FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE What People Want: Investigating Inclusive Insurance Demand in Ethiopia © 2018 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff and consultants of the World Bank Group. The World Bank Group refers to the member institutions of the World Bank Group: The World Bank (International Bank for Reconstruction and Development); International Finance Corporation (IFC); and Multilateral Investment Guarantee Agency (MIGA), which are separate and distinct legal entities each organized under its respective Articles of Agreement. We encourage use for educational and non-commercial purposes. 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FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS III ACKNOWLEDGMENTS VII EXECUTIVE SUMMARY IX I. INTRODUCTION 1 Understanding Low-Income Markets 1 Objectives of Demand Research 1 Methodology 3 II. SUMMARY CHARACTERISTICS OF HOUSEHOLDS SURVEYED 7 Geographical Scope 7 Respondent Profile 8 Economic Level Segmentation 10 III. FINANCIAL BEHAVIOR 13 Savings 13 Borrowing 14 Insurance 15 Informal Insurance - Edirs 16 IV. RISKS AND RISK MANAGEMENT 19 Risk Events Experienced by Survey Respondents 20 Risk Ranking by Focus Groups 21 V. SPECIFIC RISK EVENTS, COSTS, AND COPING 25 Agricultural Risk Events 25 Health Risk Events 29 Death Risk Events 36 VI. POTENTIAL CHANNELS FOR DISTRIBUTION OF INSURANCE 43 CONCLUSIONS AND RECOMMENDATIONS 47 REFERENCES 49 APPENDICES 51 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA I FIGURES Figure 1. Summary of Research Methodology 4 Figure 2. Geographical Scope of the Study 7 Figure 3. Cumulative Percentage of Sample Likely to Fall Below National Poverty Lines 10 Figure 4. Likelihood of Sample Under National Poverty Lines, by Primary Economic Activity 11 Figure 5. Proportion of Households Reporting Savings for Future Expenses 13 Figure 6. Amount Saved (USD), Urban and Rural 14 Figure 7. Percentage of Households Borrowing from Various Sources in the Last 5 Years 14 Figure 8. Primary Reasons Households do not Borrow 14 Figure 9. Reasons for not Having Insurance 15 Figure 10. Primary Reason for Edir Membership 16 Figure 11. Sufficiency of Edir Payment 16 Figure 12. Monthly Contribution Amounts (USD) - Urban and Rural HH 17 Figure 13. Expected Edir Payout in Event of Death of Close Family Member (USD) 17 Figure 14. Experience of Shock Events as Reported by Survey Respondents 19 Figure 15. Example Risk Ranking Cards – Focus Group Discussions 20 Figure 16. Risk Ranking According to Three Factors (FGDs) 20 Figure 17. Distribution of Households’ Crop Income in Normal Years and Shock Years (USD) 26 Figure 18: Percentage of HHs Reporting Losses in the Given Ranges 27 Figure 19. Proportion of Households Reporting Losses in the Given Ranges After a Crop Shock 27 Figure 20. Coping Mechanism Used to Cope with Agricultural Losses 28 Figure 21. Occurrence by Type of Health Shock 31 Figure 22. Types and Amounts of Incurred Costs Reported After a Health Shock 31 Figure 23. Health Shock Costs and Frequency by Urban and Rural 32 Figure 24. Average Cost by Type of Health Shock 32 Figure 25. Distribution of Costs Incurred by a Household During a Health Shock: Urban and Rural (USD) 32 Figure 26. Coping Strategies Used After a Health Shock 34 Figure 27. Frequency and Allocation of Costs Faced After a Death – Rural Participants 37 Figure 28: Frequency and Allocation of Costs Faced After a Death – Urban Participants 38 Figure 29. Distribution of Expenses After Death – Urban and Rural 38 Figure 30. Coping Mechanisms Used After a Death 39 Figure 31. Membership and Frequency of Access of Potential Channels – Survey Respondents 43 Figure 32. Product Development Process 47 Figure 33. Attitudes Towards Insurance 56 TABLE OF CONTENTS II TABLES Table 1. Key Research Questions 2 Table 2. Profile of Households in Survey 8 Table 3. Overall Risk Ranking by Focus Groups 23 Table 4. Household Agricultural Cash Management 26 Table 5. Focus Group Feedback on Crop Insurance Product Prototype Features 29 Table 6. WTP for Crop Insurance (ETB) 30 Table 7. WTP for Crop Insurance (% of Coverage) 29 Table 8. Focus Group Feedback on Hospital Cash Product Prototype Features 35 Table 9. WTP for Hospital Cash Insurance (ETB) 36 Table 10. WTP for Hospital Cash Insurance (% of Coverage) 36 Table 11. Focus Group Feedback on Life Insurance Product Prototype Features 40 Table 12. WTP for Life Insurance (% of Coverage) 41 Table 13. WTP for Life Insurance (ETB) 42 Table 14. Trust, Ease of Access, and Likelihood of Buying from Potential Distribution Channels (FGDs) 44 Table 15. Sampled HHs Distributed to the Regions 52 Table 16. Household Survey Sampling Framework 52 BOXES Box 1. Edirs as Informal Insurance 16 Box 2. Crop Insurance Product Prototype 29 Box 3. Health Facility Access 32 Box 4. Hospital Cash Insurance Product Prototype 35 Box 5. Life Insurance Product Prototype 40 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA III III. MANDATORY REPORTING AND INFORMATION SHARING IV FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE ACRONYMS AND ABBREVIATIONS ATP Ability to pay ETB Ethiopian Birr FGD Focus Group Discussion HH Household MFI Microfinance Institutions MI Microinsurance N Number NBE National Bank of Ethiopia PL Poverty Line R4 R4 Rural Resilience Initiative SACCO Savings and credit cooperative SNNPR Southern Nations, Nationalities, and Peoples’ Region SPS Simple Poverty Scorecard USD United States Dollar WFP World Food Programme WTP Willingness to pay FOREIGN TERMS Edir Traditional community groups that assist each other during emergencies, often for funerals Equb Traditional informal financial cooperative, similar to a rotating savings and credit association Woreda Districts, or third-level administrative divisions in Ethiopia Kebele Smallest administrative unit of Ethiopia, similar to a ward The exchange rate used throughout this study is USD 1 = ETB 22.1, the interbank exchange rate at the time of the data collection in March 2017 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA V ACRONYMS AND ABBREVIATIONS VI FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE ACKNOWLEDGMENTS The authors are Katie Biese (MicroInsurance Centre at Milliman), Michael J. McCord (MicroInsurance Centre at Milliman), Katherine Baez (EA Consultants), Eamon Kelly (Independent Consultant), and Craig Thorburn (World Bank Group cthorburn@worldbank.org). The authors express their great appreciation for the unwavering support of the National Bank of Ethiopia, particularly Ato Belay Tulu, whose assistance in obtaining necessary research permissions as well as dedication to making inclusive insurance a reality in Ethiopia were instrumental. The team thanks the World Bank Group Ethiopia team, Francesco Strobbe (Senior Financial Economist) and Mengistu Bessir Achew (Operations Officer), for their support of this research. The team would like to express its gratitude to JaRco Consulting’s core and field team, led by Tsegahun Tessema. We are grateful to Kibru Mamusha (Project coordinator at JaRco Consulting) as well as all supervisors, enumerators and researchers whose efforts and commitments made this project possible. Finally, the team owes particular appreciation to all Ethiopian women and men who participated in this study, either responding to lengthy household interviews or engaging in focus group discussions. A special thanks goes to Aichin Lim Jones (Graphic Designer) for her work on the design, layout, and graphics of this publication. This study and report were financed by the World Bank Promoting Inclusive Insurance in Ethiopia project funded by the FIRST Initiative (See footnote 2). It was implemented by the MicroInsurance Centre at Milliman in collaboration with EA Consultants and JaRco consulting. