3
17.5
12 .1
11.8
10 .8
5.1
4 .6
4 .1
2 .8
2 .3
9 .5
18 .4
3 .1
2 .8
2 .8
1.5
4 2 .6
8 .7
10
5.6
6 .3
2 2 .2
56 .8
3 5.1
17.1
12 .1
15.7
2 0 .6
4 2 .6
2 1.7
2 1.4
55
5.6
4 3 .8
3 6 .4
11.1
3 2 .4
3 4 .6
52 .7
6 2 .6
50 .6
54 .4
14 .9
58 .7
6 4 .3
3 5
72 .2
3 7.5
4 5.4
3 3 .3
10 .8
11.9
2 6 .4
2 1.5
2 8 .9
2 2 .1
8 .7
14 .3
16 .7
12 .5
18 .2
3 3 .3
0 % 2 0 % 4 0 % 6 0 % 8 0 % 10 0 %
Insurance is too expensive for me/price is too high
Head it is a long/ difficult process to realize a claim.
No trust in insurer -heard that insurers do not pay...
No trust in insurance companies - they can go ba...
I do not know where to find insurance/ nobody a...
Never heard of insurance/ do not have enough in...
The insurance agents/ offices are too far from the...
Current terms and conditions
AllExtreme poorPoorVulnerable poor
Non-poor
do not suit me.p
If I were a p
e agent I woul...old has not needed insurance becaus...
I do not have time to think about insurance.
I am not sure if insurance will work because 3rd p...
We have not needed insurance - I think nothing s...Other Reasons
roached by an insurancMy househ
27
6.5 Attitude towards insurance Analysis of questions asked to assess the low-income households’ attitude towards show 41.4% werpositive about insurance 33.3% were uneducated, 25.3% were skeptic about insurance/ins Graph 19: Key market segments by attitude towards insurance - %
e urers
41.4
25.3
33.3UneducatedScepticEnthusiastic
Thinks insurance is expensive Does not think insurance has any use
Insurance is for rich people
Wants to know about insurance Trusts insurers
Believes in the benefits of insurance
Thinks insurance does not help Does not make sense to have insurance Does not trust insurers
Focus group discussions during qualitative research reflected the similar views. During focus group discussions several participants showed some degree of hostility towards insurers initially but by the end of the discussion they were convinced of the benefits of insurance and its advantages in facing household risks.
28
6.6 Opinion about insurance and insurers We asked all households for their responses as to whether they agreed or disagreed with a variety of
away om prototype answers. Lack of knowledge, misinformation about insurance products and distrust
of insurers are quite prevalent in the households surveyed. 38.6% of the households said they needed more information about insurance; 41.4% think that claim processes took too long time; 50.7% thought insurance was too expensive; 45.2% do not trust insurers; 43.9% thought insurance was only for rich people and 31.7% think insurance is a waste of money. Focus group discussions during qualitative res same views. Graph 20: Attitude towards insurance by opinion - %
questions designed to test their mindset. Some of the questions were designed to lead themfr
earc f the h also revealed some o
14.7
1.2
3.5
5.8
4.2
20.9
4.6
4.8
5.2
26.8
42.2
34.6
21.1 10.6
18.3
20.9
15.5useful
rance is a waste of money
Insurance is a standard service in a civilized world
I do not have time to think 6.1
17.2
7.2
16.4
7.3
5.1
4
2.1
25.3
17.5
24.6
30
26.9
34.7
15.9
41.1
43.9
25.5
11.8
33.5
6.8
25.4
47.5
25.1
29.5
32.8
34.7
34.5
20
15.6
31.2
17.5
32.7
30.8
37.8
16.5
31.9
18.2
13.8
12.4
12.5
20.7
15.9
7.3
19.9
13.5
14.8
16.7
44.1
18
2
28.6
20.9
23.7
17.1
24.2
17
15.9
16.5
12.9
8.9
35.6
15
9.2
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
The insurance agents are too far from where I live
I would need more information about insurance
Insurers are not stable financially and can go bankru..
When somebody is insured he/she can live without...I don’t trust insurers
It does not make sense to insure as nothing serio..Insurers do not pay benefitInsurers are socially Insu
about insuranceInsurance is expensive
It does not make sense to insure because we can...Insurance is only for rich people
I will buy a policy if I am approached by an agentHaving insurance is prestigious
It is a long/ bureaucratic process to realize a claim
Strongly disagreeRather disagreeRather agreeStrongly agreeHard to say
39.6
39.8 28 15.9
29
6.7 Names of insurers The households surveyed knew almost all the major insurers in Sri Lanka by name. 83.1% of the households could mention the names one or more insurers in the country. Households in south and western provinces (69.6%) were better informed about insurers than those in north and eastern provinces (44.5%). Rural (63.9%) and urban (66.1%) households were more or less equally informed. 54.9% of the households could name Ceylinco and of these households 65.9% were from
e poor income group. Sri Lanka Life is the next most well known insurer (36.2% of which 19.1%
%
thare from poor group) and next is Janashakti (22.7% of which 23.2% are from poor group). Graph 21: Names of insurers known to the households -
54.9
36.2
22.7
9.7 8.2 7.7 70.9 0.6 0.1
65.9
19.1 21.429.8 27.6
12.53.2
16.7
6.1
16.923.2
0
10
20
30
40
50
60
70
CeylincoSri Lanka Life Insurance...
JanashakthiEagleUnion AssuranceLife Insurance Corporation
SanasaNational Insurance Corpor...
Samurdi Insurance
Asian AllianceSarvodayaFarm
ersAlm
aoCo-operative Insurance
HNB AssuranceDoes not know any insure..
Total % Poor households %
6.8 Insurance Products During our qualitative and quantitative surveys we presented the concepts of four insurance products currently available in Sri Lanka to the households to test their understanding of insurance products, their likes and dislikes of the terms, their preferences about premiums payments and their willingness and ability to buy one or more products. The four concepts are summarized in Box 1 below. The responses from the two surveys are also summarized in the following paragraphs.
30
Box no 1: Product concepts tested – health insurance and funeral/burial insurance
ox no 2: Product concepts tested
B
Health microinsurance
rage:Cove covers healthcare costs of the policyholder, spouse and all of their children up to age 18. fits:
ThisBene
nsurer will pay hospitalisation cost of up to LKR 40,000 for each event but a maximum of LKR 50,000 in n any one year. This will not cover any expenses related to treatment or medicine for outpatients department
The itotalvisits. Treatm ics is provided free by the goveClai processing:
ient at outpatients departments of government hospitals and clin
rnment and need not be insured. ms
Benefits are paid to the policyholder in cash immediately on claiming with all required documents. Price: LKR 1,725 per year per household or LKR 144 per month. Restrictions You have to be a member of the credit thrift and co-operative society. Frequency of premium payment: Premium is payable in one installment in advance each year. Proximity: The service is available through branches of the insurer or its associated organisations. Provider: The service is provided by an insurance company associated with a leading credit thrift and co-operative society in the country. Funeral/Burial microinsurance Coverage: The policy pays cash towards funeral or burial costs of the policyholder or family member. Benefit: LKR 10,000 per death up to a maximum of 2 deaths in any one year. Claim processing: Within 1 day of the claim with all required papers. Price: LKR 172.50 per household per year or LKR 14. per month. Restrictions You ave to be a member of the credit thrift and co-operative society. Frequency of premium payment
h:
Prem ance each year. Prox
ium is payable in one installment in advityim :
The Prov
service is available through branches of the insurer or its associated organisations. ider: service is provided by an insurance company associated with a leading credit thrift and co-operative society in ountry.
The the c
31
Box no 2: Product concepts tested – life insurance and property insurance
.9 Qualitative survey
he qualitative survey revealed that the households are aware of all major insurers and of all four oncept insurance products but lacked knowledge of the products and their benefits. Life, health and neral policies were in demand but not property. They are willing to pay up to LKR 200 per month r insurance in monthly installments. They do not perceive tsunami to be a threat in the foreseeable ture. They are confident to receive financial and physical support from the government and donors the event of any major natural calamity and therefore do not find insurance of property is a
ecessity. They responded that in spite of free treatment at government owned hospitals, one still has pay for clinical tests, medicines and also some incentives to administrative staff at the hospitals to
uicken the administrative formalities, and hence they would like some kind of cash benefit through 300 per risk event
quiring a hospital visit.
Life microinsurance Cove ager : The licy runs for a period of 10 years and pays cash to a person named in the policy in the event of death of the policyholder during this period. Bene
po
fit: The licy will pay LKR 181,500, plus an additional amount called bonus which depends on the profit the com akes each year, to your family in case you die of natural causes during 10 years of taking out the policy. If you died unexpectedly due to an accident, the company will increase the amount to be paid to LKR 199, 0 plus bonus. If you did not die within the 10 years of taking out the insurance, the company will pay to you LKR 8,150 plus bonus at the end of the 10 year period. Price
popany m
65 1: prThe emium payable is LKR 3,278 per year payable in advance at the beginning of each year or LKR 273 per
mont . Rest ions
hrict :
You ave to be a member of the credit thrift and co-operative society. Frequency of premium payment:
h
Prem m is payable in one installment in advance each year. Prox ity:
iuim
The service is available through branches of the insure or its associated organisations. Prov eid r: The service is provided by an insurance company associated with a leading credit thrift and co-operative society in the country. Property microinsurance: Cove ager : The licy covers damage to property and assets through storm, fire and all other natural perils, and loss of assets throu h burglary, robbery or theft. Bene t
pogfi :
Up t LKR 100,000 paid in cash direct to the policyholder. Clai ng
o m processi :
With 3 days of notification of the loss. Price
in:
LKR 62.50 per year or LKR 72 per month. Rest
8rictions: have to be a member of the credit thrift andYou co-operative society.
Frequency of premium payment: Prem m is payable in one installment in advance each year. Prox ity
iuim :
The service is available through branches of the insure or its associated organisations. Prov er:id The service is provided by an insurance company associated with a leading credit thrift and co-operative society in the country.
6 Tcfufofuinntoqa health insurance. Average cost incurred by the households is around LKR re
32
6.10 Quantitative survey (1 = not satisfied; 2 = satisfied; 3 = fully satisfied)
he responses from the quantitative survey are summarized under each product
able 9: Healthcare - %
1 2 3
T T
Coverage 11.6 57.6 20.9 Benefit 8.7 63.3 20.2 Price 23.9 50.0 13.1
78.5% were satisfied with the coverage;
3.5% were satisfied with the benefits; 3.1% were satisfied with the premium and 23.9% were not; 1.9% were willing to buy the product and 32.2% were not; 2.7% would like to insure up to 4 household members; f those that did not want to buy, 60.2% mentioned that they did not need this insurance product, 8.3% mentioned price is the reason and 91.4% of these households said that they would consider uying if the price was lowered by LKR 50.00 per month; 1.8% mentioned that if the product was delivered to their door step they would be willing to buy it nd 23.5% stated they would not.
able 10: Funeral/Burial - %
1 2 3
865 7O2b5a T
Coverage 7.9 56.8 27.5 Benefit 4.6 53.3 34.9 Price 0.1 36.3 46.0
84.3% were satisfied with the coverage;
8.2% were satisfied with the benefits; 2.3% were satisfied with the premium; 8.0% were willing to buy the product and 21.3% were not; 7.5% would like to insure up to 4 household members; f those that did not want to buy, 74.8% mentioned price being the reason and 83.3% of these ouseholds said that they would consider buying if the price was lowered by LKR 5.00 per month; 8.6% mentioned that if the product was delivered to their door step they would be willing to buy it
t.
