Customer education in agriculture

insurance

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Issues and challenges around customer

education in agriculture insurance

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Presenter:Brenda Wandera

International Livestock ResearchInstitute

Presenter:Lory Camba Opem

International Finance Corporation

Presenter:Navin Sharma

ICICI Lombard General InsuranceCompany

Facilitator:Pranav Prashad

Impact Insurance Facility

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Achieve better understanding of how to mitigaterisk

Create value for the customers

Help providers reach more clients and expandmarkets

Change behaviours in agricultural communities

Poll: Why is it important to educate

clients

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Customer education at the core of

responsible finance

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Staying Resilient and Keeping Customers FIRST

Why does customer education in

responsible insurance matter

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Inadequate understanding and low consumer protection can lead to further impoverishment of low income consumers and can limit market expansion and profitability of product.

The benefits of insurance products are difficult to understand for consumers, more so in mandatory products

Where products are voluntary and consumers must make out-of-pocket premium payments, there is a risk of involuntary lapse of the policy. Better understanding creates safeguard to minimize this risk.

Greater focus on consumer’s needs and their better understanding helps organizations build stronger relationships with their clients. This enhances trust, increases client retention, and reduces the risk of lapses or false claims.

Adherence to consumer protection goals creates more socially valuable and financially stable institutions and products

Why it matters to our clients and their

customers

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Serves customers with products that fit their needs: both traditionaland digital financial services; microenterprises (NGO transformations,cooperatives, etc), banks (downscaling), NBFIs (insurance, housing)

Builds long-lasting customer relationships: customer education,product understanding & use; importance of credit reporting, managingmultiple loans; diversified services to retain/obtain customers

Manages risks for more prudent growth: help develop riskmanagement systems and processes as backbone for more prudent,resilient business growth, solid customer base for expanded services

Anticipates uncharted risks of opportunities (like use of technology):low customer uptake, unreliable agents/networks, data/info security,KYC, fraud

Measured by responsible insurance

indicators

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A number of Social Performance Indicators (SPIs) are tracked so insurers can develop a better understanding of where consumer protection needs are met and where challenges remain. This knowledge can inform capacity-building efforts throughout the value chain.

Consumer Protection Question Indicator

Are products appropriate for the clients they are sold to?

• Incurred claims ratio• Claim Settlement Turnaround

time

What safeguards exists to protect client data? • Guidelines on privacy of client data

What renewal process is used? • Renewal ratio

What process exists to tell consumer a claim is rejected? Is the ratio appropriate?

• Claim rejection ratio

What opportunities do clients have to file complaints?

• Complaints ratio

Are clients satisfied? • Client Retention Rate

Challenges in developing responsible

insurance through education

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Challenge 1: Lack of Awareness and Poor Perception of Risk

Challenge 2: Low Demand and Uptake

Challenge 3: Need for Clarification of Roles

Challenge 4: Lack of Adequate Regulatory Frameworks

• Provide information and education for consumers at different engagement points

• Partners with known brands to increase trust

• Bundled products and modular products• Digital Products (not just for distribution)• Incentive models for voluntary insurance take-up

• Better understanding of partnerships and business models

• Designing appropriate Risk-pooling mechanisms• Improve cooperation between entities – better

relationship between insurers and actors in the value chain

• Promote engagement between regulators and industry• Develop guidance for providers (for traditional and

digital insurance)

Evolution of education tools and approach

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Index based insurance is a new concept. It is important that clients receive accurate and complete information. Misinformation leading to unrealistic expectation and subsequent disappointment will damage the reputation of the product.

IBLI potential clientsMostly illiterate or semi illiterateHave had zero or limited prior experience with insurance

Continuous education on the product and its benefit is keyTools need to be easy to understand for them Approaches need to be acceptable and interesting for the clients

Consumer education tools and approach adapted based on

Experience & Feedback

Objective of consumer education

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Proposed theory of change around consumer education

Key challenges & possible solutions in

rural segment

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Improving awareness among farmer community

Innovative distribution & marketing activities – promotional activities, add on services like agro advisory

Optimise costs Using technology & cross utilization of existing infrastructure

Manpower and infrastructure requirement

Creative

distribution+

Use of technology

Engagement activity to create awareness

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Creating awareness about Crop Insurance

Facilitate better understanding of the NCIP

Importance of Insurance as a collateral security

Understanding of Roles & Responsibilities

Feedback from Banks & Govt. & Scope for improvement in our services

Engagement with channel partners

Engagement with government

Engagement with end users

Marketing collaterals –awareness and promotion

Newspaper & radio spots

Objective Intervention

Use of IEC activities to achieve behavioral change in the target segment

Product information – benefits, cost etc.