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA VII ACRONYMS AND ABBREVIATIONS VIII FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE EXECUTIVE SUMMARY O ne important barrier to insurance markets that are more inclusive is the necessity to better understand the needs of low-income and other un- and underserved populations. These people are not currently clients of insurers and are difficult for insurers to reach through normal operations. As a result, many well-motivated efforts to provide client solutions can fail because of a misunderstanding or lack of understanding of the client’s situation. Without a clear understanding of the target market’s real and perceived risk management needs and the strategies they use to manage those risks, it is very difficult to identify opportunities and design valuable insurance products. This demand research study aims to provide Coping mechanisms invoked to respond to data and information regarding critical inputs financial shocks can be painful and leave the to key microinsurance product development household with significantly reduced resilience. opportunities and requirements in Ethiopia. Savings and cash on hand are the most common By examining the risks that low-income people and primary strategy used to cope with financial face, how they manage them, and identifying adversity. However, only 7% of households report gaps, the market can gain valuable inputs into regular saving, and those that do manage to save product design, including benefits to offer, better have low balances. Loans or gifts from family and distribution approaches, and marketing and friends is a second choice strategy for many, but communications strategies. in cases where shocks affect entire communities, such as drought, this is often a severely limited if The research was conducted using a set of three not prohibitive option. When cash, savings, and tools: a quantitative household survey of more than family / friends are not available, more burdensome 2900 Ethiopians and two sets of qualitative focus strategies must be used. Among rural households group discussions totaling 38 groups. Interviews and in particular, selling assets such as livestock is focus groups were conducted across Amhara, Oromia, common, used in 5% to 25% of cases depending on Tigray, Southern Nations, Nationalities, and Peoples’ the type of shock. While this may cover immediate Region (SNNPR), and Addis Ababa by a local research expenses, it reduces their future productivity and team between February and May of 2017. erodes resilience against poverty in the longer term for the immediate family and possibly for The results show a clear gap between the effects generations. Interest-bearing loans from formal of various financial shocks and households’ institutions are reported to be expensive, difficult to ability to cope with them and a clear gap of obtain, and stressful. unmet but insurable risks. In the event of illness, death, agriculture or other property loss, 53% to The survey results show that experience with and 96% of affected respondents experienced great knowledge of insurance is very low, but this can to moderate financial hardship, depending on be leveraged as an opportunity. Though insurance the type of shock. Up to a year after the event, knowledge is low and will require educational as many as 1/4 to 2/3 (depending on the type of efforts, negative bias is also very low. This is shock) of affected households had been unable to positive for insurers, as they can start with a ‘blank sufficiently recover using the coping mechanisms slate’ rather than trying to overcome a bias against they had available to them. insurance, which is common in many other markets. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA IX Also, despite low knowledge of formal insurance, able to pull together enough money to completely Ethiopians have a strong informal insurance culture cover their losses, the lowest ‘success’ rate of all through Edirs (community-based organisations shocks examined in this study. Most focus group largely focused on funeral benefits, also iddir, eddir, participants (97%) indicated they would buy a idir), which can be leveraged. When presented with proposed prototype crop insurance product if it prototype products, focus group participants were were available to them, as it would allow them to very interested in the idea of insurance as a solution replace lost income and buy inputs for the next to closing the gap between expected costs and crop cycle. However, despite the interest, some available coping strategies. groups felt it was not affordable: on average, participants were willing to pay just 3%-4% of People worry most about health-related risks, the sum insured per year. as well as risks that impact their assets. During focus group discussions in rural areas, crop loss • Health risks. 32% of households experienced at was ranked as the most worrisome because crops least one major health event in the last year, and are not only the primary source of income, but they FGD participants ranked it as the most likely risk also are fundamental to the overall health of the to occur and potentially one of the most impactful household, both people and livestock. Health risks if it were to happen, clearly indicating a demand for were ranked highly in both urban and rural areas, insurance protection. The perception of financial as participants seem to consider the ‘worst case impact as expressed by FGD participants seems scenarios’ of potentially very expensive treatment, higher than the actual financial impact of health lengthy periods of inability to work or even death, shocks as reported to the survey. The average total and disease outbreaks. Transport accidents were costs reported was USD 105, but the majority of also top of mind for urban dwellers, as these events households report less than this, with a median are highly visible and can be very devastating when cost of USD 22. Many people fear a high-cost they occur. Both urban and rural respondents ranked illness, but many basic events are manageable with death risks rather low in priority, as the financial existing resources, with 75% reporting that they impact is perceived as low due to the culture of were able to fully recover after the shock event, and community assistance for funerals1. However, just 51% report moderate or great finacial hardship. concern remains in case of death of a breadwinner. A well-designed insurance product could leverage existing strategies such as savings, and provide Findings regarding specific types of risks: peace of mind. Interest in a hospital cash prototype was high, with close to half of participants willing • Agriculture risks. Overall, 49% of households to pay an actuarially sound premium. experienced some loss, either of crops or livestock, during the last year. For those who • Death risks. For focus group participants, the reported a crop loss to the survey, the average risk of death is seen as less pressing because income from crops dropped from USD 323 (ETB people feel relatively well-prepared due to 7,150) in a normal year to USD 123 (ETB 2,720) membership in an Edir. However, for most survey in a shock year, a loss of 62%. For almost 75% of respondents, the primary reasons for being part households, these losses represented half or more of an Edir are social rather than financial. 83% of their income in a normal year. Less tangible estimated that the amounts provided in the event losses include not having enough food, and of death are minimal, covering only a token loss of investment in agricultural inputs, often amount up to about 25% of costs. Reported costs purchased on credit. Only 53% reported being in case of death fall into three general areas: pre- Subsequent anecdotal suggestions also pointed to a system of relatively orderly transfer or property on death as another 1 potential contributing factor. EXECUTIVE SUMMARY X death costs such as medical expenses, immediate in terms of perception, most people seem hesitant costs such as funeral ceremonies and burial, to consider purchasing a financial service from a and longer-term costs such as a 40 or 80 days non-financial service provider. memorial service and general family financial upkeep in case of loss of breadwinner. In rural Ethiopia provides a significant opportunity areas, total costs reported average about USD for insurers to expand their businesses, the 250, while urban households reported costs on government to improve the overall stability of average of approximately USD 450. In focus the low-income population, and low-income groups, a life insurance product prototype was people to stabilize their economic status. acknowledged as a positive addition to risk However, it is also clear that there is much that management strategies, and one for which people is necessary to make this happen. The results would pay an actuarially derived premium. of the demand work presented here helps to define the needs and potential risk management When discussing potential channels for responses that could enhance the structure of purchasing insurance, focus group participants the project’s product and marketing level inputs. said they would be most likely to purchase from The regulation component of the project