8867Oh6and 13.7% stated they would no Table 11: Life - %
1 2 3 Coverage 6.5 61.8 28.9 Benefit 4.1 46.0 44.8 Price 38.2 30.2 21.8
90.7% were satisfied with the coverage; 90.8% were satisfied with the benefits; 61.6% were satisfied with the premium and 30.2% were not; 52.0% were willing to buy the product and 31.6% were not;
4 people; 76.6% would like to insure up to
33
Of those that did not want to buy 65.3% mentioned price and being the reason, 23.2% mentioned ouseholds that cited
rice, 93.4% said if the price was lowered by LKR 50.00 per month they might reconsider their
5.7% mentioned that if the product was delivered to their door step they would be willing to buy it and 28.2% stated they would not. Table 12 rty - %
1 2 3
that they did not need this insurance and 25.1% mentioned lack of trust. Of the hpdecision. 5
: Prope
Coverage 15.9 43.5 16.6 Benefit 12.4 52.6 18.7 Price 18.3 54.1 10.5
60.1% were satisfied with the coverage; 71.3% were satisfied with the benefits; 64.6% were satisfied with the premium; 9.0% were willing to buy the product and 66.4% were not; Of those that did not want to buy 76.6% mentioned they did not need this insurance, 16.5% had bad xperience with claim before and 1e 0.8% mentioned price is the reason. Of the households that cited
ht reconsider their decision if the price was lowered by LKR 25.00
9.3% m their door step they and 36.4% stated they would not. Graph 2 lingness to buy concept products - %
price, 13.7% said that they miger month. p
2 entioned that if the product was delivered to would be willing to buy it
2: Wil
1739.9
27
39.9
20%30%
5.43.6
19.7
7
10%
th Funeral Life Property
28.1
26
46.7
40%50%60%
17.2 27.770% 71380% 14.3 3.9
24.90% 12.9 10.7 15.4100%
Hard to sayDefinitely not w illingRather not w illingRather w illingDefinitely w illing
0%Heal
Funeral i e (rather willing 28.1% and definitely ng 39 = 68 was the product most in demand, followed by life (56.9%) and health (53.0%). Even though mo seholds considered amage to property to be the risk that caused most financial pressure and was most difficult to cope
property insurance (9.0%) and 66.7% did not have any
id not consider tsunami to be a very ot been any incidence of major flood or fire in the areas
cost. As a result the households do not consider property insurance to be of a high priority.
nsuranc willi .9% .0%)st hou
dwith, very few showed willingness to buyinterest to buy. Further enquiry revealed that the majority of the households dlikely risk in the near future, and there has nthat we surveyed. Also, most of the tsunami victims in the area received substantial cash compensation from various sources and many of them have been housed in new buildings free of
34
Graph 23: Most important reasons for lack of willingness to buy concept products - %
60.2
17.6
28.3
8.2
6.4
74.8
16.1
8.3
16.5
7.8
23.2
25.1
65.3
12.1
5.6
.7
10.8
7.2
5.1
0% 20% 40% 80 100%
t need insurance
trust insurers
ium is too high
surance
76.6
13
60% %
I do no
I do not
Benefit (loosing money)
Health I had bad experience with inFuneral
Prem Life Property
ant to buy at least concept products their reasons for not need for all other
We asked those households that did not wwanting to do so. Apart from life insurance, most households cited lack ofinsurance products (Property 76.6%, Funeral 60.2% and Health 60.2%) as the most important reason for rejecting the concept products. In the case of life insurance, 65.3% mentioned the premium was too high. The second most cited reason was lack of confidence on insurers. Graph 24: Has enough disposable income to buy? (%)
3945
28.5
32.5
0
5
10
15
20
25
30
35
40
No di
income -
affoany in
Has diinco
willi
more t
Has di
incow
illiany insposable
cannotrd to buy
surance
sposablem
e andng to buy
han oneproduct
sposablem
e but notng to buy
surance
hen related toWh
their disposable income (declared income less declared expenditure), 39.0% do not ave sufficient income to buy any of the concept products, 32.5% have the income and are willing to
buy one or more of the products and 28.5% have the disposable income but for various reasons are unwilling to buy any product. 35
Table 13: Household members to be included in policy - % Table no: Health Funeral Life Mean 2.46 2.59 2.63 1 person 14.5 13.2 14.2 2 persons 20.9 20.9 23.2 3 persons 18.8 21.4 22.0 4 persons 18.5 22.0 17.2 Sub-total 72.7 77.5 76.6 More than 4 persons 3.8 6.0 6.0
ost households (20.9% to 23.2%) would like at least 2 members (mostly breadwinner and spouse)
Mto be covered by the concept insurance products. 17.2% to 22.0% would like 1 to 2 additional members (mostly children) also covered under household policies. Most households would limit thenumber to persons to be covered to 4 or less members (funeral 77.5%, life 76.6% and health 72.7%) and only a very small percentage of households would like more than 4 members covered.
able 14: Price sensitivity - % T
able no: T Health Funeral Life Property Total
% Not willing %
Total %
Not willing %
Total %
Not willing %
Total %
Not willing %
Sensitive to decrease in price 9.1 28.3 1.8 8.3 20.6 65.3 5.0 10.8 Very sensitive (gives its own price) 0.8 2..4 0.3 1.4 1.4 4.3 1.4 3.0 Total of all sensitive 9.9 30.7 2.1 9.7 22.0 69.6 6.4 13.8 The market for life insurance is quite demand elastic i.e. sensitive to price changes. If life insurance premiums were to be dropped by LKR 50 per month, 20.6% households could be induced to buy concept life insurance products. The price sensitivity is higher in the poor and vulnerable poor households than other income groups. Also households in the south and western provinces respondents are more price sensitive than those in the north and eastern provinces. The market for other products, though not that highly sensitive, could be expanded by 1.8% to 9.1% by reducing price. Table 15: Distance sensitivity - % Table no: Health Funeral Life Property Would buy if delivered at door step 51.8 68.6 55.7 29.3 Households are also sensitive to convenient delivery mechanism. The market for all concept products could be expanded substantially if convenient delivery mechanisms such as door to door elivery could be introduced. d
36
7 FINANCIAL HABITS
can help a low income household build up an stment or cope with emergencies. A high e of the low-income household surveye e savi bits. This is also reflected in
management strategy when 69 eplied t ey use r own funds to meet the risk they faced in the last 12 month
45 or 82.7% of the households responded saying that they have been able to save money from their
have
aved less an LKR 1,000 in a year, and in poor group, 45.3% saved less than LKR 1,000. 48.0% of the savers
s, 23.9% poor households and 21.8% non-poor households. 58.3% f the households have an account with a bank, post office, CBO or Samurdhi. 77.0% of these
ds are from poor income group.
raph 25: Saving behavior of u %
Savings invepercentag s we d hav ng hatheir risk .2% r hat th d theisituations s. 8household income in the last 12 months. 76.6% of the savers are from poor income group and 23.4% from non-poor group. 64.8% of the households were able to save on rare occasions and 11.8% been saving often. 69.7% of the households disclosed their savings amount. In the extreme poor group 73.3% sthwere vulnerable poor householdohousehol G the ho seholds -
63.2
2.8
21.5
3.2
18.3
49.1 5.443.7
1020%30%40%50%60%70%80%
23.490%100%
4.2 19.2
0%%
Rarely
Non Poor over 9000Vulnerable Poor 6001 - 9000Poor 3001 - 6000Extreme Poor below 3000
TotalOften
37
Graph 26: Amount saved in last 12 months - %
6.3
73.3
6.7 4.4 8.9 6.723.9
24.719.4
6.5 4.1 5.6
0%
20%
To Un 1
45.3
48 31
20.6 12.9 16.1
21.960%
80%
9.6
27.2 11.4 15.2
21.8 20.6
40%
ta de000
20003000 to 4000
4000 to 5000
Over 5000
7.7100% Non-poorVulnerable PoorPoorExtreme poor
l r 1000to 2000
to 3000
During qualitative survey FG discussions the households indicated that they are not able to save because of their low income but used of own their funds when faced with risk situations. 66.2% of the households have borrowed money within the last 3 years, with 42.9% of the household are currently repaying these loans. 11.4% are repaying more than one loan. 11.2% are repaying up to LKR 1,000 per month and 11.2% paying up to LKR 2,000 per month. 30.6% of the households have acted as guarantor for loans to a third party under which they may become liable for repayment in the event the principal borrower defaults on the loan. 2.0% of them are currently paying under such guarantees.
38
Graph 27: Attitude towards finance/financial institutions - %
9.3
1
16.1
5.9
Strongly Agree
Rather Disagree
Rather Agree
Strongly Agree
Hard to say
4.3
15.8
16.3
14.1
50.3
39.9
44
12.5
14.1
22.7
8.3
8.2
14.9
13.1
21.4
Saving build financial stabilit
23.1
24.4
1.2
20.5
5
16.4
23.8
51.8
50.8
4.5
30.9
61.7
41.7
39.6
7.6
9.3
38.2
27.2
26.9
20.1
22.7
7.2
8.
50.5
12.1
5.5
5.7
8
10.3
7
5.7
0% 20% 40% 60% 80% 100%Borrowing money is the only tool to respond to em...It is worth to plan my household finances for the n...Nowadays, everybody can save at least small am...
Borrowing from relatives and friends is shameful money is a way to
Samurdhis are unrIt makes sense to save for emergencies
3
25 50.5 8.3 7.9 8.2
y
Banks are unreliable
CBOs are unreliable
Post off s are unreliableice
Credit Thrift and Co-operatives are unreliable
8.7% of the households agree that saving for emergencies make sense; 88.6% agree that financial lanning for the future is important and 66.7% consider saving is one way of building financial ability;. 75.5% are willing to trust Credit, Thrift and Co-operatives, 75.4% on Samurdhis, 74.9% n Post Offices, 66.1% on Banks and 56.2% on CBOs. These organisations have opportunities to rovide risk management tools such as savings product or loans to the low-income households ecause they are already conducting financial transactions within them.
8.1% would not hesitate to borrow money to cope with a risk situation and 61.3% would approach relation or a friend for a loan.
8pstopb 5a
39
8 MARKET DEVELOPMENT PROJECTIONS AND STRATEGIES 8.1 The Access Frontier as a tool in making markets work for the poor21
We applied the ‘Access Frontier’ approach to understand how markets work over time, and in particular, how they work to include access by poor people. The access frontier approach enables greater understanding of market development over time from the perspective of who is, and who will be, served by the market over time and defines the maximum proportion of the eligible population who use the product under existing conditions. The approach enables the market for a particular product to be divided into those who currently use it, those who could have it but don’t want it, those who are within reach of the market now and in the foreseeable future, and those outside of the reach of the market because of their low income and of their own choice. More specifically, the access frontier approach assesses the maximum proportion of the eligible population who can access a product type in a defined market against current levels of usage. It enables a distinction between the reasons for non-usage. In particular, it places a focus on identifying those potential users in the ‘supra-market zone’, who are not able to use the product because of insufficient income and are therefore beyond the reach of direct market solutions. The Access Frontier approach identifies three market zones: the ‘market enablement zone’, between the current usage level and current access frontier; the ‘market development zone’ between the current and future access frontier and future access frontier; and ‘redistribution zone’ of people in the supra-market group. This distinction enables development of policies for intervention to promote or accelerate usage to be correctly matched with the state of market development, and in particular, not to crowd it out. The access frontier defines the maximum proportion of the eligible population who use the product under existing conditions. This frontier is likely to shift over time. Considering where it will move in the short to medium term to the future access frontier is an important part of assessing the capacity of market solutions to extend access. There is still a group of people who, largely because of poverty, the market will be unable to touch in the foreseeable future (‘the supra-market group’). For
is group, the state may decide to supply the service directly or regulate existing institutions to thprovide it (i.e. forced cross subsidy). 8.2 Application of Access Frontier in this study Table 16
Segment Description of the segment How defined in our study
Natural limit ds who is either not eligible for
insurance schemes or they objectively do not need insurance.22
chronically ill; Life: age below 18 and above 60; disabled or chronically ill household heads. Funeral: dependent children Property: value over LKR 1.0 million
A group of househol
Health: age above 60; disabled or
Supra-market A group of households who may wish to buy microinsurance but are unable to, mostly due to lack of surplus income.
1) Below household monthly income per person at the level of LKR 1,294 (extreme poor households).
21 “The Access Frontier as a tool in making markets work for the poor”: by David Porteous; April 2005
This group also includes those who declare that they do not need insurance and will not buy it. 22
40
2) Willing to buy but cannot pay for all selected insurance concepts.
Within access frontier in the future
A group of households who are likely to access the suggested microinsurance product concepts if terms and conditions are more adapted to them. They are also reluctant to buy now due to limited knowledge, distrust, skepticism, dissatisfaction from some product features, etc.
The rest of the market.
ithin access n and wish Those who are willing to buy suggested Wfrontier now access the suggested microinsurance product
concepts on current terms and conditions. microinsurance products and are enthusiastic about insurance in general
The percentage of households who ca
8.3 Market development projections
ere urance showed
the highest potential (41.8%), followed by life (29.1%) and then health (16.1%). Property
• Market redistribution zone – this group is defined as the supra market. The household group
Access frontier identified three market zones from our collected data and its projection:
• Market enablement zone – that is the household group that can be reached now because they are interested in microinsurance and have a positive attitude towards microinsurance. This high awareness about microinsurance in this household group. Funeral ins
insurance did not show very high potential (5.5%). This group is within access frontier.
• Market development zone – this market can be tapped by new products, convenient marketing and affordable premium. This is the future market and varies from 18.7% for property insurance to 59.0% for health insurance.
in this sector cannot afford to buy insurance or will not buy insurance for personal reasons and is unlikely to change its mind-set. This group varies from 3.5% for life products to 50.3% for property insurance.
Graph 28: Market development projections for different microinsurance products - %
100%
16.1
41.8
29.1 18.7
5.5
5
51.6
11.310.9 3.5
25.5
0%
40%9
50.3
36
13.6 11.3 15.8
80%
20%
60% Natural limitSupra marketAccess frontier futureAccess frontier now
Health Funeral Life Property
41
9. CONCLU
nce m lage level. reflected ames of insurers amongst the
households. It ca uded that the low usage of insurance amongst the low-income s no kes m ce mo
his survey has identified a need for microinsurance and a demand for it. In spite of this, selling ri Lanka is not going to be an easy task. A substantial
ent of l nd skeptical about insurance. They have a fixed ced
ombination of the right product and the right strategic marketing. Many mSeveralpremiu ro-poor.
