Perceptions of (Micro)Insurance in Southern Ghana:

The Role of Information and Peer Effects

Lena Giesbert, GIGA Hamburg

Susan Steiner, DIW Berlin

The 2012 Research Conference on Microinsurance,Enschede, University of Twente

13/04/2012

Structure

Research Question and Motivation Background: Insurance LandscapeMethodology

Source of data: Focus Group DiscussionsData Analysis: Content Analysis

ResultsEvaluation of (Micro) InsuranceLevel of InformationLearning from Peers

Conclusion and Implications

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Research Question and Motivation

• How do people perceive insurance ? How do perceptions come about?• Is it regarded to be good or bad?• What do people mean when they characterise (micro)insurance?• Which factors do people consider when making a judgement?• How are experiences with and opinions about (micro) insurance

communicated? How do people influence each other?• Low uptake of microinsurance despite (assumed) large demand • Increasing number of studies on determinants of uptake using

quantitative data (surveys, RCTs, experiments)• Point to importance of behavioral factors (trust, familiarity, social

networks…)• Complementary to above literature: explorative approach to

study people’s understanding and perception of (micro) insurance

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Background

Anidaso policy : provided by Gemini Life Insurance Company (GLICO) through rural banks and MFIs, term life (<=60) packaged with accident and hospitalization benefits, optional savings plan

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Type of insurance % households

Anidaso microinsurance 2

Conventional commercial life and non-life insurance 12

National Health Insurance Scheme 52

Social Security and National Insurance Trust 13

Insurance supplied in the study area:

National figures:• 66% of population covered

with NHIS, 11% with SSNIT.• Market penetration of

microinsurance is 0.8% and of conventional commercial insurance about 5%.

Methodology: Source of Data

• Four focus group discussions conducted in two towns (Nyakrom, Brakwa) in the Central Region in October 2008

• In each town: 2 FGD with 8 participants, ½ insured / ½ non-insured, 1 female / 1 male,

• Participants from “real groups” (market women, dress-makers, farmers, masons)

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Methodology: Data Analysis

• Content analysis of the verbal communication in the FGD• Developed a coding scheme to derive opinions on insurance:

• positive/precise• positive/imprecise• negative/precise• negative/imprecise

• These categories assigned to evaluative statements about (micro) insurance

• Group-to-group validation• In addition, we use direct quotes from the transcripts for

better interpretation

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Results: Perceptions

Evaluative statements about Anidaso Policy

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• Purely positive statements about microinsurance in three groups, mixed evaluations in one group

• Deviation is due to the bad experience of one participant with the microinsurance provider.

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Positive Negative Positive Negative Positive Negative Positive NegativeBrakwa Female Nyakrom Female Brakwa Male Nyakrom Male

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Unin-sured

Insured

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Results: Perceptions

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Other types of insurance:• Purely positive image, usually related to particular

experiences of a damage followed by an insurance payout• Mostly precise content

Insurance in general• Mixed picture, positive and negative remarks• Concentration of imprecise content of positive remarks

Results: Level of Information

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Is insurance a panacea for all difficulties in life?JD: Now, the reason why I joined the Anidaso group is that, even if you build today,

there could be a strong wind that will blow off your roof. You may not have money to buy roofing sheets at that time. In some cases, electricity, children being so troublesome, a child may have ironed when you are not around, she might not have switched it off. Fire might gut your room. It is mainly because of that I joined the Anidaso policy. (Brakwa, female, insured)

How does insurance work?JD: Sister, if you get insured, the aftermath is all joy. If you are able to do it well, it

brings peace to the home. Because no one comes to ask you for a loan repayment. (Brakwa, female, insured)

MA: […] or a car has hit someone and they say when you are knocked down by a car, you get insurance, and when going to claim it, you do some papers and things.[…] Maybe, if the car that knocks you down doesn’t have insurance, how will you go and claim it? (Nyakrom, female, insured)

• Contributing to erroneous expectations: deficits in management

Results: Influence by Peers

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A bad experience/opinion can have a strong influence on others.K: It is what they are saying, that is what some of them are saying, those who went

in are not seeing anything. Me on my part, I won’t put it [my money] there. (Brakwa male, not insured)

• Learning effect

A good experience/opinion can do the same. CAO: That is why, me too … So, I asked him [Father] that I who wasn’t a teacher, I was

doing my own, could I do some? Then he said oh no, I can’t do some. That is why when I heard this; I said if someone had done it, I will also do what? Do it. For me, too; my children not to suffer in future. (Nyakrom, female, insured)

• Especially important are narratives of how people got to first know about insurance (hearsay)

• Previous impressions formed of conventional types of insurance often become decisive factor for buying MI

Conclusion and Implications

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• Given the low uptake of microinsurance our FGD participants have a surprisingly positive picture about it.

• Not necessarily good news, because positive (and negative) perceptions are strongly influenced by insufficient information (wrong knowledge, intuition)• Once erroneous expectations are not fulfilled by provider, this

may lead to strong negative counter reactions (reduced trust)• Perceptions are also influenced by the experience and opinions

of peers. • A previous experience with insurance (incl. conventional) shared

among peers can substantially alter someone’s attitude towards this or other insurance (enhance or reduce trust)

• People may then even negate concrete information on a policy

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Three Discussion Points

Future research:• Group dynamics

Policy / practical implications:• How to deal with negative chain reactions of limited

information (intuitive understanding) and mutual personal interference?

Methodology:• FGD participants not representative of population at large

(more insured, more educated)

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Thank you!

giesbert@giga-hamburg.de

Background

Risk management context: limited use of insurance payouts in response to risk

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  Self-help/Self-

insurance

Informal

insurance

Market-based

mechanisms (in

parentheses:

insurance)

Reduced

consumption

Illness 67.81 22.69 8.07 (6.52) 1.43

Death 65.00 27.59 4.17 (0.56) 3.24

Destruction of property/assets 79.27 11.20 5.15 (0.88) 4.38

Business shock 69.66 21.49 1.95 (0) 6.90

Theft 78.02 19.04 0.18 (0) 2.76

Rain/flood 72.46 19.67 0.97 (0) 6.90

Loss of job 73.34 18.15 0.13 (0) 8.38

Drought 70.78 6.39 0.71 (0) 22.12

Pest or disease

(crop/livestock)

80.63 6.33 13.04 (0) 0

Accident 73.09 21.88 4.94 (0) 0.09

Divorce/separation 53.92 34.15 0.16 (0) 11.78

Funeral of family members 59.60 28.31 12.09 (0) 0

Disputes about land/assets 56.42 33.55 8.52 (0) 1.51

Other 42.05 46.39 1.28 (0) 10.27

Results: Perceptions

Evaluative statements about other types of insurance

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Positive Negative Positive Negative Positive Negative Positive NegativeBrakwa Female Nyakrom Female Brakwa Male Nyakrom Male

0

1

2

3

4

5

Uninsured

Insured

Num

ber

of S

tate

men

ts

Results: Perceptions

Evaluative statements about insurance in general

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Prec

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Prec

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Positive Negative Positive Negative Positive Negative Positive NegativeBrakwa Female Nyakrom Female Brakwa Male Nyakrom Male

0

2

4

6

8

10

12

Uninsured

Insured

Num

ber

of S

tate

men

ts