shows formal institutions that were well-structured specific alterations to the legal structure that could and capable of financial transactions, such as improve the ability and motivation of insurers to Banks or MFIs. Informal or less formal groups, enter or expand within this market. The supply such as SACCOs and Edirs, reach more people side component provides guidance for capacity more frequently, and thus are attractive in terms improvements with the industry. The financial of generating larger volumes of potential clients. education component has uncovered important However, potential purchasers of insurance see knowledge gaps and means of “educating” the them as risky because of their informal status. When Ethiopian market. Combining these inputs is considering insurance, people are looking for a critical to implement a comprehensive approach formal institution that brings stability and financial to improving risk management. One component is capacity. Alternative channels that are starting to be not enough, but all efforts must be responsive to the used in other countries – such as utilities, retailers, information around clients in order to significantly post offices, mobile phones, and others – are not yet expand inclusive insurance in Ethiopia. largely in consideration. Level of access is low, and WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA XI ACKNOWLEDGMENTS XII FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE I. INTRODUCTION Understanding Low-income Markets I nsurance markets can be less than fully inclusive for many reasons. Barriers that prevent clients and providers from finding and completing insurance transactions that they want and need are many and varied. One important barrier is not surprising – the needs of clients that are not currently served by insurance are not well understood by insurers. These people are not currently clients of insurers and are difficult for insurers to reach through normal operations. As a result, many well-motivated efforts to we discuss a range of people that are not high provide client solutions can fail because of a income and yet are also underserved. misunderstanding or lack of understanding of the client’s situation. The microinsurance landscape is The term ‘microinsurance’ is used in this report, littered with examples where failure can be attributed and is often used generally, to refer to insurance to products that do not work for clients due to such specifically designed to meet the needs of the a misunderstanding. However, understanding client poor. It is thus a more specific sub-set of inclusive needs is a costly investment. To this end, this study insurance. ‘Microinsurance’ does not mean, and is intended to get information to help overcome this is often confused with, “little insurance policies” barrier. Just as industry-wide mortality studies are that are the same as more conventional insurance commonplace in many markets, industry wide products, but with lower premium and benefit consumer research can be important in markets amounts. ‘Microinsurance’ also does not mean where the cost of each insurer doing it themselves a particular type of insurance product, although would be a barrier to providing services. some in Ethiopia tend to describe it as such, for example, insurance attached to microfinance This effort follows a project directed at reducing lending activity or weather index based crop regulatory barriers. Now we seek to reduce barriers insurance. arising from misunderstanding of the market. “Inclusive Insurance” and “Microinsurance”: Objectives of Demand Research Inclusive insurance focuses on making insurance The demand research was conducted to provide markets more “inclusive” and reducing the key inputs for World Bank support to develop extent that people are excluded from accessing the insurance sector in Ethiopia, particularly to and using the insurance services they want and develop and launch microinsurance products. need. Typically, this is focused on lower-income It serves as a critical input to one of the four people who are usually underserved to a greater pillars of the World Bank’s “Promoting Inclusive extent, if not totally, and may also include other Insurance in Ethiopia” project2, which includes un- and under-served groups such as women, or initiatives around products, regulation and middle-income groups. In the Ethiopian context, supervision, consumer protection and financial whilst we are focusing on lower-income people, literacy, and index-based insurance. The project, running over three years, is funded by the FIRST Initiative; a multi donor trust fund providing support for 2 initiatives to strengthen and develop the financial sector. Refer to www.firstinitiative.org for more information. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 1 When designing microinsurance products, the • the impact that risk events have on household importance of understanding the target clients’ economic stability when they occur needs and demands cannot be overstated. Although • the means they use now to address them (coping) this is true for any insurance product, or any other • and any gaps and opportunities arising product for that matter, it is particularly critical for success in a microinsurance context. Without a This gives us a good basis for developing effective clear understanding of the target market’s real and and demand driven products. perceived risk management needs, as well as the strategies they currently use to manage those risks, it Overall research objective: Provide study is very difficult to identify effective opportunities or results that will provide critical inputs to design valuable products. Typically, microinsurance key microinsurance product development demand research seeks to understand: opportunities and requirements in Ethiopia. • the risks people identify as significant to them and their relative priority, at least in general terms Key questions were developed in four areas, as shown in Table 1. Table 1. Key Research Questions Objective Key questions Link to Product development What are the socio-economic • To differentiate/segment the market across wealth characteristics of the target market? levels • To assess the size of a loss relative to household income • To analyze affordability issues • To assess feasibility of different premium payment structures What are the risks that this target • To identify risks that meet the test of an insurable market faces that cause economic risk stress? • To identify life cycle events that cause high levels of economic stress • To prioritize the types of coverage that will have real I. Risks impact and Coping What are the (financial/non-financial) • To identify priority areas of coverage strategies impacts of these events/risks? • To identify the amount of coverage required • To identify complementary activities to help reduce and manage risks What are their current risk • To identify gaps in types, amounts and timeliness of management solutions (ex-ante/ex- coverage post) to address these risks and the • To identify how credit and savings may complement gaps in these current formal/informal insurance coping mechanisms? • To identify positive attributes of informal What access to financial service do insurance mechanisms that can be replicated in they currently have (e.g. loans)? microinsurance What are the resulting priority risks by • To feed into the development of high impact product target market? concepts for different market segments I. INTRODUCTION 2 II. Financial What is the target market’s • To help determine client education needs Literacy and understanding and perception of • To design field agent training programs (how to Consumer insurance? explain insurance to clients) Awareness What is their level of financial literacy? • To design marketing and communication strategies What is the level of trust expressed by clients regarding insurance? III. Capacity What is their Ability to pay (“ATP”) • To understand the level of premium that low-income to pay for and Willingness to pay (“WTP”) for households can afford and are willing to pay insurance microinsurance? • To design premium collection procedures and processes that are convenient and easily accessible for clients IV. What existing groups do they belong • To identify potential delivery systems that fit clients Distribution to? Are these groups involved in • To identify structures and positive features of Mechanism financial transactions? existing institutions that can be incorporated