The ma arketed with s
low-cost and easy to understand microinsurance product has to be developed, the mind-set of low-incomecam iinsuran
low-c tified. Sri Lanka has a long tradition of bringing d grass root
vel initiatives. These organisations offer an unusually wide variety of financial services to the rural people. Most low-income households use their services. Their strength lies in their established institutional framework, their closeness to low-income households, their interest in serving the low-income households and the reputation they have built up in rural areas. These organisations would form an ideal delivery and premium collection channel and can reduce the transaction costs. A number of commercial insurers in Sri Lanka have experience in microinsurance. They have knowledge about the product and the market. An ideal combination would be an insurer-agent partnership between the commercial insurance companies, who can provide the insurance product and marketing, and grass-root level financial intermediaries, who can provide the delivery mechanism and premium collection mechanism and service the clients.
SIONS AND RECOMMENDATIONS
companies in Sri Lanka are very active in thein the awareness of insurance products and nn therefore be concl
Large insuraThis is
arket – even at the vil
households iproduct even
t due to lack of access to insurers. This mare difficult.
arketing of any new microinsuran
Tmicroinsurance to low-income households Segm ow income households is uneducated as
mind-set about insurance and insurers. To penetrate this segment one has to have a balanc
ajor insurance companies have tried to penetrate this market but without much success. major reasons have come out of this survey for their failure: 1. products not suitable; 2. ms not affordable and 3. delivery mechanism and premium collection mechanism are not p
rket size is substantial and new microinsurance products need to be developed and m
a trategy to overcome these three major obstacles.
A households needs to be changed through a series of re-orientation programme and marketing
pa gn. The survey has found demand for life, health and funeral insurance but not property ce.
ost delivery mechanism has to be idenAfinancial services to the rural people through a diverse setting of government, private anle
42
ANNEX: 1
TERMS OF REFERENCE
43
A
NNEX: 2
QUALITATIVE SURVEY TOOL FOR ME GROUP IN TARGET AREA; METHODOLOGY: FOCUS GROUPS; TIME: 3 HOURS
1. INTRODUCTION (10 MIN) • Welcoming the respondent • Presenting the objectives of the meeting and “rules of the game” • Assurance on confidentiality • Introduction of respondent/moderator
Introduce the discussion Reveal and understand the respondent’s perception on their day-to-day life
2. WARM UP (10 MIN) • Which are the first thoughts/ ideas that come into your mind when you think of your
day to day life? • Which are the things you like in your day to day life and would not change? Why? • But which are the things you do not like in the day to day life and would like to
improve? Why is that? For FGs conducted in small towns and rural area, ask: • I told you in the beginning of the discussion that I am not from around here and I am
curious to learn a few things about the place you live in. How is life in in this town/village? What are the things you like about it? Why? But which are those you dislike about it? Explain.
• In Tsunami hit areas ask how they have cope with life since the disaster and the degree of support they have received.
• How would you like your life to be in 3- 5 years from now on?
Understand the unexpected shock/ risk affecting them. Identify the shock management procedure
3. ASSESSMENT OF CRISIS SITUATIONS AND NEEDS (40 MIN) 3.1 Risk list
ICROINSURANCE – DISCUSSION GUIDE OUTLINE TARGET: LOW-INCOM
• Thinking about your life/ your children’s life, in general, which would be the
moments when you/ they would need a large amount of money? Check for long term perspective as well. • Why then? Explain • Can you think back, were there any moments in your life when something
unexpected happened and you needed a large amount of money for it? What happened? Please give me examples from your own experience or acquaintances’ experience of situations when something unexpected happened and you needed a large amount of money to solve the problem? Write down on cards all risks mentioned by the respondents.
3.2 Ranking of risks impact on family life • I wrote down each risk mentioned by you in this discussion. I would now like you to
indicate against each risk the following: o Frequency with which these events occurred o How difficult was it for you to get the necessary amount of money o How important was it for you to have/to get the money in that
particular moment (e.g. imminent surgery/child birth/funeral expenses etc):
For each of the categories done ask them to clarify if they have ranked two or more risks as being equally important For the insurable risks ask: • Did these situations have any effect on you/your family members in any way or
not? In what way? Explain. Prompt about health, property, life risks, funeral expenses, educational support etc.
3.3 Risk management strategies• How one can get the money in case of emergency? • What can be done to get the necessary money? • In time of your emergency how much money was required? • What did you do? Who did you go to? • Did you get the money straight away or with difficulties? • How did it make you feel? Explain.
44
• With this experience do you have any plan how you would cope with such
surance and saving iscussion: - Awareness - Attitudes towards
each of them - Reveal potential
NSURANCE, SAV DISCUSSION (60 MIN).
so far, do you think is there any way you could What ways?
by saying…. ld about ‘saving’ and ‘insurance’. Do you think that
rder to have money when something unpredicted happens? Why do you say so? Explain.
I
emergencies in the future?
Ind
barriers
4. I INGS AND LOAN • Considering all you have said
anticipate these problems and be prepared for them, in terms of money?If not mentioned spontaneously, prompt on: saving and insurance
• In other groups I have been tothese could be alternatives for you in o
.1 nsurance4
4.1.1 Awareness • Are you aware of any insurance products? How did you hear about this product?/
e Where from? Are there different types of insurances? Explain. Do any of you havor had insurance? Do you know somebody who has/had insurance? What do theyknow about it?
•
1on: gender, age,
m rson? Explain.
ce providers awareness know n
l insurers;. nce providers
insuring with any one of these? Which one? Why? insure with any one of these? Which one? Why?
4.1•
didn’t you/they continue with the policy? Explain. ll come to an end, will you/they renew it?
4.1.6 Trial po
Non-users• In whi
ast/current us
your particular needs and preferences, how
pay the premium? y (linked to
o the agent?
1.4. 2 Benefits and drawbacks
• From what you know or heard about insurance(s), do you think it has any advantages? What are they? Why do you think these are advantages? What about drawbacks, do you think insurance has any? What are they? Why do you say that?
.3 Stereotype policyholder 4.
In your point of view, who should be insured? What kind of pers•arital status, lifestyle, financial situation etc.? Why this pe
4.1.4 Insuran• Are you aware of any organisations offering insurance products? What do you
about these organisations? How do you know about them? Check perception olocal versus internationainsurance company versus NGOs/MFIs;
Understand the level of trust in the insura• Would you consider
Would you refuse to• :
.5 Usage If answer to 4.1.1 was yes: What made you/them to buy insurance? Explain. What type of insurance did/do you/they have? Why this one? On what basis you/they selected it? Have you/they ever received any benefits? Explain.
o Past users: why o Current users: when it wi
Why? • If answer to 4.1.1 was not: Why? What are the main reasons for this?
tential : ch circumstances would you see yourself taking out insurance?
ers P• In which circumstances would you see yourself taking out insurance again? Non-users/ Past/Current users If the insurance was to be adapted to •
should it be? • Returning to the risk discussion, which of the risks revealed in this discussion
would you like to insure? Why?
4.1.7 Premium payment Non-users:
e to• If you were to take insurance, how would you likWeekly? Monthly, Quarterly? Half-yearly? Yearly? Seasonallcrops/selling of livestock).
• How would you like to pay the premiums? At the office? T
Past/current users
45
• ld you see yourself taking out insurance again? • How are paying/paid your premiums? Weekly? Monthly, Quarterly? Half-
livestock) • Would you like to see any change in the payment method or frequency?
4.2
In which circumstances wou
yearly? Yearly? Seasonally (linked to crops/selling of
• How did you pay the premiums? At the office? To the agent?
Saving discussion
1 Benefits and drawbacks Are there any advantages or disadvantages in saving
4.2.• money? What are the
advantages? What are the disadvantages?
ey saver
4 2• f any place where the savings could be kept? What is your opinion
n on banking market.
se to put your savings in any of them? Which one? Why?
• •
ould you refuse to put your savings in any of them? Which one? Why?
ame any Thrift & Credit Co-operative Societies in your village/town/town
• r
• Would you t • Which one• Would you efu t your savings in any of them? Which one? Why?
Can you name any Samurdhi in your village/town/town near you? How can they generate your trust it? Why?
• ut your savings in Samurdhis? • put your savings in any of them? Which one? Why?
4.2•
rpose for which you save or not? Explain. Please explain how you
mstances will you use the money (check for crises situations as well)? Do keep your savings in a bank? Why?
n.
4.2.5 SNon Will you consider saving money in the future? When? Why? How?
4.2
4.2.2 Stereotype mon• In your opinion, what kind of person saves money: gender, age, marital status,
lifestyle, financial situation etc.? Why do you say that? Explain.
3 Banking/CBO/Other Organisations market Are you aware oabout these? Check for perceptio
• Can you name any bank in your village/town/town near you? • Do you trust banks? How can they generate your trust it? Why?
Would you put your savings in banks? • • Which one? Why?
Would you refu• • Can you name any CBOs in your village/town/town near you? • Do you trust CBOs? How can they generate your trust it? Why?
Would you put your savings in CBOs? •• Which one? Why? • Would you refuse to put your savings in any of them? Which one? Why?
Can you name any Post Offices in your village/town/town near you? Do you trust a Post Office? How can they generate your trust it? Why?
• Would you put your savings in a Post Office? • Which one? Why? • W • Can you n
near you? Do you trust a Thrift & Credit Co-operative Society? How can they generate youtrust it? Why do you say so?
pu your savings in a Credit & Co-operative Society? ? Why? r se to pu
•• Do you trust a Samadhi?
Would you pWhich one? Why?
• Would you refuse to
.4 Usage Do you save money?
o If yes: What made you decide to save money? Is there a specific pudo it: when do you save (monthly, irregularly)? What amounts of money? In what circu
Explai o If not: Why not? What were the main reasons for this?
aving potential -users:
•
.6 Proximity
46
• dec you prepared
t
.3 Extra cash - Insurance
Does distance to the place where yu keep your savings play any role in your ision to keep savings with them? In what way? Then, how far are
to ravel to a place to deposit your money?
4 tra cash at any time? When does this happen?/ What does it
depend on? What do you do with the extra cash? What are your priorities at this abits and priorities.
?
y
• Do you have any ex
moment? Probe for saving h• To what extent would you be interested in buying insurance with the extra cash
Explain. Probe for interest in insurance 4.3 Loan and Potential Liabilit
4.3an from a bank, CBO, Thrift Credit , pawn shop, relations or any other
• orrower dies with an bility.
assets to payoff
other way how this outstanding balance could be paid off by
If the borrower had an life insurance, would it have been easier on the family of the
in your household stood guarantee or surety for anyone who ative
Society, Samurdhi, money lender, pawn shop, relations or any other organisations? arantor
tential
a situation or do you know of anyone who had faced such a
If the borrower had a life insurance, wouldn’t it be less pressure on the guarantor?
Concept evaluation in terms of: - spontaneous reactions - understanding - relevancy - distinctiveness - stereotype user - trial potential - improvement areas
5. I TERN
e?
? e? Internal?
• What wou o• Under LKR 1,0• LKR 1,001 to 2• LKR 2001 to 3• LKR 3001 to 4• LKR 4001 to 5,000? • LKR 5001 6
ure pattern
enditure?
.1 Loan and Liability
• Have you or anyone in your household taken a lo& Co-operative Society, Samurdhi, money lenderorganisations? Check for small or large amounts. Do you know what will happen to the household if the boutstanding loan balance? Check for awareness of potential lia
• Did you or do you know of anyone who had to sell off householdsuch an outstanding loan?
• Do you know of anythe family after the death of borrower?
•deceased borrower to pay off the outstanding loan?
4.3.2 Potential Liability • Have you or anyone
has taken a loan from a a loan from a bank, CBO, Thrift Credit & Co-oper
• Do you know that if the borrower dies leaving an outstanding loan, the guwill be asked to pay the balance outstanding? Check for awareness of poliability.
• Have you faced suchsituation?
•
NCOME AND EXPENDITURE PAT
5.1 Main bread winner
• In your household who is the main bread winner? Are there more than one bread winners in your household? •• Do you pool all your earnings together and spend out of it? 5.2 Source of income
main source of incom• In this region what is the• Employed? Self-employed? What kind of activities? Agriculture: Fishing? Skilled labour•• Remittanc 5.3 Level of ea inrn gs
ld y u say is the general level of earnings in this area? 00? ,000? ,000 ,000?
to ,000? • Over LKR 6,000? 5.4 Expendit• How much do you normally spend each month? • What is your most important exp• What is the next important expenditure? • Next important?