Process for claims (and enrolment)

Information on risks and insurance principles

Alternative solutions to manage risks

Poll: What topics should insurance

consumer education address

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Consumer awareness and financial

education: customer journey

15Wiedmaier-Pfister & McCord (2012)

Point of SaleAgent educates consumer before selling policy

TV, radio, Internet and phones Drama, talk show, Interactive website jingles, SMS

Workshops Train the trainers: Need trainers equipped to train adults in practical ways

SchoolsFinancial education included in curriculum Extra-curriculum activities: clubs, school visits

Community events Road show, street theatre, movie

In-community knowledgeable persons Either community leaders or simple members Trained for specific messages and advice

Educating customers helps for client-centric

product design via diversified channels

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Improving Client-Driven Product Design

Diversifying Distribution Channels

Build Consumer and Local Players’ Awareness

Develop the reach and diversity the distribution network

Identify, pitch, enter agreements with, and provide tailored insurance policies for local distributors

Increase consumers trust in provider and insurer, training officer to explain advantages of insurance

Provide capacity building trainings on index insurance for local actors, including insurers, distributors, regulators and other stakeholders

Offer bundled products, insurance + credit, leading to higher uptake

Assess data modeling methodology and techniques used for calculating risk, pricing and handling of underlying data to make these more transparent

Review and recommend improvements to product coverage terms, including the claims assessment methodology (i.e. in determining what qualifies for a payout)

Use feedback for

Consumer education approaches

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• Face to face trainings - Agents endorsed by community for trust

• Interactive radio programs - Local radio station and languages

• Pre- recorded radio programs - Local language

• Insurance games - Based on pastoral production system

• Edutainment videos - Shown in the evenings in the villages

• Community meetings - Oral community • Skits - Local artists• Use of village chiefs - Trust issues

Using Games and “Village Elders” for

“consumer education”

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Insurance simulation games effective for insurance

understanding

• Used some of the pastoral systems to explain the difficult concepts

• More sales were recorded in these areas as opposed to areas where there were no games

• Resource intensive and time consuming • Not feasible to play the games with the all the

households in the area : choose carefully

Village elders have proven to be some of the most

effective Master Trainers and VIPs

• Convincing the other village elders of the validity of the insurance product

• Reducing the skepticism of the local population• Sub division of roles between Master Trainers and VIPs

worked well• The older men, who were trusted by the

pastoralists, relayed information while the younger men finished the transaction

• Evolved to lead and sub agent relationship -commercial

Past tools

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● Cartoon● General

Video● Poster● Insurance

simulation games

● Quick Ref● Edutainment

Video● IBLI Training

Manual

● IBLI Payout Video● Jingles● Updated Pictorial● Issue Cards● Pocket Guides:

FAQs, Communication Skills, Rate Cards

● IBLI Pictorials for Ethiopia

● Updated Pictorial for Kenya

● Updated quick reference guides

● Index announcement poster

2010 2011 2012/2013 2014

Material for clients: pastoralists

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Material for clients (II)

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Material for sales agents

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Latest tools and approach - 2015

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We pride ourselves in being innovation champions… each setback for us is an opportunity to do even better!!!

Gamification

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Pocket IBLT

Find out where

you are on the

Leaderboard

Earn Badges

Kenya Livestock Insurance Program -

KLIP

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Consumer education strategy

Level 1: Knowledge and tools for government and insurance industry policy makers

Level 2: Knowledge, skills and job aids for IBLI/KLIP sales agents and promoters

Level 3: Awareness raising for potential clients

Through community leaders and farmercooperatives

Through relevant agriculture input providers

Through mass media – radio and newspapers

Using mobile phones

Poll: What are the most effective ways to

engage with rural agricultural households

on insurance awareness & education

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Stakeholder Mapping – work through

Government

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The Insurer

District Admn.DM & Agri.

Deptt

Deptt. of Agriat State Level

SLBC atState Level

Dist. LevelBanks

Farmer

Engagement at each level is a pre-requisite to Create awareness about scheme Earn the buy-in of each stakeholder and use them to promote Develop rapport and set up momentum

SLBC: State Level Banking Committee

Focused Engagement & Recognition

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R&R to motivate channel partners for high penetration

Engaging & explaining to govt. and bank officials –effective spokespersons

Workshops at multiple levels

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District workshops to sensitize the district officials about insurance covers and processes

Pradhans (village chiefs) workshop to mobilize the people’s representatives

Special women workshop

Marketing collaterals - reinforce the

message

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Posters & Banners

Wall paintings - effective in health too!