into for Who do they ‘trust’ the most to buy insurance delivery systems Insurance insurance from? What is their level of ownership and usage of mobile phones? Methodology making at the national level. The marginal value to the results from covering all regions and The study was carried out in four regions – adding a “nationally representative” constraint Amhara, Oromia, SNNPR, and Tigray – and on sampling was not required for this particular Addis Ababa. The regions selected provide a cross study. The regions that were not selected are section of rural and urban markets. However, the less developed in terms of infrastructure and overall results are not intended to be nationally economy, and are less densely populated, making representative. Instead, they are intended to research more cost and time intensive. These be sufficient for the planned project research characteristics also make it much less likely for needs oriented toward product development. At insurers to be interested and able to reach to the same time, they do cover a substantial and those markets. A purposive sampling approach credible group to be relevant as input for decision- WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 3 to the selection of communities according to the areas described above, and provides tangible rural and urban populations of each area, as well sources of data on the knowledge, attitudes, and as a deliberate sample according to gender of the practices regarding insurance. respondent, were used in order to obtain credible comparisons within these demographics. • A larger set of 32 post-survey Focus Group Discussions gathered qualitative information to To accomplish the stated objectives, a local research help explain the results of the quantitative survey, firm implemented a set of three tools developed and tested several product prototypes for interest by the authors. The authors also trained the and willingness to pay. enumerators and focus group facilitators on each of the tools. The research tools were as follows: Figure 1 provides a summary of the full approach. It shows how the market research is intended to • Short set of six pre-survey Focus Group fit in an overall product development process and Discussions (FGDs) gathered basic information feed back into the design of prototypes. Focus about market experience with risks, their groups used at the start and end are linked with mitigation and management and provided inputs the extensive household survey instrument. The to help enhance the quantitative study. following sections describe the household survey and FGD methodology in more detail. • A quantitative household questionnaire gathered quantitative data on the four research Figure 1. Summary of Research Methodology Institutional Assessment 6 Continuous Market Consists of Pre-survey Review Research FGDs Microinsurance Product Partnership Inform Roll Out Development Development Process Pilot Prototype Testing Design & Testing 2,922 HH Product Surveys Design Informs Follow Up By Demand Report + Videos from Results in 32 the Field Post-survey FGDs I. INTRODUCTION 4 Household Survey Focus Group Discussions The survey comprised respondents from 2922 A total of 38 FGDs (six prior to and 32 following households3 in the selected four regions and the household survey) composed of six to ten Addis Ababa. The survey was conducted by a participants each were conducted by local local Ethiopian research firm using a three-stage researchers in local languages. All FGDs were cluster approach. At the first level, enumeration sound-recorded to allow the researcher to focus areas were selected by a simple random sampling on the discussion and allow for review afterwards approach of zones, weredas, kebeles (smallest to ensure no information was missed or misheard. administrative unit) and villages, based on a The semi-structured discussions lasted between list used by the Ethiopian Statistical Agency. In one and two hours depending on the composition each enumeration area, interviewers selected the of the group and the answers. households using a systematic random sampling method based on household lists provided by The groups consisted of economically engaged the local administrative units. Finally, within adults, with male and female groups conducted households, an equal number of adult male and separately. Participants were identified in female respondents were targeted, who may or discussion with a relevant local authority and may not be the head of household. engaged voluntarily. Both urban and rural groups were conducted; in rural areas participants were The survey was implemented using computer- almost entirely engaged in agriculture, while assisted personal interview methods, in local urban participants were a mix of self-employed, languages, between April and May 2017. The agriculture, or government employed persons. Personal Digital Assistant technology offered The full sampling framework is available several advantages, including instant data access Appendix 1. and ‘live’ updates, efficiency by reducing data entry time, reducing human error, and time- and The set of post-survey focus group discussions, geo-stamps to ensure the “right” person is in the in addition to discussing overall risks and “right” place. coping mechanisms, also tested five different product prototypes. High level prototypes were The full sampling framework for the survey can developed based on the results of the household be found in Appendix 1, and the survey instrument survey and included crop insurance in case of is available by contacting the World Bank. drought, livestock insurance in case of death of animal for any cause, a hospital cash product, a simple term life product, and a fire policy covering home or business property. To avoid confusion or bias, each FGD only tested one of the five products. Details on the methodology for establishing sample size provided in Appendix 1. 3 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 5 ACKNOWLEDGMENTS 6 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE II. SUMMARY CHARACTERISTICS OF HOUSEHOLDS SURVEYED Geographical Scope4 T he research was conducted in the regions of Amhara, Oromia, Tigray, and SNNPR, as well as in Addis Ababa; together these regions account for almost 90% of the population of Ethiopia.5 In each region, a 50% split between urban and rural households (HH) was selected, such that together with 100% urban Addis Ababa, the overall sample was 37% rural and 63% urban. Figure 2 provides an overview of the geographic scope of the study. Figure 2. Georgraphical Scope of the Study 5 Regions 16 Zones 31 Woredas 59 Kebeles 2,922 Household Surveyed 50 Households Surveyed per Kebele on Average 13,088 Household Members 37% of Households Are Rural Details of geographical scope in Appendix 1. 4 See Table 15 in Appendix 1 for population details by region. 5 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 7 Respondent Profile The dependency ratio may be a good way to adjust the potential target market for microinsurance Table 2 provides the summary characteristics of since it highlights the needier populations: the the sample households and respondents. 93% of youth (ages 0-14) and the elderly (ages 65+), individual survey respondents either take part in to the number of working age adults (ages 15- or participate in major household decisions about 64), who will mostly be insurance buyers. It money, financial matters, or household spending. also represents a measure of vulnerability of 57% of the respondents are head of household the population, since shocks at the individual and 37% are the spouse of the head of household. or household level will have a greater economic Full statistics at the regional level can be obtained impact when dependency ratios are higher. by contacting the World Bank. Table 2. Profile of Households in Survey Category Urban Rural Overall Sex Male Female Male Female Male Female Average HH Size 4.3 People 4.8 People 4.5 People Gender of the Head of HH 72% 28% 83% 17% 76% 24% Estimated Dependency Ratio6 54% 86% 65% Literacy Self-Reported Ability to Read and Write7 84% 61% 58% 25% 74% 48% Financial Literacy8 20% 16% 22% 17% Primary Economic Activity at the Male- Female- Male- Female- Urban Rural Household Level9 Headed Headed Headed Headed Agriculture 19% 14% 76% 58% 18% 73% Trade/Business 30% 34% 11% 22% 31% 12% Employed 31% 18% 6% 4% 27% 6% Wage Labor 13% 14% 7% 9% 13% 7% 6 Dependents are defined as those household members least likely to be economically active: those under age 15 and above age 64. The ratio is thus number of dependents to those in the range of 15-64.. 