47
• •
Concept evaluation in terms of: - spontaneous reactions - understanding - relevancy - distinctiveness - stereotype user - trial potential - improvement areas
N) A E
RES
.1 SPONTANEOUS REACTIONS
/ THOUGHTS THAT CAME INTO YOUR MIND WHEN YOU HEARD THE PRESENTATION?
UGHT YOUR ATTENTION? WHAT? WHY? IS THERE
6.2
•
6.3 ELEVANCY
• SURANCE PRODUCT?
• HICH WOULD THEY BE? WHY DO YOU CONSIDER THESE AS DISADVANTAGES? EXPLAIN.
IN YOUR OPINION, WHAT KIND OF PERSON WOULD BUY THIS PRODUCT? GENDER, AGE,
MARITAL STATUS, LIFESTYLE, FINANCIAL SITUATION ETC? WHY THESE PERSONS? WHAT ?
? WHY DO YOU SAY SO? OULD YOU BE TEMPTED TO GET INSURED? WHY DO YOU SAY SO?
T THIS INSURANCE
HY?
Nest important? Least important?
6. CONCEPT EVALUATION (60 MIPL CE THE ONE OF THE INSURANCE CONCEPTS (DA, DB, DC, DD) WITH EACH OF TH
PONDENTS AND READ IT ALOUD.
EVALUATE:
6• WHAT WERE THE FIRST WORDS/ IDEAS
• IS THERE ANYTHING THAT CAANYTHING YOU PARTICULARLY LIKED/ DISLIKED FROM THE PRESENTATION?
UNDERSTANDING • WHAT IS THIS PRODUCT ABOUT? WHAT DOES IT PROVIDE TO ITS USERS?
IS THERE ANYTHING UNCLEAR? WHAT?
BENEFITS PERCEIVED AND R• WHY DO YOU THINK SUCH A PRODUCT WAS DESIGNED? EXPLAIN.
WHAT WOULD BE THE BENEFITS OF THIS IN• ARE THESE BENEFITS RELEVANT TO YOU? WHICH? WHY IS THAT?
DOES THIS INSURANCE HAVE ANY DISADVANTAGES? W
6.4 DISTINCTIVENESS • IS THIS INSURANCE CONCEPT DIFFERENT FROM WHAT YOU KNOW/ HAVE HEARD/ USE OR
FROM PREVIOUSLY MENTIONED COPING STRATEGIES? - IF YES: IN WHAT WAY DO YOU FIND IT DIFFERENT? EXPLAIN. - ARE THERE ANY ADVANTAGES/ DISADVANTAGES? WHICH WOULD
THEY BE? WHY DO YOU SAY SO? - IF NOT: WHAT ARE THE COMMON CHARACTERISTICS IT SHARES WITH
THE OTHERS? EXPLAIN.
.5 TARGET STEREOTYPE AND TRIAL POTENTIAL 6•
MOTIVATES THESE PERSONS TO BUY IT WHO WOULD NOT BE TEMPTED TO BUY IT•• WHAT ABOUT YOU? W
EXPLAIN. 6.6 IMPROVEMENT AREAS IS THERE ANYTHING YOU WOULD CHANGE/ADD/ IMPROVE ABOU•
PRODUCT? WHAT? WTOTAL: 3 HOURS
48
ANNEX: 3 QUANTITATIVE SURVEY TOOL FO MITARGET: LOW-INCOME GROUP IN TAR
R CROINSURANCE – DISCUSSION GUIDE OUTLINE GET AREA; METHODOLOGY: FACE TO FACE
(the questionnaire to be administered with respondent starts on the next page) Basic information (to be terviewer af Addre t: _________Name ________ __ Q1. Interview number: I____II_
Q2. Interviewer number: I_________I
Q3. Interviewer name: ______________________________
Q4. Date (dd/mm/year) of the interview
Q5. Province:
Q6. District:
Q7. Name of location: ______ ______
Q8. Interview lasted: I_______I minutes Introduction
filled out by the in ter the interview)
ss of the respond of the responden
en _____________________________________________ __________________________________________ t: ___ _
___II____I
: / / /
_______________
INT.: READ: „Good morning / good evening. My name i the research for the Cambridge Consultancy Company. I w ul you face and activities you are engaged in. In addition, I would like insurance. All the gathered information will be combi d wopportunities to develop adequate insurance services for you. Please remember ers are confidential and are used in the statistical tables. Please also remember honest opinions are important for us.”
s … and I work as an interviewer for ……………. We are conductingo d like to ask you some questions about you, your household, risks
to discuss your household needs for financial services, and especiallyne ith the information from other respondents and used to analyze
your answ there are no right or wrong answers and only your
49
Household composition INT.: READ: To start with I would like to talk with you about your household. As the household we define all the people living in the same place and sharing expenditures for food. We would like to talk about all the household members who are supported by household budget. This includes your child (who temporarily absent for short-period of time. It also includes your dependent parents and other relat
ren and their spousions living with yo
es u.
and
children your grandchildren). It also includes any household members
INT.: FIRST ASK ABOUT THE HEAD OF THE HOUSEHOLD (ID = 1, INPUT IN THE FIRST h e hou LINE) = the person who brings t e biggest income to th sehold. ASK FOR EACH MEMBER SEPARATELY. MARK ONLY ONE CODE IN EACH CELL. the questions from A7 t e to cho A8 do s not apply ildren
below 16 years old A1. ID
Please give names of all your household members. INT.: WRITE A NAME.
A2. Relation to the household head 1 – household head 2 – spouse / partner 3 – child 4 – parent 5 – grandchild 6 – other person
A3. Gender 1 – male 2 – female
A4. Age ENTER AGE OF EACH PERSON IN YEARS ONLY
A5. Perdisability(loss of aarm, leg, 1 – Yes 0 - No
ff g m a ma) or e i illness n etes, ta e, s D IV).
atus
g
er)
u n de
s lit ada to
eeh o /unive
manent n eye, etc.)
A6. Suchronicany oth(e.g. caheart athepatiti 1 – Yes0 - No
A7. 1 – s2 – mwith 3 – sdivor
A8. 1 – 2 – 3 – 4 – 5 – 6 –
erin(e.g. r sercer, ck, s
, AI
froasthous
diabtrokS/H
Mari
inglearria paeparced
4 – widow(
tal st
ed / lrtnerated
Ed
no up GrGCA Lhig
catio
chooo Grde 6E/O Lvel er (c
gra
ng e 5 9 vel
llege
completed
rsit
ivin /
y)
1 1 2 3 4 5 6 1 2 0 0 3 2 5 1 1 1 2 4 1 3 4 6
2 1 2 3 4 5 6 1 2 0 0 3 4 2 5 1 1 1 2 1 3 4 6
3 1 2 3 4 5 6 1 2 0 0 3 4 2 3 5 1 1 1 2 1 4 6
4 1 2 3 4 5 6 1 2 0 0 3 4 2 3 5 1 1 1 2 1 4 6
5 1 2 3 4 5 6 1 2 0 0 1 1 2 3 4 2 3 5 1 1 4 6
6 1 2 3 4 5 6 1 2 0 0 1 1 2 3 4 2 3 5 1 1 4 6
7 1 2 3 4 5 6 1 2 0 0 1 1 2 3 4 2 3 5 6 1 1 4
8 1 2 3 4 5 6 1 2 0 0 1 1 2 3 4 2 3 5 6 1 1 4
50
B. Risks and risk management strategies INT.: FIRST IDENTIFY ALL RISKS GOING THROUGH THE LIST AND THEN ASK NEXT QUESTIONS REGARDING EACH RISK THAT HAPPENED.
B1. Have any of the
following risks
members in the last 3 years (since 2003 till today)?
happened to you or other household
MARK A ODE IN CEACH RO
it happened in your
today)?
B2. How many times has
W
household during the last 3 years (since 2003 till
ENTER THE NUMBER OF TIMES 99 – hard to say (do not r d)
evaluate the general impact of the risk itself and using coping mechanisms on your household economicB3. How would you
standard of living?
ea
READ CODES AND SHOW A CARD # 1- no influence 2- decreased slightly 3- decreased significantly
eas4 – decr
ed dramatically
99 – hard t
B4. Which of the risks was the most difficult to cope with (generated the
est financial pressure) in the last 3 years?
o say (do not read)
high
(TICK THE CATEGORY)
1 – yes 0 -no Disability/death
A A ouseholeading to temporary 1 0 2 3 4 ccident of h ld member
disability 1 99
B Accident of householeading to ermanent di 1 1 3 4 ld member
p sability 0 2 99
C Death (n al) 1 1 3 4 atur 0 2 99
D Death (accidental/unexpected) 1 0 1 2 3 4 99
E Death of breadwinner 1 3 4 0 1 2 99
Health
F Minor illn ss of househ 1 1 3 4 e old members 0 2 99
G
Illness of household member requiring hospitalizationemergency service and surgical treatment
1 3 4 and/or 0 1 2 99
H Illness of household mehospitali tion and/or emergservice and therapeutic treatment
1 3 4 mber requiring
ency za 0 1 2 99
I Illness of household member (without hospitalization, but needed visit to a doctor)
1 0 1 2 3 4 99
Property
J Damage to property (due to forces out of the control of respondent, e.g. Tsunami, flood, fire.)
1 0 1 2 3 4 99
K Theft of property (household or business assets) valued more than SLR
1 0 1 2 3 4 99
51
5,000.
Other
L Bad weather conditions affecting agricultural production 0 1 1 2 3 4 99
M Livestock disease 0 1 1 2 3 4 99
52
B5. INT: Take the risk identified in Column B4 above and ask the question relating to that risk. B6. INT: From the Table READ THE COPING MECHANISMS AND GIVE A CARD TO HIM/HER
Each mechanism has to have a specific ranking (number). Use relative ranking: from 1 – helped the most; 2
– less than 1; 3 – less than 2, etc. Code all mechanisms used in the right column below.
Coping mechanisms (CARDS) B5. How have you managed to find money to cope with the risk last time
it happened? (tick)
B6. which of the coping mechanisms mentioned in B5 generated the biggest share of money to cover
expenses related to the risk (code according to ranking)
0. coping action (i.e. glecting the illness, not re-ilding the stolen assets, etc.)
Nonebu
1. surance In
2. ing own funds, depleting savings, etc.
Us
3. Selling animals, fruits and other stored agricultural products (including barter arrangements)
4. Getting additional job (or working more)
5. Going abroad for work
6. Donation from relatives, friends and private persons
7. Grants from Government, Samurdhi, NGO, CBO,
8. Getting assistance from the employer (packages and informal help)
9. relatives and friends
Borrowing without interest from
10 rrowing with interest from relatives/friends
. Bo
11. Using rotating saving associations
12 rrowing from CBO . Bo
13. Borrowing from banks
14. Borrowing from moneylenders.
15. Pledging household assets in pawnshops (including jewellery, household consumer durables, etc.)
16. Selling household assets ncluding jewellery, household nsumer durables, land, nsport vehicles, house, etc.)
(icotra
17. Other ______________
18. Other ______________
53
Insurance – knowledge and use C1. What insurance products do you know or have heard about? INT. PLEASE CIRCLE THE MENTIONED RESPONSES. DO NOT READ OUT THE LIST TO THEM. WHEN YOU GET THE FIRST ANSWER PROBE FOR THE NEXT UNTIL THE RESPONDENT CANNOT RECALL ANY OTHER. 0 Do not know any of insurance products
A Health
B Disability (accident)
C Life
D Funeral, burial
E Property – houses, business assets
F Agricultural – crop, livestock
G accidents Insurance for Fishermen – boat, nets,
H Educational Support
I es, specify______________ Other polici C2. Ha your household members had insurance during the last 15 years?
ve you or any of
0 – no GO TO QUESTION C3 1 – yes GO TO QUESTION C4 , used to have 2 s GO TO QUESTION C4 – ye , have now 99 a GO TO QUESTION C4 AND PROBE IN CASE IT REVIVES – h rd to say (do not read)
MEMORY; IF IT DOES NOT REVIVE GO TO C6. C
3. Why not?
THIS IS A MULTIPLE ANSWER QUESTION. DO NOT READ CODES – THIS IS A SPONTANEOUS ANSWER (I UST” PLEASE ASK WHY AND CODE RELEVANT ANSWER F THERE IS GENERAL RESPONSE “NO RTB UESTION C6. ELOW). AFTER THIS QUESTION GO TO Q CODES 1 ave enough information / do not know how it works - never heard of insurance / do no ht 2 - I ce / nobody approached me do not know where to find insuran3 th ace where I live - ents/offices are too far from the ple insurance ag4 – think nothing serious w happen to my family or me – we have not needed insurance I ill5 - m t needed insurance because we can manage problems ourselves y household has no6 price is too high / I have other priorities - insurance is too expensive for me /7 - current terms and conditions do not suit me 8 realize claim - heard it is a long / difficult proce s tos9 - no urer - heard that insurers do not pay (manipulate with conditions, etc.) trust in ins1 companie – they can go bankrupt o run away stealing my money 0 - no trust in insurance s r1 ance will work because 3rd party (e.g. hospital) may not to accept it 1 - I am not sure if insur1 bo t insurance. 1 ance agent I would have bought insurance.