IEC Activities

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Using opinion makers Reach non motorables via “hand miking” (Bihar)

Local flavour (Jharkhand) Catching eyeballs (Odisha)

Innovations - Kite festival (Gujarat)

Mobile van campaigns

Participation in local events

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Nukkad Natak - Skits and drama at Durga Puja in Bengal

Promotion through most reachable and relevant media - the radio jingle

Innovative practices

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Innovation in enrollment for increased efficiency - Tab based enrollment of non loanee farmers

Impact of Increased engagement and

customer oriented activities

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Engagement with stake holders & other interventions helped in terms of extending reach

• Significant increase in no. of farmers covered as compared to previous year in the same district speaks volumes about the impact of effective engagement

161000

314760

24433

79300

Farmers covered K 14 Farmers covered K 15

MNAIS WBCIS

95%

224%

*Kharif 2014 and 2015

WBG/IFC responsible insurance strategy:

leveraging on Global Index Insurance Facility

(GIIF)

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• Support Insurance providers in developing strategies to strengthening responsible insurance practices across business functions

• Monitor and track progress against Smart Campaign social performance indicators, using a set framework and set of indicators

Consumer Protection & Responsible

Insurance Delivery

• Develop & distribute trainings on insurance management for non-traditional insurance distribution channels

• Capacity building for local insurance entities to track social performance

• Workshops & trainings to build consumer awareness through private and public financial education campaigns

ConsumerAwareness &

Financial Education • Evaluate the impact of insurance on the lives of the end-beneficiaries

• Evaluate progress in social performance based on indicators tracking

• Share lessons in international fora – e.g. Microinsurance Network, Consumer Protection Working Group

Evaluate Lessons & Share Results

Financial education lessons from IFC

projects in India

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Program should cover the entire delivery spectrum- broad based to intensive

Appropriate mobilization strategy is critical for client retention-participatory approach to contextualize content to match client expectations

Balance should be struck between scale of the program and its effectiveness

Regular monitoring for quality/evaluation and impact assessment for motivating HR

Employing appropriate technology can help achieve scale and reinforce learning among clients- MIS, radio, television, audio-visual content

Delivery of financial education should be followed up with access to appropriate products to increase retention

Very little evidence of cost benefit analysis. Benefits could be direct/indirect

Financial Awareness is like a vaccination drive– value unrecognized until afflicted by disease (in this case high debt levels/erosion of savings)

Case study: financial institutions

interventions in financial education

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An MFI in South Asia provides a 5 week financial literacy program to clients on basic money management (debt management & savings) Facilitates opening of savings accounts Graduates get perks:

Extra Rs.2000 on credit limit Eligible for Individual Loan if 2+ year client Access to cashless disbursements

An MFI in China uses informal trainings to raise client awareness of their products and their understanding of financial services via innovative means: emails, calendars and group trainings

An MFI in India set up a Financial Information Centre to give financial advice by telephone and uses a variety of interactive teaching methodologies like games, stories and cases during financial literacy trainings.

Elaborate Lessons for agri insurance

A greater number of countries is

developing national financial education

frameworks

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Data from OECD/INFE, PISA Frameworks

• Greater number of countries are relying on evidence and the measurement of financial literacy to develop their strategy based on evidence of needs and gaps across their population.

• Most countries have used national financial literacy surveys relying either on available international tools

WB Global Financial Literacy Survey

Accurate and complete information to clients helpsto create realistic expectations that are more likely tobe met - this helps with building trust.

Proper information and education about insurance ismust for all stakeholders for providing full benefits tothe farmer and create value at each level.

There is a lot work still be done for consumereducation and as we've seen today, for insurance asa product and more specifically for agriculturalfarmers. IFC/WBG remains committed to financialinclusion.

Concluding thoughts

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Issues and challenges around customer

education in agriculture (index)

insurance

4040

Presenter:Brenda Wandera

International Livestock ResearchInstitute

Presenter:Lory Camba Opem

International Finance Corporation

Presenter:Navin Sharma

ICICI Lombard General InsuranceCompany

Facilitator:Pranav Prashad

Impact Insurance Facility