7 Here, literacy is self-reported during the survey as the oldest or “head” male and female in the household being able to read and write. 8 % of respondents correctly answering 3 of 4 financial literacy questions used globally by the S&P Global Financial Literacy Survey. 9 These percentages do not represent the number of households or members that practice certain activity since the results were not mutually exclusive and some household reported more than one activity. Instead, it should be interpreted as the relevance of each economic activity for the sample surveyed relative to others. II. SUMMARY CHARACTERISTICS OF HOUSEHOLDS SURVEYED 8 Unemployed 1% 7% 0% 0% 3% 0% Other 6% 13% 0% 5% 8% 1% Mobile Phone Ownership Average # of Phones Per HH 2.1 .9 1.6 % of HHs with No Phone 9% 40% 20% % of HHs with 1 Phone 25% 38% 30% % of HHs with 2+ Phones 66% 22% 50% Source of Income for Individuals Wage Labor (Non-Agriculture, 56% 22% 43% Temporary or Permanent) Self-Owned Business 37% 20% 24% Agriculture 19% 92% 35% Other (Remittance, Rent, etc.) 9% 6% 8% At around 20%, financial literacy of the survey Mobile phone ownership is lower than in sample—measured in terms of ability to correctly many other emerging markets, particularly answer questions on 3 of 4 financial topics— in rural areas. Compared with some of its is below that found by a more focused study regional neighbors, Ethiopia has rather low conducted by Standard & Poor’s using the same mobile penetration: for example, GSMA reports questions, which found 32% of the Ethiopian that Kenya has a 78% sim penetration (number population to be ‘financially literate’ in 2014.10 of connections compared to the total population), Ethiopia is comparable to other Sub-Saharan Sudan has 68%, Uganda 60%, and Tanzania markets, such as Sudan (21%), Egypt (27%), and 71%, compared to Ethiopia’s 42%.11 With 40% Uganda (34%), and not far behind Kenya (38%) of rural households reporting no mobile phone, and Tanzania (40%). As formal financial services it is clear that mobile distribution will not be an are expanded to be more inclusive, providers must immediate or complete solution for expanding take care in designing informative and efficient inclusive insurance in contrast to the experience marketing materials and procedures, as well as in of a number of other African countries. the design of the product itself, building financial literacy as the market grows. 10 Klapper, L., A. Lusardi, and P. van Oudheusden. Financial Literacy Around the World: Insights from the Standard and Poor’s Ratings Services Global Financial Literacy Survey. http://gflec.org/wp-content/uploads/2015/11/Finlit_paper_16_F2_sin- gles.pdf . 11 GSMA Intelligence, Country data dashboards. https://www.gsmaintelligence.com/ Data retrieved 17 October 2017. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 9 Economic Level Segmentation • 150% of poverty line (150% PL): 1.5 times the national poverty line. To assess the economic level of the survey respondents, the survey calculated poverty scores • 200% of poverty line (200% PL): 2 times the based on the Simple Poverty Scorecard method12. national poverty line. The Scorecard uses objective household survey questions to assign each household a score; each Figure 3 provides the likelihood of rural and score is then associated with a percent likelihood urban households in the sample being under the of living under a certain poverty line. For this poverty lines. In the overall sample, it would study, each household was classified according to be estimated that about 2/3 of households are at the likelihood of being at or below four Ethiopian or below the 200% poverty line, while 17% of poverty lines: households would be at or below the National Poverty Line. In urban areas there are no major • The food poverty line (Food PL): represents a differences in the likelihood of male- and female- threshold under which an individual cannot meet headed households to be under each of the minimal nutritional needs. national poverty lines. Interestingly, in rural areas a higher percentage of male-headed households • The national poverty line (100% PL): it than female-headed households were likely to be represents a threshold for minimal food and non- living under each of the poverty lines. food (clothing and housing) needs. Figure 3. Cumulative Percentage of Sample Likely to Fall Below National Poverty Lines OVERALL 2% 17% 45% 67% Female 1% 16% 43% 65% TOTAL Male 2% 18% 46% 68% Female 2% 19% 48% 70% RURAL Male 2% 22% 53% 74% Female 1% 15% 42% 63% URBAN Male 1% 15% 42% 63% Food PL 100% PL 150% PL 200% PL Note: Percentage are cumulative Developed by Mark Schreiner. http://www.microfinance.com/ 12 II. SUMMARY CHARACTERISTICS OF HOUSEHOLDS SURVEYED 10 In terms of targeting a market segment for The households’ poverty likelihood also differs microinsurance, the low-income market could depending on the primary economic activity. be considered as those who are just below the Households whose members work for wage poverty line but not destitute (food poor), up labor live in households with the highest poverty through those who are still vulnerable to falling levels, followed by agriculture workers (Figure back below poverty (up to 200% of poverty line). 4). This situation may be influenced by the For the Ethiopian market, one could loosely income volatility that characterizes wage labor define this as those households above the food and agriculture, compared to formal employment poverty line yet below 200% of poverty line. This and trade. represents up to 65% of households in the study. Figure 4. Likelihood of Sample Under National Poverty Lines, by Primary Economic Activity URBAN Wage Labor 2% 20% 49% 70% Employed 1% 12% 36% 58% Trade/ 15% Business 1% 43% 64% Agriculture 1% 16% 45% 67% Food PL 100% PL 150% PL 200% PL RURAL Wage Labor 2% 19% 48% 69% Employed 1% 10% 32% 53% Trade/ 17% Business 1% 45% 67% Agriculture 2% 23% 54% 75% Food PL 100% PL 150% PL 200% PL WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 11 Key Implications – Demographic Profile • The dependency ratio (population <15 and >64 divided by those from 15 to 64 years old) is particularly high in the rural areas. This has an impact on the development of insurance products, as products in rural areas will require consideration of more children and the aged, while at the same time households in rural areas tend to have the least disposable income for insurance. This measure of vulnerability will be particularly important in designing life, health, and personal accident products. • Given a target market of the population above the food poverty line yet below 200% of national poverty line, the results of the study indicate that up to 65% of Ethiopian households in the five regions would fall into this segment. This suggests a simple potential market of around 65 million people. • In the sample, as in Ethiopia generally, men are considered the heads of households. However, it becomes clear throughout this study that women have a strong impact on HH decisions. Therefore, women should be considered in product development and marketing and promotion. Additionally, it would benefit insurers to have some products and services that are focused specifically on the women’s market. • Throughout the emerging markets, mobile phones are seen as the answer to many distribution problems and to quickly reaching scale (whether this is correct or not is for another study). In urban areas in Ethiopia, HH ownership of at least one phone is about 90%, while in the rural areas, it is 60%. In developing products in Ethiopia, it is important to consider that products with processes or services tied to mobile phones automatically excludes about 20% of the total potential market. Given the low financial literacy, it is not considered that mobile platforms could have large scale but may be suitable for a certain sub-set of the population. II. SUMMARY CHARACTERISTICS OF HOUSEHOLDS SURVEYED 12 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE III. FINANCIAL BEHAVIOR U nderstanding households’ current use and perceptions of financial tools can be useful in determining how insurance can fill in a gap or complement households’ current portfolio of strategies, as well as provide insights for marketing and positioning insurance products. Savings The majority of households do not have adequate For those that do manage to save, balances are savings; they save infrequently, if at all, and often low, with most households having a current have low balances when they do save. 52% of the balance of up to USD 300 (ETB 663013) (Figure surveyed individuals live in a household with a formal 6). On average, households that do save had set savings account, with significantly more households aside USD 330 (ETB 7785) for future expenses, in urban areas having an account (63%) than rural with urban households having saved more (USD 448 households (35%), and a higher percentage of / ETB 9900) than rural households (USD 149 / ETB male-headed households (54%) than female-headed 3300) at the time of interviewing. Gender differences households (46%) reporting account ownership. in savings balances were smaller than differences by Only 7% of households reported regular saving, and urban / rural, with male-headed households reporting having an account does not guarantee saving: more balances of about USD 363 (ETB 8,020) and female- than half of households do not save at all, including headed households reporting almost USD 315 (ETB 10% of those households that have a formal account. 