2 – I do not have time to think a u3 - if I were approached by an insur
14 - _______ OTHER: _________________99 – ha
rd to say (do not read)
GO W THE ITH RESPONDENT THROUGH LIST.
C4. What was the type of policy you or any of your family members had in the last 15 years or you have now? 0 - no 1 – yes
C5. Who has paid for it?
0 – somebody else (e.g. employer)
1 – policyholder (I or any of family members)
54
A Health 0 1 0 1
B Disability (accident) 0 1 0 1
C Life 0 1 0 1
D Funeral, burial 0 1 0 1
E P 0 1 0 1 roperty – houses, business assets
F Agricultural – crop, livestock 0 1 0 1
G In – boat, accidents 0 1 0 1 surance for Fishermen
H Educational Support 0 1 0 1
I O y______________ 0 1 0 1 ther policies, specif C6.
Could ating in your area? (From top of mind; don’t prompt) you tell me names of insurers oper
IF NOT D GO TO SECTION D ________________
1. 2. 3. 4. 5. 6.
10.
ests
ABLE TO MENTION ANY PLEASE PUT ‘0’ AN
7. 8. 9.
D. Product Concept TINT: READ: Now surance product concepts a I would like nd ask similar set of questions about each one. Please analyse each concep somebody offered you only one product.
to show you 4 int separately as if
Int. ROTATE CONCEPTS If you started the previous interview with DA; start this one with DB and then do DC, DD, DA and so on. Mark the order in which the concepts were introduced, by putting 1, 2, 3, 4. DA – Health DB – Funeral/Burial
DC – Life DD – Property
55
DA. Health insurance concept test INT. READ: I ou about health insurance. Buying health e is one way to protect yo om financial shocks rela to ted by an accident or sudden (not prolong yourself or to an of your family. For yours of the family members you would like to insure you pay um every month or once you or your family me er n accident, you will get cash benefit from the insurers to cover health care costs ertain limit. You can get most of it and ead the concept of a health insur you, and then I e to ask for your opinion a t it
would like to talk to y the health care costs crea
insuranced) illness to
urself fry members ted
elf and each a fixed s a year. Ifmb s get ill or have a
not the full amount. I will rup to a cwould likance product to
bou . HAND OUT THE CONCEPT AND READ IT LOUDLY WITH RESPONDENT. DA1. Would yo points: AND SHOW A CARD #
at all
Not satisfactory tory Fully
satisfactoray
u be happy with the policy on the followingNot satisfactory
READ CODES
Satisfac y Hard to s(do not read)
A. Coverage (w 2 3 4 99 B. Benef (m 2 3 4 99 C. Price you pay) 1 2 3 4 99
hat risks it covers) 1 oney you receive) 1 it
(money DA2. How willing would you be to buy this product?
READ CODES AND SHOW A CARD # 1 – definitely not willing – GO TO DA4 2 – rather not wiling – GO TO DA4
When answering use the scale presented on this card (INT. READ 3 – rather willing - GO TO DA3 4 – definitely willing - GO TO DA3 POSSIBLE ANSWERS).
99 – hard to say (do not read) - GO TO NEXT CONCEPT
DA3. How ma e le in your household would you like to insure? (including resp e )
ny p opond nt
WHEN DONE O NEXT CONCEPT
[___
GO T
__] 99 – hard to say (do not read)
DA4. ASK Why are y
ONLY THOSE NOT WILLING TO BUY
ou not willing to buy?
INT.: THIS IS A SPONTANEUOS QUESTION. DO NOT READ ANSWER
I do not need this insurance I had bad experience with insurance
benefit (loosing money)
price (premium) frequency of premium payment OTHER: …………………....
I do not trust insurers coverage benefit (amount)
claim processing provider proximity S.
99. hard to say (do not read) DA5. ASK ONLY THOSE WHO MENTION PRICE AS A 0 – it will not change my decision – GO TO DA6 REASON If you think the price is too high, if the premium is lowered by LKR 50 per month would you buy the product?
1 –I might reconsider my decision – GO TO NEXT CONCEPT 2 – I would be willing to buy it - GO TO NEXT CONCEPT 99 – hard to say (do not read) - GO TO DA6
DA6. How much would you be prepared to pay for this insurance?
0 – No, I am not interested at all Yes, the price is [_____________] LKR per month
56
DB. Funeral/Burial insurance concept test INT. READ: I would like to talk to you about funeral/burial expenses insurance. Buying such an insurance is one way to protect yourseand members of your family from financial shocks related to expenses relating to funeral and expenses. For yourself and each of the family members you would like to insure, you pay a fixed fee once a year. If you or your family members die during the year, you will get a ficash benefit payment from the insurers. I will read you a concept of a disability insurance product, and then I would like to ask for your opinion about it.
lf
xed
HAND OUT THE CONCEPT AND READ IT LOUDLY WITH RESPONDENT. DB1. Would you be happy with the policy on the following points: READ CODES AND SHOW A CARD #
actory tory say Not satisfactory at Not Satisfactory Fully Hard to
all satisf satisfac (do not read) . Coverage (what risks it covers)
A 1 2 3 4 99 B. Benefit (money you receive) 1 2 3 4 99 C. Price (money you pay) 1 2 3 4 99
READ CODES AND SHOW A CARD # DB2. How willing would you be to buy this product? When answering use the scale presented on this card (IN
1 – definitely t willing – GO DB4 no TO2 – rather not wiling – GO TO DB4
T. READ POSSIBLE ANSWERS).
3 – rather willing - GO TO DB3 4 – definitely willing - GO TO DB3 99 – hard to say (do not read) GO TO NEXT CONCEPT
DB3. How many people in your household would you like to insure? (including respondent) WHEN DONE GO TO NEXT CONCEPT
____] [_99 – hard to say (do not read) I do not need this insurance
urance
oney)
ium)
ium payment
I had bad experience with insI do not trust insurers coverage benefit (amount) benefit (loosing mclaim processing provider proximityprice (premfrequency of premOTHER: ………………….... 99. hard to say (do not read)
DB4. ASK ONLY THOSE NOT WILLING TO BUY
hy not willing to buy? W INT: THIS IS A SPONTANEUOS QUESTION. DO NOT READ ANSWERS.
DB5. ASK ONLY THOSE WHO MENTION PRICE AS A REASON If you think the price is too high, if the premium is lowered by LKR 5 per month would you buy the product?
0 – it will not change my decision – GO TO DB6 1 –I might reconsider my decision – GO TO NEXT CONCEPT 2 – I would be willing to buy it - GO TO NEXT CONCEPT 99 – hard to say (do not read) - GO TO DB6
DB6. How much would you be prepared to pay for this insurance?
0 – No, I am not interested at all Yes, the price is [_____________] LKR per month
57
DC. Life insurance concept test INT. READ: I would like to talk to you about life insurance. Buying life insurance is one way to protect members of one’s family from financial shocks related to the death of yourself or another family members. For yourself and each of the family members you would like to insure you pay a fixed fee every month or once a year. In the event of your death or death of one of the family members, the insurer will pay a cash benefit to you or your family. I will read you a concept of a new life insurance product, and then I would like to ask for your opiniabout it.
on
HAND OUT THE CONCEPT AND READ IT LOUDLY WITH RESPONDENT. DC1. Would you be happy with the policy on the following points: READ CODES AND SHOW A CARD #
all y Not satisfactory at Not
tory satisfac Satisfactory Fully tory satisfac
Hard to sa(do not read)
s) 1 2 3 4 99 ive) 1 2 3 4 99
99
A. Coverage (what risks it coverB. Benefit (money you receC. Price (money you pay) 1 2 3 4
READ CODES AND SHOW A CARD # DC2. How willing would you be to buy this product? When answering use the scale presented on this card (INT. READ POSSIBLE ANSWERS).
1 – definitely not willing – GO TO DC4 2 – rather not wiling – GO TO DC4 3 – rather willing - GO TO DC3 4 – definitely willing - GO TO DC3 99 – hard to say (do not read) GO TO NEXT CONCEPT
DC3. How many people in your household would you like to insure? (including respondent) WHEN DONE GO TO NEXT DC7
[_____] 99 – hard to say (do not read)
DC4. ASK ONLY THOSE NOT WILLING TO BUY Why not willing to buy? INT: THIS IS A SPONTANEUOS QUESTION. DO NOT READ ANSWERS.
not need this insurance perience with insurance
rs
efit (amount) it (loosing money)
ssing
1. I do 2. I had bad ex3. I do not trust insure4. coverage 5. ben6. benef7. claim proce8. provider 9. proximity 10. price (premium) 11. frequency of premium payment OTHER: …………………....
99. hard to say (do not read)
DC5. ASK ONLY THOSE WHO MENTION PRICE AS A REASON
LKR 50 per month would you buy the product? If you think the price is too high, if the premium is lowered by
0 – it will not change my decision – GO TO DC6 1 –I might reconsider my decision – GO TO NEXT CONCEPT 2 – I would be willing to buy it - GO TO NEXT CONCEPT 99 – hard to say (do not read) - GO TO DC6
DC6. How much you would be willing to pay for this insurance?
0 – No, I am not interested at all Yes, the price is [_____________] LKR per month
58
DD. Property insurance concept test. INT. READ: I would like to talk to you about property insurance. Buying property insurance is a way to protect yourself from financial shocks related to the loss (theft, fire, etc.) of your household or business assets. For all the assets you would like to insure you pay a fixed fee, being a proportion of their current market value, every month or once a year. In the event of asset loss, the insurers pay a cash benefit or replace the asset. I will read you a concept of a new insurance product, then I would like to ask for your opinion about it. HAND OUT THE CONCEPT AND READ IT LOUDLY WITH RESPONDENT. DD1. Would you be happy with the policy on the following points: READ CODES AND SHOW A CARD #
sati y Satisfactory sa y to say Not satisfactory at Not Fully Hard
all sfactor tisfactor (do not read) A. Coverage (what risks it covers) 3
1 2 4 99 B. Benefit (money you receive) 1 2 3 4 99 C. Price (money you pay) 1 2 3 4 99
READ CODES AN 1 – definitely not willing – GO TO D D42 – rather not wiling – GO TO DD4 3 – rather willing - GO TO DD3 4 – definitely willing - GO TO DD
D SHOW A CARD # DD2. How willing would you be to buy this product? When answering use the scale presented on this card (INT. READ POSSIBLE ANSWERS).
3 99 – hard to say (do not read) END HERE
DD3. What is the value of the assets you would like to insure? WHEN DONE GO TO NEXT CONCEPT
[_____] 99 – hard to say (do not read)
DD4. ASK ONLY THOSE NOT WILLING TO BUY
hy not willing to buy? WINT.: THIS IS A SPONTANEUOS QUESTION. DO NOT READ ANSWERS.
1. I do not need this insurance 2. I had bad experience with insurance 3. I do not trust insurers 4. coverage 5. benefit (amount) 6. benefit (loosing money) 7. claim processing 8. provider 9. proximity 10. price (premium) 11. frequency of premium payment OTHER: …………………....
99. hard to say (do not read)
DD5. ASK ONLY THOSE WHO MENTION PRICE AS A REASON And if the premium is lowered by LKR 25 per month would you buythis policy?
0 – it will not change my decision – GO TO DD6 1 –I might reconsider my decision – GO TO NEXT CONCEPT 2 – I would be willing to buy it - GO TO NEXT CONCEPT 99 – hard to say (do not read) – GO TO DD6
DD6. How much would you be willing to pay for this insurance? What if the premium can be paid monthly?
0 – No, I am not interested at all Yes, the price is [_____________] LKR per month
59
E. Concept test summary E1. If the services that we have just talk about are delivered at your door step will you be willing to buy it? 0 – No; 1 – Yes; 99 – hard to say (do not read) DA – Health 0 1 99 DB – Funeral or Burial 0 1 99 DC – Life 0 1 99 DD – Property 0 1 99 E2. How would you like to pay the premi 1 = M arterly; 3 = Half-year
f all the concepts willingness to b them.
um? onthly; 2 = Qu ly; 4 = Yearly E3. Combined analysis o and uy ASK ONLY THOSE WILLING TO BU T LEAST TWO PRODUCTS
ducts he/she in the concept
espo oducts she/he is
2. Ask a question: can you afford to buy all of th In the last row tick 1 for the products the respondent wants to buy.
eral/Burial DC - Life DD - Property
Y ASummarize with the respondent which pro(definitely or rather willing to buy).
was willing to buy at prices as stated
1. Calculate total costs per month if a r ndent decides to buy all the pr
interested in. em? If not which will you pick as priority?