6,935). It should also be noted that of the households Figure 5 shows the proportion of rural and urban who reported saving for future expenses, more than a households saving at various frequencies. third of respondents did not know how much savings they currently had accumulated. Figure 5. Proportion of Households Reporting Saving for Future Expenses (All HH, Regardless of Whether They Have Formal Savings Accounts) 68% 47% 31% 22% 9% 11% 7% 3% Yes, Often Yes, But Infrequently Yes, But No or Sporadically Very Rarely Urban Rural The exchange rate used throughout this study is USD 1 = ETB 22.1, the interbank exchange rate at the time of the data 13 collection in March 2017 (oanda.com). WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 13 Figure 6. Amount Saved (USD), Urban and Rural % of HH’s Reporting Balances in the Given Ranges Rural 62% 15% 11% 2% 5% 6% Urban 40% 14% 15% 3% 9% 19% USD 0-100 101-200 201-300 301-400 401-500 >500 Savings are important because they are often the across gender, with a higher percentage of female- first layer of protection in the event of a financial headed households (55%) than male-headed (49%) shock. As we will see in Section 5 of this paper, using reporting taking a loan. Urban and rural borrowing savings and cash-on-hand were the first and most was also generally similar (51% of urban households common strategies used by households that faced and 47% of rural households reported borrowing), a shock. Given the savings behavior and balances though the sources of the financing between the reported to the survey, it is not surprising that many two groups is quite different, with urban households repondents reported that their coping strategies were being much more likely to borrow from a bank. insufficient to recover from an adverse event. Figure 7 shows the most common sources of credit for urban and rural households. Other sources such as cooperatives, moneylenders, and MFIs were each Borrowing used by less than 3% of households. Constraints to Sources of credit are accessible to most credit seem to be limited, at least in perception: For households, and more than half have made use of those who did not borrow, just 31% reported a form one or more sources of credit in the last five years. of constraint as the reason: either prohibitive cost, Half of all surveyed households borrowed some inability to get a loan from a financial institution, or money in the last five years, generally consistent not wanting to bother family and friends (Figure 8). Figure 7. Percentage of Households Figure 8. Primary Reasons Borrowing from Various Sources in Households Do Not Borrow the Last 5 Years 25% 12% 7% 20% 4% 15% 52% 9% 10% 5% 16% 0% Banks SACCOs Friends Other Other/Don’t Do Not Believe Do Not Want to and Family Know in Loans Bother Friends & Family FIs Will Not Cost Is Too No Need Urban Rural Lend to Me High III. FINANCIAL BEHAVIOR 14 Insurance reasons were far less common, because so few had experienced insurance – for example less than 6% Insurance experience and knowledge is very low; said that insurance is too complicated, and hardly thus, rather than having negative preconceptions anyone indicated a lack of need or a lack of trust. about insurance that are found in many markets, This is positive for insurers and other stakeholders, Ethiopians are open to learning more about as a lack of knowledge is easier to address than insurance. Just 15% of urban households and negative attitudes and inaccurate pre-conceptions. 18% of rural households had some prior insurance experience. In urban households, the most common For those respondents who had heard of insurance type of insurance was government-sponsored health prior to the survey, perceptions indicate a general insurance and motor third-party liability; in rural openness and need for insurance. Responses to a areas respondents were mainly familiar with the series of agree / disagree statements indicate that up government health insurance and funeral insurance. to 70% see a need for, or usefulness of, insurance. Of those with insurance, 30% were unaware of the Interestingly, there was little difference in perception premium amount. between male and female respondents. Women were slightly more likely to respond with ‘Don’t know’ The primary reasons households have not had but the overall distribution of opinion was generally insurance are information-related (Figure 9). the same. In rural areas, most households are unaware of insurance, with 62% of respondents reporting that Figure 33 in Appendix 2 provides the full set of they have never heard of insurance before (compared questions and answers regarding perceptions of to 42% of urban respondents). Insurance-related insurance. Figure 9. Reasons for Not Having Insurance Never Heard of Insurance 49% Not Enough Info Information / Not Sure How It Works 41% Related Reasons Don't Know Where To Find It 25% Don't Know 14% It’s Complicated Or Inconvenient 6% Insurance Too Expensive 6% Related Reasons Don't Need Insurance 1% Don't Trust Insurers 0% 0% 10% 20% 30% 40% 50% WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 15 Informal insurance - Edirs Box 1. Edirs As Informal The Edir (see Box 1) is a common informal insurance Insurance mechanism that mainly provides support in the case EDIRS – Informal Insurance In Ethiopia of death of family members. Among the respondents, 79% of households belong to an Edir, with no Edirs are traditional community groups whose significant difference by region, gender of household members assist each other socially and financially head, or between urban and rural areas. Survey when adverse events occur, primarily in case of a responses indicate, however, that the primary value family member’s death. Participants typically make monthly contributions and receive a payout to cover of membership may be social, and the financial value a portion of funeral and other related expenses. This is perceived as insufficient to provide full protection payout will vary based on how close the deceased was in the event of the death of a family member, leaving to the Edir members. Edirs may provide monetary or room for insurance to play a complementary role. in-kind benefits. For most respondents, the primary reasons for being part of an Edir are social rather than Despite the low amounts, this regular setting aside financial (Figure 10), and the amounts provided of funds for a risk event is the precursor to an in the event of a death tend to be minimal (Figure insurance culture, and indicates that households 11). This corresponds with responses regarding the do have some cash available to pay for ex-ante financial value that an Edir provides in the event risk management. The clear majority of households of a death of a family member. Most participants reported monthly contributions of up to USD 0.50 agreed that in the case of death of an immediate (ETB 11) as shown in Figure 12. Very few rural family member, the amount of money provided by households contribute more than this, while more the Edir is very limited (Figure 11). In fact, 83% of urban households contribute in the range of USD respondents said the proceeds from their Edir would 0.50 to 1.00 (ETB 11 - 22) and USD 1.00 to 1.50 provide only up to about 25% of total costs. (ETB 22 - 33) per month. Figure 10. Primary Reason for Edir Figure 11. Sufficiency of Edir Membership Payouts 43% 43% 3% 1% 39% 37% 