DB – FunProduct concept DA – Health
Willing to buy 1 – Yes 0 - No 1 – Yes 1 – Yes
0 - No 1 – Yes
0 - No 0 - No
Cost for respondent LKR 144 per family/pm
LKR 14 per fper month
LKR 72 pm for LKR 0
amily LKR 273 pp/pm 100,00
Decision on buying 0 - No 1 – Yes
0 - No 1 – Yes Yes
0 - No 1 – Yes
0 - No 1 –
F. Attitude towards insurance
ther disagree
I rather agree
I strongly agree
Hard to say I strongly I ra
disagree F1 The insurance agents are too far from where I live. 2 3 4 99 1 F2 I would need more information about insurance. 4 99 1 2 3
F3 Insurers are not stable financially and can go bankrupt easily. 3 4 99 1 2
F4 When somebody is insured he/she can live without w 3 4 99 orry. 1 2 F5 I don’t trust insurers. 1 2 3 4 99
F6 It does not make sense to insure as nothing serious wi 99 ll 1 2 3 4 happen to my family or me.
F7 Insurers do not pay benefits (manipulate with conditi oetc.). 4 99 ns, 1 2 3
F8 Insurers are socially useful. 3 4 99 1 2 F9 Insurance is a waste of money. 1 2 3 4 99 F10 Insurance is a standard service in a civilized world. 4 99 1 2 3 F11 I do not have time to think about insurance. 1 2 3 4 99
12 Insurance is expensive. 1 2 3 4 99 F
13 It does not make sense to insure because we can manage problems ourselves. 1 2 3 4 99 F
14 Insurance is only for rich people. 1 2 3 4 99 FF15 I will buy a policy if I am approached by an agent. 1 2 3 4 99 F16 Having insurance is prestigious. 1 2 3 4 99
17 It is a long / bureaucratic process to realize a claim. 1 2 3 4 99 F
60
Financial practices I strongly I rather I rather
disagree disagree agree I strongly agree
Hard to say
G1 emergBorrowing money is the only tool to respond to
ency situations. 4 99 1 2 3
G2 yearIt is worth to plan my household finances for the next 5
s. 1 4 99 2 3
G3 Nowadays, everybody can save at least small amounts. 1 4 99 2 3 G4 Borrowing from relatives and friends is shameful 1 2 3 4 99 G5 Saving money is a way to build financial stability. 1 2 3 4 99 G6 Banks are unreliable. 1 2 3 4 99 G7 CBOs are unreliable. 1 2 3 4 99 G8 Post offices are unreliable. 1 2 3 4 99 G9 Credit Thrift & Co-operatives are unreliable. 1 2 3 4 99 G10 Samurdhis are unreliable. 1 2 3 4 99 G11 t 99 I makes sense to save for emergencies. 1 2 3 4 G12. Do amily members put from time to time some money aside to meet some future expenses (not curre
you or any of your fnt)?
2 – Y oes, ften GO TO G13 1 – Y s, be ut rarely GO TO G13 0 – No GO TO QUESTION G14 99 – refuse to answer (do no QUE
e usual amount of money you ma ut aside yearly
t read) GO TO STION G14 G13 What is th nage to p ? READ CODES ANDUnder LKR 1,000
A CARD # LKR 1 1 to 3 3
SHOW 1 ,000 to 2,000 2 LKR 2,00 ,000
LKR 3,001 to 4,000 4 LKR 4 ,000 LKR 5,001 and 6 ,001 to 5 5 over 99 – refuse to answer (do not read)
ny types of account now t s rm deposit with Bffice BO , Credit Thrift & Co-operative Society)?
oes
G14. Do any of you family members have a (e.g. curren avings, te ank, Post O , C0 – n 1 – y 99 – h
n
ard to say (do not read) Loa s
G15. H from a
1 – y 0 –no
ave you or any of your household members taken a loanny of the following sources in the last 3 years?
es A CBOs, 1 0 B C ety 1 0 redit Thrit & Co-operative SociC S 1 0 amurdhi D B 1 0 ank E P 1 0 rivate money lender / pawnshop F R 1 0 elatives, friends, neighbors, roata
G16. A household re you or any of yourmembers repaying any loans now? 1 – yes – GO TO G17 0 – no - GO TO SECTION G19 99 – hard to say (do not read) GO TO SECTI
loans dohave now (from different
of Debts
ON G19
I________I No
G17. How many you
sources)?
99 – hard to say (do not read) GO TO SECTION G19
G18. What is t otal amoun l you repaid st month? I________I SLR
he t t ofoan la
99 – hard to say (do not read) GO TO SECTION G19
61
Guarantees and Sureties
G19. Have you or any of your household members given guarantee or sto y
on 1 – y 0 –no od surety in last 3 years for loans taken b
e else? some es A C 1 0 BO B C 1 0 redit Thrit & Co-operative Society C S 1 0 amurdhi D B 1 0 ank E P 1 0 rivate money lender / pawnshop F R 1 0 elatives, friends, neighbours G20. A ousehold
be w? re you or any of your h
mem rs paying under the above no1 – y
G21. How many payments (from different sources)?
of Debts es – GO TO G21
0 – no I________I No 99
- GO TO SECTION H – hard to say (do not read) GO
TO SECTION H
G22. What is th otal amounpaid last month I_ _____I SL
e t t ?
__ R 99 – hard to say (do not read) 99 – hard to say (do not read) – GO TO SECTION H GO TO SECTION H
Household economic activities, income sources and expenditure INT: READ: I would like to talk with you about your households economic activities, all those undertaken by adult
household members that generate income for your household.
H1. I will read you different sources of income. Please me from which sources did your h
tell ousehold receive income
2 months? 0 - no in the last 1 1 - yes Wage employment A Permanent job 1 0 B Temporary jobs (usually of seasonal character) 1 0 Self-employment C Trade activities (other than selling those are under G) 1 0 D Skilled labour (carpenter, black-smith, mason etc) E Service provision (including renting equipment, boats, etc.) 1 0 F Production activities (excluding processing of those in G & H) 1 0 Agriculture (only income generating) G Agriculture produce (crops, vegetables, fruits, etc & its processing) 1 0 H Livestock (including selling meat, milk etc & processing) 1 0 Other sources I Pension 1 0 J Social benefits including grants from Samurdhis and others 1 0 K Regular remittance from somebody living and working abroad 1 0 L Regular remittance from somebody living and working in Sri ka 1 0 Lan
M OTHER: ________________ Use only when you cannot classify in the categories above 1 0
In th r any other members f your ho ehold receive any other
e already listed? e past 12 months, did you o o us
typ of income that we have not Note: This is a critical probe question. Use mbers in s the list of household me ection A to assist with probe. Also, probe carefully for second jobs, occas nd casual income.ional income, a If respondent reminds herself/himself of any sources o of inc me that have not yet been listed, go back to table H1. After listing all sources of income, th
en proc s for eac
eed to ask next question h listed source of income.
62
H2. What is your household net income in an average month?
LKR
1 Under 1,000
2 1,000 – 1,500
3 1,501 – 2,000
4 2,001 0 2,500
5 2,501 – 3,000
6 3,001 – 3,500
7 3,501 – 4,000
8 4,001 – 4,500
9 4,501 – 5,000
10 5,001 – 5,500
11 5,501 – 6,000
12 6,001 – 6,500
13 6,501 – 7,000
14 7,001 – 7,500
15 7,501 – 8,000
16 8,001 – 8,500
17 8,501 – 9,000
18 9,001 – 9,500
19 9,501 – 10,000
20 Over 10,000
99 Refuse to disclose
Note ral areas. to calculate carefully for those having irregular incomes; farmers in ru Note obe back if they included all income sources listed in H1 in this estim n.
R
: important to pr atio LK = SRI LANKAN RUPEE
63
H3. Can you say on the average how much you spend on the following household expenses each month?
LKR
1 Food and fuel for cooking
2 Rent
3 Clothing
4 Healthcare
5 Education
6 Electricity
7 Fuel for boat or tractor
8 House repair
9 Repair to tractor, boats etc
10 Furniture and other assets
11 Loan repayment
12 OTHERS__________ specify
99 Refuse to disclose
Note to calculate eful irregular expens ; farmers in rural areas.
car ly for those having es
Note: important ro cluded all expenses re included.
to p be back if they in a
64
Additional household related questions I 1. How much time does it take you on average to get (using the transport you use the most often) to the nearest: (in hours; includes all the time usually spent to get there)
ealth Ce tre _________________ _________________
I 2. How would u ev of health services in your area?
• Government H• Hospital
n
yo aluate qualityREAD CODES D A CARD # 1 – not satisfacto at a t satisfactory 3 – satisfa tory 4 – fully satisfactory
I3. Do you have the following assets in your ho eho(at least one)
no
I 4. How old is the item?
AN SHOWry ll 2 – no c
us ld?
1 – yes 0 -
(is several assets of the same category ask about the newest one) 1- ears or older 2– newer than 6 years
6 y
A Color TV 2 1 0 1
B CD Player io 0 2 /Rad 1 1
C Refrigerator 1 0 1 2
D Gas Cooker 1 0 1 2
E Motor Cycle 1 0 1 2
F Bicycle 1 0 1 2
G Boat 1 0 1 2
H Tractor 1 0 1 2
I Other Motor Vehicles 1 0 1 2
J Telephone 1 0 1 2
K OTHERS ________ 1 0 1 2 I5. Do you own the place where you live? – Yes 0 – No (rented, etc.)
. Have any of your household members lost a job in the last 3 years? – No 1 - Yes
. Have any of your businesses gone bankrupt in the last 3 years? – No 1 - Yes
. Were you affected by Tsunami? – No 1 – Lost part of the assets 2 – Lost all assets
. Were you affected by the war? – No 1 – Lost part of the assets 2 – Lost all assets
1 I60 I70 I80 I90
65
ANNEX: 4 QUALITATIVE SUR RN AN OVINCESVEY REPORT: SOUTHE D WESTERN PR by Daminda Gegeenag - c Market Research Sp
eme for low-income earners, it was found that the awareness levels of the respondents were very high about the insurance and varies insurance products. In fact some of the respondents had or already having insura lic s. H ary to identify and
ich c uld cau e n ance get grou .
Saving Discussions Almost all the groups respondents were aware about the banking and savings, further
y nks, financial i itutio
w y of the group spond ts position to make much savings as y ve much disposable income em are daily wage earners and
eg g patterns.
n of Risks
aj dents ve exp ien t types of risks while they adopted ffe egies to mitiga the sa . M dents said that sickness and health za nerable ccurs qu family death comes next in to the
sk list. Thirdly, theft and burglaries and loss of properties is more likely. Further, fire, nt and do not disturb families too much and
opular. Tsunami cause a lot of problem but not likely
d some commitments in terms of a loan or monthly payment i purc abilities s their extended families or
arents/adults living away from their families etc. The level of awareness held high of rrowin
rial Potential
uring the group study discussions it was revealed that many of the respondents were ware insurance and their attitudes towards insurance providers were at very low level.
e Domesti ecialist Executive Summary In this research study, finding the possibilities of introducing micro insurance sch
nce po ie ow ever it is necessascertain drawbacks, whproducts the said tar
o s egative impact in developing micro insurps
the knew ba nst ns. Ho ever, man re en were not in athe do not ha . Many of thirr ular earnin Ra king M ority of the respon ha er ced differendi rent strat te me any responha rds are more vul , o fre ently while ariagriculture, cyclones etc. were not frequetherefore property insurance is not pto happen again soon. Loan and Potential Liabilities Many of the respondents helfor a h re hase or some other li uch as maintain pthe respondents in money, lending, bo gs etc. T Da
66
They pursue negative attitude towards insurance providers. However, in each group iscussion held more than 75% of the respondents of each group held very positive
ture Patens
The t
eeds.
wareness
e and the awareness level was at a very high vel. While awareness level was at high they knew different types of insurance
reas/district but they did not have knowledge about the enefits of different products.
rust/Credibility
ers
urning down the claims due to various reasons.
remium Payment
lmost all the respondents are in position to pay premium monthly/quarterly for micro
dattitude about micro insurance products that we discussed. Hence, trial potential of micro insurance is much greater. Income and Expendi The group participants were from different demographic strata's, represented agri, fishery, and carpentry and also from clerical. Most of them were daily income earners and some of them weekly where very few of them were monthly income earners. expenditures were mainly for foods while very few of them get a disposable income aparfrom satisfying their basic food n A The respondents were aware of insurancleproducts, such as life, health, death, burglary, fire, agriculture etc. Also they knew number of insurance providers where each one of them knew at least one or two insurance providers in the ab T The level of credibility and the trust remain very low for insurance providers due to manyreasons by the respondents as follows. During recent Tsunami calamity very low reception/acceptance from insurance providfor their claims. T Lack of after sales services. Poor updation/education of insurance policy that they purchased. Many of them had some body known to them who was affected by non payment of claims. P Ainsurance products. Also most of them said that they are in position spent Rs.100/- to Rs.250/- monthly for insurance products. Some respondents said that they are willing to
67
pay more than one product such as life and health, health and death, after explaining tconcepts. Conclusions
he
ness to have micro insurance products by the spondents there is a significant lack in Credibility of the insurance providers, among the
en a
the claims were paid. Further death of family ember was not compensated even though he had carried life insurance.
ed that said above situations arises due to insufficient awareness about the olicy that they buy and non-appropriate filling of the documents and lack of other
the
y or ce policy while they had given much positive response for
e four insurance products concepts that we discussed.
e above negative situation for insurance and the fear psychology eveloped among the respondents, insurance providers needs to go out of their way to
PRODUCTS for potential subscribers.
elow, the participant of the focus group held at tsunami affected community in the
2. J.A.Leelarani 48 yrs
4. T.Mangalika 41 yrs
.Udayakumara 33 yrs 7. L.D.L.Upali 43 yrs
42 yrs
While the awareness and the willingrerespondents. This has caused due to claim rejections by the providers at the time whclaim is produced, requesting for payments. Respondents reasoned out that very little differences in the name of the policy and birth certificate or policies did not carry the claim that they request (Though they have been told that policy carries that benefits), etc… also during tsunami time none of m It was observpadministrative functions by insurance providers. Further Representatives of the said organizations have been given high promises about the policies and not servicing accounts properly, cause additional aggravation of the above situation. In an average almost all the despondence are in position to pay the premium monthlquarterly for the micro insuranth In order to arrest thddevelop willingness, positive ness among the respondents while developing credibility in order to provide MICRO INSURANCE Focus Group 1 Bdistrict of Galle namely
1. W.M.Wimalawathi 60 yrs
3. P.a.Jayalatha 47 yrs
5. J.A.Latha 43 yrs 6. K
8. M.Jayalath
Above group was organised in a relocated village for tsunami affected people Called `Chinese friend ship village` at Kurundu Gahawattha in Galle district.
68
Focus Group 2 Below, the participant of the focus group held at tsunami effected community in the
ara namely
ocus Group 3
. S. Rani 46yrs thi 55yrs
. S. Sunitha 46yrs
rs . Somawathi 50yrs
L. Y Above group was organised in a relocated village for tsunami affected people call ava wara, Pahathgawa Nakulugamuwa in Hambantota dist Fo Below, the participant of the focus group held at Rural Village in Kanahalagama Ak
district of Mat
9. K. Renuka 46yrs 10. M.N. Nenawathi 50yrs 11. M. N. Somawathi 46yrs 12. T. W. Sumanawathi 57yrs 13. M. N. Charlet 53yrs 14. M. N. Seelawathi 50yrs 15. T. W. Siriyawathi 49yrs 16. M. N. Nimal 41yrs
Above group was organised in a relocated village for tsunami affected people called `Jayasaurapura village` at Pelena Weligama in Matara district.
F Below, the participant of the focus group held at tsunami effected community in the district of Hambantota namely N. Muthumala 58yrs K. H. Siripala 62yrs W. K. Ciril Shantha 39yrs J. M. Dayananda 56yrs WA. P. SumanawaKG. K. Upul 39yrs K. Pranama 46yP
. Priyanthi 30yrs
ed `Sama village` at N divi Purarict.
cus Group 4
uressa in the district of Galle namely
69
K. G. Sirisena 45yrs . Sanjeewani 33yrs
s umudini Madushani 34yrs
M. 0yrs W. rs Ma s Sam Above group was organised in a village of rural area in Galle District where most of them are il
TW. M. P. Kusuma 49yrs K. G. Leelawathi 42yrS
K. Gamage 5 G. Nayana 32ynel Kumari 37yran Dhiruk 36yrs
from agrarian based fam ies.
70
ANNEX: 5 QUALITATIVE SURVEY REPORT: NORTHERN & EASTERN PROVINCES
Raviraj - Domestic Market Research Specialist
cus g scussions were conducted across two districts and four DS nai North and Arayapathy DS divisions, Ampara- Karathivu
ai DS ns. Current country situation did not able to conduct on orthern region. The study was conducted three target groups Male, female and Male
nderstanding the Problems/ unexpected shock / risk affecting them
he people of the villages had under gone many problems such as financial problems, nemployment, and current cost of living,
nexpected ills, Child birth, Funeral, current country situation are major risk
dentify the shock management producer
epend upon the emergency situation their requirement is varied some time need s.2000.00, some time need more than more than 10000.00 to 20000.00. But in mergency time difficult to get certain amount of money. mergency financial purpose they sell or mortgage their property or jewelry, brows oney from others.
nsurance and saving discussion- awareness, Attitudes
ost of the people have heard of insurance. They did not no their benefit and less wareness of type of product. They did not know the differentiation between saving and surance. They have known the saving and their benefits not much in insurance
here are no any gender balance, age, marital status and lifestyle influence buy insurance ny one can insured but finical background is must then only renewable the insurance olicy.
eylinco,LIC and Janaskthi companies names are well known in all village, because eir representative already visited. But their monthly premium is very high. aving money is advantage but not disadvantage. Money is saving in the bank or any nancial institution that is helpful to emergency situation.
here are no any gender balance, age, marital status and lifestyle influence by saving oney any one can saved but finical background is must then able to save money.
by Amirthalingam Executive Summary: A total of four fo roup didivisions. Batticaloa-Manmuand Addalachen divisioNand female. U Tu U I DRe Em I Main Tap CthSfi Tm
71
All of them are saving money in bank. Because they are believe. Banks are to far from all illages but they well known in government banks, such as People bank and Bank of
different banks and financial institution but saving amount is
is
they have extra cash any time females said buy jewels, males said deposit the money in
n . The people said monthly premium
s.150.00 to Rs.200.00 not difficult to pay. Micro credit system all village committee antor
ould be less pressure. gency financial purpose. Easley cover our
edical expenses. Most of them are interested in life and health insurance. Because they lity
d abour, fishing, skill labours, labours, and small traders. Average
onthly incomes Rs. 40000.00 to Rs.5000.00. Mostly they are spend more money to d to children education and
thers
this study we found most of them are interest to buy insurance. Majority of them are
h Background:
en
bjective:
troduce a basic framework for evaluating insurance products.
vCeylon. Most of them are saving money these banks because they are believe. The government controls these two banks. They save the money invery less, emergency time they will use it, not regular saving. If they have excess amountof money they save it. They are saving Rs 100to 500.00 but not regular. Some one else not saving because they have no ideas but they are earning well, some one else incomevery less. Ifthe bank. They are interested to buy insurance. In Ampara Nithavur Ds division the people obtained loan from micro credit organizatiothey obtained Rs. 10000.00 to Rs. 20000.00Rmembers are the guarantor. The Brower hold life insurance definitely the guarwThe people said insurance is helpful our emermor their family will get the compensation even on their demise or permanent disabi Income and expenditure pattern In the eastern providence mostly males are the chief wage earners. They are livelihooactivities are farming lmfoods, second they spend money to medical, third they speno Evaluation Ininterested to buy a life and funeral policies. Researc Project of micro insurance aimed at spreading insurance awareness and providing insurance cover to all irrespective of their economic status. This project has beintended to provide insurance cover to the poor in the rural areas. OIntroduce the concept and basic principals of insurance as one way to help low incomehousehold to manage risks. In
72
Research objective are as follows Understanding the unexpected shock / risk affecting them Identify the shock management producer
surance and saving discussion- awareness, Attitudes
he Qualitative approach in the form of focus group discussions was implemented. A
apathy DS divisions, Ampara- Karathivu nd Addalachenai DS divisions. Current country situation did not able to conduct on
ion hours.
he three target segments were:
ales – Above 20 to 40 years old
Manmunai North
Aryampathy Karathivu Nithavur
InIncome and expenditure pattern Evaluation Methodology: Ttotal of four focus group discussions were conducted across two districts and four DS divisions. Batticaloa-Manmunai North and ArayaNorthern region. The groups were conducted during the period of August 2006 Second week and Last Week. Each focus group consisted of approximately five individuals with the discussrunning around 1 ½ to 2 Sample Design T MFemale- Above 20 to 40 years old Male and Female- Above 20 to 40 years old Respondents were recruited from a cross section of socio economic background. Segment
Male Above 20 to 40 years old
X
Female- Above 20 to 40 years old
X
Male and Female- Above 20 to 40 years
X
old X
73
Findings: Understanding the Problems/ unexpected shock / risk affecting them
he preset country situation st of living
ack of financial capacity
udden death
oney requirement varied from situation to situation. Need Rs.20000.00 to 10000.00 or
nsurance and saving discussion- awareness, Attitudes
People are heard a ward o nce did not know its benefit. o olices.
saving and its b nefits but not mu in insurance No any gender balance, age, marital status and life style influence by insurance. Any one
qualified or s insurance. inancial background is must.
hakth are well known insurance companies. ank or any financial institution is advantage emergency t it is
ful.
o any gender balance, age, marital status and life style influence by saving money. Any ne does it.
The people of this areas facing number of problems Problems: TIncreasing the coLUnemployment Unexpected shock /risk: Sudden illness Childbirth Funeral S Identify the shock management producer MRs 200000.00 In Emergency financial Purpose Getting from their saving Sell or mortgage their property or jewelry Brows money from others. I
f insuraLess awareness of typeKnow the
f pe ch
can buy it. Any one can buyFCeylinco,LIC,JanasSaving money in the bhelp
i ime
No
74
Saving money in Bank, Trust worth the Banks. Well known bank are Peoples Bank and Bank of Ceylon People belied the CBOs, Post office, Samurdi and micro credit organization.
saving less amount of money.
insurance holder definitely the guarantor would be less pressure.
penditure pattern
chief wage earner in the eastern province; their livelihood activities are g, labours and skill kabours. Average monthly income Rs.40000.00 to
0000.00. nd 5% for others.
ccording to this study majority of people interested to buy insurance near future
onclusions
his study confirms income level more than Rs 40000.00 to Rs 5000.00 segmentation
hey are willing to pay Rs.150o Rs.250.00 per month. e life insurance funeral
terest to pay the premium for nearest post office, respective insurance agent or any .
g
ant Gender
People are No regular saving. Brower hold life Income and ex Males arefarming, fishin590% money spend for food, 4% for medical a Evaluation A C Tpeople interest for the insurance. TMost of people interest for thInother recognized microfinance or village level organization Following members were participated in the focus group metin 1. Manmunai North DS Division
S.No Name of the Particip1 T.Jayakanthy Female 2 M.Vithushiya Female 3 N.Mageshwary Female 4 P.Magala Female 5 J.Sasikala Female
75
The general problems of this area are unemployment, cost of living and present country ituation. The main problems are unemployment and lack of their economy. Develop
The main risks are unexpected lness, sudden death and child birth. At emergency time they will borrow money from
out in insurance knows the insurance ompanies. Most of them are known the Ceylinco insurance. The people said insurance
ay of saving. Emergency time such as who will get treatment in the ospitals sudden death will able to get the compensation.
ost of them are interested for the life, health, and funeral policies. But the will pay
eoples .
e using this money for the emergency time. Buying medicines, unexpected
belied the banks. Because the banks controlled by the government body.
in ender, marital status. Money is important for insurance and saving money.
he people are getting income from fishing and labour works. Their average monthly
food next medicine, children education and others
rticipant Gender
stheir economy is the main task in the period of 3-5 years. ilothers or mortgage or sell the jewelry or their property. The village people had little knowledge abcalso the one of the wh Mmonthly Rs. 150.00 to Rs 200.00. The people of the village had a saving account in the government banks. Such as pbank, Bank of Ceylon and samurdhi. They had a little amount of money in their savingBut they artraveling and other important purpose. The people are Any body can qualify for the insurance and saving money. There are no any issuesg Tincomes are Rs.3500.00 to 5000.00. Monthly they are spending more than Rs.4000.00. Most of the money they spend forexpenses The people are interested for the insurance. Most of them are preferred for the life, health and funeral insurance polices. 2. Arayampathy DS division
S.No Name of the Pa
1 V.Suderalingam Male 2 A.vijayan Male 3 N.Kalamohan Male 4 S.Fenando Male 5 L.L.Soudrarajan Male
76
The People of the village had undergone many problems and the main cause of this is money or financial problem. So that now they think to save money for their present anfuture generation and they have the same as their main plan and focus within a period of 3 to 5 years or even can say it as their mission in life. Because of their life style and background society they are frustrated and expect a bette
d
r faithful society around them a etter life style among them. Therefore they expect better income for all of the villagers
as sudden illness, funeral, they re borrow money from others (friends, relations) or mortgage or sell their jewelers and
hey have a slight idea about the insurance and its benefits. No one had seminars or
inco and Janasahti insurance companies.