13% 13% 12% 50% 7% 33% 4% Receive Receive Contribute Social Assistance Support for to My Benefits/ with Financial Emotional Community Expectations Provides A About 25% About 50% of Costs Burden Burden Token Amount of Costs About 75% More Than 75% of Costs Urban Rural of Costs III. FINANCIAL BEHAVIOR 16 Figure 12. Monthly Contribution Amounts (USD) - Urban and Rural HHs 700 584 597 No. of Households 600 500 401 400 300 200 163 79 95 86 88 100 9 2 5 2 0 0.00-0.50 0.51-1.00 1.01-1.51 1.51-2.00 2.01-2.50 >2.50 Monthly Contribution Amount Urban Rural In exchange for these contributions, members receive rural respondents and 60% of urban respondents said relatively little in financial benefits in the event of they would expect to receive up to USD 50 (ETB death of a close family member. More than 70% of 1105) (Figure 13). Figure 13. Expected Edir Payout in Event of Death of Close Family Member (USD) % of HH’s Reporting Expected Payouts in the Given Ranges Rural 48% 23% 12% 8% 2% 6% Urban 27% 32% 11% 9% 2% 20% USD 0-25 26-50 51-75 76-100 101-125 >125 Key Implications - Financial Behaviors • Infrequent saving and low balances leave households vulnerable in case of a shock, leaving a need and opportunity for insurance. • Credit seems to be available from multiple sources and widely used; there may be additional opportunities for bundling insurance with credit • Insurance knowledge is low and any insurance products will require an educational marketing effort. However, negative bias is very low, which is positive for insurers, as they can start with a blank slate rather than trying to overcome bias against insurance as is common in other countries. • Despite low formal insurance knowledge, Ethiopians have a strong informal insurance culture through Edirs. While the financial coverage provided by Edirs is insufficient, the practice of risk-pooling can possibly be leveraged and the coverage complemented by formal insurance. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 17 ACKNOWLEDGMENTS 18 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE IV. RISKS AND RISK MANAGEMENT Risk Events Experienced by Survey Respondents S urvey respondents reported experiencing several shock events in the year prior to the survey. Most common were health incidents, with 32% of households reporting at least one serious illness / health event. Of those households with agriculture as a primary source of income, 56% reported significant loss of crop or livestock.14 Almost 7% of all households reported a death in the family. Significant property loss was reported by about 3% of households. For those who experienced these events, varying levels of financial hardship and the ability to recover were reported, as shown in Figure 14 based on rural and urban responses. Figure 14. Experience of Shock Events as Reported by Survey Respondents Urban 120 60 Percent of Affected HHS 100 50 Percent of All HHS 86% 80 40 34% 61% 60 53% 30 40 37% 37% 20 24% 20 7% 10 4% 0 0 Illness in the Damage/ Loss Death in Family of Property the Family Rural 120 60 Percent of Affected HHS 53% Percent of All HHS 100 96% 93% 50 88% 80 40 64% 65% 60 53% 28% 30 44% 47% 42% 40 17% 20 29% 20 7% 10 1% 0 0 Illness in the Damage/ Loss Death in Illness/ Death Crop Loss/ Family of Property the Family of Livestock Damage % of Affected HHs Reporting % of Affected HHs Reporting % of All HHs Experiencing Moderate to Great Hardship Inability to Recover from Shock Shock in Prior Year A severe drought and poor temporal distribution of rainfall in the Horn of Africa at the end of 2016 affected southern and 14 eastern Ethiopia, including some of the survey areas. (Source: FEWSNET East Africa Special Report February 3, 2017) WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 19 Risk Events Experienced by Survey agriculture as a primary source of income, 56% Respondents reported significant loss of crop or livestock. Almost 7% of all households reported a death in the family. Survey respondents reported experiencing Significant property loss was reported by about 3% several shock events in the year prior to the of households. For those who experienced these survey. Most common were health incidents, with events, varying levels of financial hardship and the 32% of households reporting at least one serious ability to recover were reported, as shown in Figure illness / health event. Of those households with 14 based on rural and urban responses. Figure 15. Example Risk Ranking Cards – Focus Group Discussions Figure 16. Risk Ranking According to Three Factors (FGDs) Urban Rural 45 42 160 144 143 Factor Score - No. of Participants 40 143 36 140 134 35 33 32 119 117 Ranking Risk in Top 3 30 120 30 100 101 26 100 90 88 25 22 22 20 80 20 61 59 14 15 60 15 13 13 44 48 11 12 11 42 39 41 10 40 39 30 31 5 5 3 20 0 0 ily nt erty ily ck ge ily nt erty ily ck ge ide ide Fam Fam Fam Fam sto sto ma ma rop rop Acc Acc ive ive /Da /Da fP fP the he the he of L of L oss oss ort ort so so in t in t in in nsp nsp ath ath pL pL Los Los ess ath ess ath Tra Tra /De /De Cro Cro ge/ ge/ De De Il n Il n ess ess ma ma Il n Il n Da Da Likelihood Financial Impact Worry IV. RISKS AND RISK MANAGEMENT 20 Risk Ranking by Focus Groups need to be financed by selling productive assets. Several groups indicated that illness is a concern Health risks, crop loss, and transport accidents because they are often left untreated due to lack were the most important risks according to focus of affordability of medicine / treatment. The high group participants. While the survey data shows ranking on the cost factor is slightly less aligned actual experience with shock events, the focus group with the experiences reported to the survey: discussions centered around people’s perceptions of the clear majority of the respondents reported risk in terms of severity, likelihood of happening in relatively low out-of-pocket costs (500 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 27 Figure 20. Coping Mechanism Used to Cope with Agricultural Losses Cash / Savings 42% 55% Selling Assets 27% 5% Additional Job / Work More 20% 20% Assistance from Goverment 13% 3% Gifts from Family & Friends 8% 15% Crop Loss Family and Friend Loan 7% Livestock Loss 6% Formal Loan 7% 4% Reduce Consumption 10% 16% • Agricultural losses (crop or livestock) were the Response to Product Prototypes only risk for which government assistance was reported as a significant coping mechanism. It In order to gauge possible interest in an insurance seems to be a more effective strategy for some solution to better manage crop losses, a simple crop people, as a higher percentage of the households insurance product prototype was presented during that received assistance could recover – almost focus group discussions. The prototype is shown in 75%, compared to 53% of crop shocks overall. Box 2; maize was the crop chosen by participants in most cases, to be protected against loss due to • Selling assets was also a main strategy listed by the drought. Participants were asked for feedback on participants who experienced crop losses. It is an premiums that they would be willing to pay, product accessible and preferred strategy for many people value, and other details like payment frequency and because they would rather use their own assets preferred channels to pay premiums and collect the than ask someone for a loan or help. However, they payouts of the insurance. recognize that selling productive assets such as oxen is difficult to do as it has an impact on future Most focus group participants saw great value in income as well, and indeed the use of asset sales as a proposed crop insurance product, as it would a coping mechanism was very low for those who allow them to replace lost income and buy inputs had experienced a loss of livestock. for the next crop cycle. Table 5 below provides key responses on various product features. • Assistance from family and friends is typically limited in cases of crop shocks, as often the shock Most participants (97%) indicated they would buy event has impacted other households in the area as the product if it were available to them, but some well, such as in the case of weather-related shocks groups felt it was not affordable: on average, or disease outbreaks. Formal loans from banks participants were willing to pay just 3%-4% of are typically not available, while migration to find the sum insured per year. Participants were asked another job was indicated as a strategy of last resort. the premium amount that they would be willing to V. SPECIFIC RISK