et the compensation even on their demise or permanent disability. Some of them are
d
he people of the village believe lot in saving. The people of the village save their
rom fishing, and labour works. They have no stable come. Some time they are getting more than Rs.500.00 , some time they are getting less
than Rs.500.00 per day. Monthly they are getting Rs. 4000.00 to Rs.5000.00.but they have no proper financial management system. More than Rs.3500.00 they spent for the food next medicine, children education and others expenses. 3.Kar ivu D
Name of the Participant Gender
band they intend all to be equal at least in their financial situation and fair society. They are skill workers, fish men and coolies. They are getting low income They were affected by war and natural disaster. Emergency time such aproperty. Tawareness programme for them. But they are interested for insurance. They liked life, health and funeral policies. They expected the small premium they will be able to pay in monthly basis. Monthly they will ready to pay Rs.150.00 to Rs.250.00. The village people most of them are known the Ceyl Most of them are interested in life and health insurance. Because they or their family willgaware that some insurance companies might cheat them by giving faults information anpromises. Any body can qualify for the insurance and saving money. There are no any issues in gender, marital status. Money is important for insurance and saving money. Tmoney in the bank. But they saving are little. Because they said banks are very far from village. The people are getting income fin
ath s Division
S.No
1 S.Thavamani Female 2 Thagavel Male
77
3 Thavachlvi Female 4 Sivanatharajan Male 5 Gowri Female The people are badly affected by the tsunami and 1990 they were affected by the ethnic
ar. Currently the people are living in the temporary shelter. Their main problems are r
lems are housing and unemployment and current country situation. Present ituation very difficult go to out side and get he employment.
he people said emergency situation such as child birth, unexpected illness and funeral
he people are not much awareness in the insurance and their policies. During this the
d funeral olicies. Monthly they will ready to pay Rs 150.00 to 200.00.
in
aving money is very less. The people are saving money in the government and rural
ostly they are getting income from agriculture labour works. They said present country an
t of the money they spend for food next medicine, children education nd others expenses
.Nithavur Ds Division
whousing. Early they were levied in the own house. After the tsunami they were lost theiproperties and household items and staying in a refugee camps. Main probs With in 3-5 years periods the people said that they need the independent life then only they will easily to go to out of station and get employment and develop their economic infuture. Tand unexpected traveling they are getting money from others or mortgage or sell the jewels. If they need more money for day to day life they are getting from others but money is getting from others very difficult. Tdiscussion the people got few ideas about insurance and they are very interested to get life, heath and funeral polices. But most of them are interested for the life anp Any body can qualify for the insurance and saving money. There are no any issues gender, marital status. Money is important for insurance and saving money. Sbanks. They are belied these banks. They had no ideas about the insurance companies and their policies. Msituation is not favor for our employment. Monthly their average income is not less thRs.5000.00. Mosa 4
S.No Name of the Participant Gender
1 A.Kamaladevi Female
78
2 I.Tamilchalivi Female 3 V.Mohanathan Male 4 S.yogashwary Female 5 .Pushparani emale S F The people are affected by tsunami and ethnic war. Main problem are housing and drinking water. Currently the income is going down. Money is problem. Emergency situation such as child birth, illness, funeral, and wedding getting money
lt redit organization. Mostly
eed money for the medical purpose. Emergency time they need Rs.2000.00 to Rs.
le of this village little bit know about the insurance and its benefits. They will terest to purchase for the insurance polices in the future, the people said insurance is
our
hey know about the Ceylinco and LIC insurance.
he people are belied the rural micro credit organization. They said it is very close to our
ent mployment. Monthly their average income is not
ss than Rs.5000.00. Most of the money they spend for food next medicine, children
from others or mortgage or sell jewels, livestock .But emergency time it is very difficuto get money. Some times we borrow money from the micro cn20000.00.Its depend upon the situation. The peopinalternate way of saving. It is help full to emergency time. But they will ready to pay for the Rs .150.00 to RS 250.00 per month. The people are saving money in the village organization. They are not saving money in the banks. Because banks are to far formvillage. T Any body can qualify for the insurance and saving money. There are no any issues in gender, marital status. Money is important for insurance and saving money. Tvillage and villagers are running this organization. The Brower hold life insurance definitely the guarantor would be less pressure. Mostly they are getting income from agriculture, fishing and livestock. They said prescountry situation is not favor for our eleeducation and others expenses
79
ANNEX
tract f
: 6 Ex rom THE ACCES
OR by David PortS FRONTIER AS A T AKING MARKETS WORK FOR
E PO eous
RACT
rk le. The access
ontier approach can be used as an analysis tool as part of “Making Markets Work for
h of ture, and those outside of the reach of the market
ecause of their low income.
lar, it
e the product because of insufficient income and are therefore beyond the reach
en the urrent and future access frontier and future access frontier; and ‘redistribution zone’ of
ut. Private providers should also adjust eir long term strategies based on the market development trajectory.
oach enables greater understanding of market evelopment over time from the perspective of who is, and who will be, served by the arket over time.
. The access frontier defines the maximum proportion of the eligible population who se the product under existing conditions. . This frontier is likely to shift over time. Considering where it will move in the hort to medium term (to the future access frontier) is an important part of assessing the apacity of market solutions to extend access. . There is still a group of people who, largely because of poverty, the market will be
unable to touch in the foreseeable future (‘the supra-market group’). For this group, the state may decide to supply the service directly or regulate existing institutions to provide it (i.e. forced cross subsidy).
OOL IN MTH ABST This paper sets out the ‘access frontier’ approach to understanding how markets woover time, and in particular, how they work to include access by poor peopfrthe Poor” (M4P). The approach enables the market for a particular product to be divided into those who currently use it, those who could have it but don’t want it, those who are within reacthe market now and in the foreseeable fub More specifically, the access frontier approach assesses the maximum proportion of theeligible population who can access a product type in a defined market against current levels of usage. It enables a distinction between the reasons for non-usage. In particuplaces a focus on identifying those potential users in the ‘supra-market zone’, who are notable to usof direct market solutions in the medium term. Three market zones are identified: the ‘market enablement zone’, between the current usage level and current access frontier; the ‘market development zone’ betwecpeople in the supra-market group. This distinction enables policies for state intervention to promote or accelerate usage to be correctly matched with the state of market development, and in particular, not to crowd it oth EXECUTIVE SUMMARY 1. The access frontier apprdm2u3sc4
80
5. The access frontier approach distinguishes three zones in a market based on where usage and the current and future access frontiers are: a market enablement zone, a
istribution zone is whether they encourage or limit the outward movement of the access frontier so that more can be served through markets
o that state subsidy can be directed at those most needy. . The market for transaction bank accounts in South Africa is assessed as an illustration
s,
e as high as 78% within 3 to 5 years. Only 5% of people indicate that
they do not want a bank account, hence the natural limit of this market is 95%.
refore weak; as opposed to promoting the maximum movement in the frontier over time.
market development zone and a market redistribution zone. 6. The test of policies in the red
over time, s7
of the conceptual framework. While usage levels are currently around 48% of adultthe access frontier has shifted so that some two thirds of the population are within reach of this solution. Technological and competitive changes suggest that the futurefrontier may li
Analysis of those in the supra-market zone (between 78% and 95%) suggests that they are in general young hence their income and household status may be expected to change over time. The case for special state interventions to expand bank accounts to people in this zone is the
8. The market for cell phones in SA also illustrates how these tools of analysis can enrich understanding and debate of how to grow markets over time.
81
ANNEX: 7
arket enablement zone projections by M
d
districts
Size of market within access frontier now for health insurance
Population Households AF Demand Average Deman
cies now % households
no of policies no of poli
K
84,465 alutara
1,066,239
250,939
12.9
32,411
2.6
G
3,615 alle
990,487
233,027
12.8
29,869
2.1 6
M
,766 atara
761,370
177,613
8.6
15,293
1.5 22
H 8,008 6.3 8,016 2.0
15,907 ambantota
526,414
12
Va 1.4
1,881 vuniya
143,940
32,591
4.2
1,371
Batticaloa 314,088 71,384 1.4 978
3.0
2,934
Ampara
589,344
133,942
5.8
7,732
1.9
14,416 Size of market within access frontier now for funeral insurance
Population Households AF Demand Average Demand
now % households policies policies
Kalutara 1,066,239
250,939
18.5
46,407
2.7
127,434
Galle 990,487
233,027
15.8
36,710
2.6
96,449
Matara 761,370
177,613
12.8
22,766
2.1
47,792
Hambantota 526,414
128,008
9.5
12,149
2.4
29,309
Vavuniya 143,940
32,591
4.1
1,339
1.4
1,881
Batticaloa 314,088
71,384
1.8
1,257
2.9
3,702
Ampara 589,344
133,942
5.6
7,470
1.7
12,844
Size of market within access frontier now for life insurance
Population Households AF Demand Average Demand
now % households policies policies
82
Kalutara 1,066,239
50,939
.1
2,835
.8
3,938
2
9
2
2
6
Galle 990,487
233,027
8.2
19,153
2.4
45,898
Matara 761,370
77,613
.8
,516
.3
0,817 1
4
8
1
1
Hambantota 526,414 128,008 4.8 6,137
.1 2,643
2
1
Vavuniya
0 2
1.
369 143,940 32,591 .8 55 4
Batticaloa
4,088
,384 0.
2.
7 31 71
4 279
8 77
Ampara
133 0.
1,18
1.9
2,187 589,344 ,942 9 0
et within access fro r n operty insu
Po use A Dem Averag Dema
Size of mark ntie
ow for pr rance
pulation Ho holds F and e nd
no% households policy value value of policies
w
n LKR LKR o.
Kalutara 1,0
250,
9.1
22,835
1,000,00
22,834,95766,239
939
0.0 ,926
Galle
3
2
9,15
000,00
9,152,90 0,487 99
,027 23 8. 1 3 1, 0.0 1 4,110
Matara 61,370
77,613
.8
,516
,000,000.0
,515,691,781
7
1
4
8
1
8
Hambantota 526,4 4 128,008 4.8 6,137
1,000,000.0
6,137,369,863
1
Vavuniya 143,940 32,591 0
255
750,000.0
191,336,595
.8
Batticaloa 4,088
31
71,384
0.4
279
750,000.0
209,542,074
Size of
cess fron
r future
health
suranc
market within ac tie for in e
d
Population Households AF Deman Average Demand
future
% households ies policy value value of polic
Kalutara 1,066,239
250,939
24.4
61,309
2.6
159,775
Galle 990,487
233,027
22.2
51,637
2.1
109,974
Matara 761,370
177,613
26.1
46,422
1.5
69,105
Hambantota 26,414
28,008
3.9
0,547
.0
0,617
5
1
2
3
2
6
Vavuniya 143,9 0 32,591 0.6
185
1.4
254
4
Batticaloa 314,088 71,384 -
-
3.0
-
Ampara
83
589,344 2 133,94 0.6 761 1.9 1,419 Size of
s fron
e fo
e
market within ac tie r fu l in
ces
ulation
r futr
holds
nera suranc
Pop House AF Demand Average Demand
future
% households s policy value value of policie
Kalutara
66,2391,0
9 250,93 16.7
41,823 2.7
114,848
Galle 990,487
233,027
29.2
67,966 2.6
178,570
Matara 761,370
177,613
33.3 2.1
59,204
124,284
Hambantota 26,414
28,008
1.1
4,223 2.4
4,311
5
1
1
1
3
Vavuniya 143,9 0 32,591 2.8 905 1.4
1,272
4
Batticaloa 314,088 71,384 1
991
2.9
2,919
.4
Ampara 9,344
3,942
5.6 7,4 .7 12,79
58
13
41 1
4
Size of market within ac ntie r li ur
n ds
cess fro
r futre fo fe ins ance
Populatio Househol AF Demand Average Demand
future
% households s policy value value of policie
Kalutara 1,066,239
250,939
26.1
65,617
2.8
183,726
Galle 990,487
233,027
23.3
54,346
2.4
130,233
Matara 61,370 77,613 3.2
8,995 .3 4,940 7
1
3
5
1
7
Hambantota 526,414 128,008 15.9 20,355
.1 1,931
2
4
Vavuniya
0 1
1.
166 143,940 32,591 .4 15 4
Batticaloa
4,088
,384 -
31 71
- 2.8 -
Ampara 589,344
133,942
1.1
1,420
1.9
2,632
Size of markinsuranc
et within ac ntie r pe
d erage and
cess fro r futre fo roperty
Population
Households AF Deman Av Dem
future
% households y value of policies polic value no. LKR LKR
Kalutara 1,066,239 9
2
250,93
5.0
12,522
1,000,000
12,522,396,28
84
Galle 90,487 33,027 .1
6,645 ,000,000 6,644,785,714 9
2
7
1
1
1
Matara 761,370 177,613 6.4 11,296
,000,000 1,296,325,832
1
1
Hambantota 4 6
1,
6,13 526,414 128,008 .8 ,137
000,000
7,369,863
Vavuniya 3,940 ,591
14
32
0.5
159
750,000
119,585,372
Batticaloa 314,088
71,384
0.1
70
750,000
52,385,519
Ampara 589,344
133,942
0.8
1,048
750,000
786,352,250
85