EVENTS, COSTS, AND COPING 28 Box 2. Crop Insurance Product Prototypes Benefits In case of Crop Failure due to DROUGHT: ETB _________ Farmer receives this fixed amount which they can request at the start, based on expected value of harvest. If there is no crop failure at the end of the season the farmer receives nothing. What is the Cover? You have the option to insure part of the value of the crop or the full amount. Term of Cover 1 season: 4-6 months (you can renew every season) If I Need to Make a Claim? Option 1 (Indemnity): Farmer makes claims request, insurance company representative visits to confirm the loss and claim is paid within 1-2 months. Option 2 (Index): Insurance Company checks readings from Early Warning System or other weather station, and if it measures a Drought for your area, money is paid within 2 weeks What If There Are Questions A call-in number for any questions, available any time to all who purchase or Problems? Table 5. Focus Group Feedback on Crop Insurance Product Prototype Features Product feature Responses Benefit • Benefit amounts were chosen by participants, and ranged in value from USD 340 (ETB 7,500) to USD 680 (ETB 15,000) • Proposed benefit amounts would be sufficient to recover from a major loss; allow replacement of income and purchase inputs for next crop cycle. Premium Payment • Method: Banks or MFIs • Timing: Twice a year, during June-January (depending on the region) Claim Payments • Banks and MFIs; paid within a month • Given a choice between and index-based payout and an indemnity-based payout, participants would prefer indemnity Overall Value “Hunger is very bad. It is main cause of illness and death of humans and livestock. Getting insurance for this is very important. It is better than selling our asset or asking loan that may not be available.” pay for the group’s selected amount insured. Next, willingness to pay. The results are shown below in the participants were given choices of different Table 6 and Table 7. percentages of the sum insured and asked for their WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 29 Table 6. WTP for Crop Insurance Health Risk Events (% of Coverage) 32% of households experienced at least one Seasonal Premium No. of Participants major health event in the last year, and FGD (% of Coverage) Stating WTP (N=37) participants ranked it as the most likely risk to occur and potentially one of the most impactful if it were Price 1 (15%) 2 to happen, clearly indicating a demand for insurance protection. There are many different causes of health Price 2 (10%) 3 shocks, each with its own type and volume of costs Price 3 (5%) 4 associated with it. Studies have shown that offering comprehensive health microinsurance is likely to <5% 27 be unsustainable without a significant subsidy.15 However, by understanding the types of costs common to all health events and the current coping Table 7. WTP for Crop Insurance (ETB) mechan 42% sims and behavior, insurers and other Seasonal Premium No. of Participants stakeholders can find ways to offer more narrow and (ETB) Stating WTP (N=37) targeted types of coverage that complement existing health financing mechanisms, thereby providing >1000 2 valuable protection. 501 - 1000 2 Health Risk Experience 100 - 500 25 The observed frequency of health events is slightly <100 6 higher in urban areas (34% of urban HHs vs. 28% of Product Specific Design Implications – Crop Insurance • Benefit amounts: It will be reasonable to establish the sum insured between USD 200-USD 250. • Premium Affordability is a major challenge given most participants choose a premium rate of 5% or less. Any premium set above this will face major challenges and may need significant subsidies to make it affordable to the target client base. • Claims payout preference was for indemnity. Any index product will face challenges in communication and understanding (besides other issues such as basis risk) for the client base. If using indemnity some efficiencies in claims validation will be needed to keep costs down. • Premium collection preference was for a formal financial institution such as a MFI or Bank. They will likely need some handling fee or commission to be factored in the pricing. • Scale: Given the low sum insured and premium rate, it will be very important to attain scale very quickly and efficiently to make the product sustainable. • Other programs: It will be important to look at the lessons from other crop insurance products in the market in Ethiopia and other comparable countries. McCord, M., R. Koven, and B. Magnoni. “The Magical Balance – MILK Lessons Learned.” Summary presentation of the 15 Microinsurance Learning and Knowledge Project. 2014. http://www.microinsurancecentre.org/resources/documents/busi- ness-case-for-microinsurance/the-magical-balance-milk-lessons-learned.html V. SPECIFIC RISK EVENTS, COSTS, AND COPING 30 rural HHs). This may be as a result of the social and Types and Amounts of Costs Experienced physical environment, including densely populated areas, air quality, sanitation, infectious disease and The financial costs of health shocks extend far beyond other related characteristics of urban areas. Figure the cost of treatment itself, and taken together have 21 shows the breakdown by type of health shock. the potential to set families way behind or prevent Malaria, severe diarrheoa and tuberculosis were the them from even seeking care. Types of costs reported most common illnesses reported. by those who experienced a health shock include: • Diagnostic related, such as consultation fees, Figure 21. Occurrence by Type of laboratory tests, and costs for transportation Health Shock to a medical facility. For some respondents, transportation costs alone can be prohibitive. As shown in Figure 22, almost all survey respondents incurred these types of costs, though the amounts Chronic Illness were relatively low. 16% Disability 28% • Treatment related, such as the cost of medicine, procedures at a medical facility, supplies, etc. Surgery While almost all health events incurred costs for Other Serious medicine, only about 1/3 of respondents reported Illness 7% 49% the other types of costs. These costs, if incurred, tend to be more expensive. Figure 22. Types and Amounts of Incurred Costs Reported after a Health Shock Proportion of HH’s Reporting Type of Expense Incurred (Average Amount, if Incurred) Consultation With A Doctor Medicine 96% Average USD 23 93% Average USD 42 Lost Incomes (ETB 509) (ETB 919) 31% Supplies Med USD 68 Lab Tests Other Cost Transportation 37% @ Medical Facility (ETB 1,500) 79% To/From Medical Facility Average USD 30 31% 63% Average USD 21 (ETB 651) Average USD 63 Opportunity (ETB 466) (ETB 1,395) Cost Average USD 23 Other Cost Associated w/ Illness (ETB 511) 24% Average USD 73 (ETB 1,597) Diagnostic-related Treatment-related WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 31 • Opportunity-costs in the form of lost income rural people may not wish to stay at a facility any of either the sick person or a caretaker. While longer than absolutely necessary, and therefore opt for only reported by 31% of those who experienced a treatment alternative that allows them to return home a health shock, these are the highest costs more quickly. Figure 23 provides the breakdown of reported, and can have longer-lasting effects. The the types of costs for urban and rural households. cumulative effect of inability to work was one of the key worries mentioned by FGD participants The combined magnitude of the individual types when discussing illness. of costs resulted in various levels of hardship for respondents; 21% of respondents indicated that By understanding the frequency and amount of the event caused great financial hardship, while these costs, insurers can identify the particular another 30% indicate moderate hardship. To types of expenses and costs that they wish to cover, help quantify overall coverage requirements, Figure and how they can market this as being beneficial 25 provides the distribution of costs. For example, and meeting needs of clients. Differences between a benefit amount of USD 75 (ETB 1650) would urban and rural households can also be targeted. For cover the total costs experienced by about 75% of example, for rural households, the transportation rural respondents and 67% of urban respondents. In costs were relatively high compared to consultation less than 15% percent of cases would a much larger fees and tests, likely because of challenges in access benefit of USD 150 (ETB 3300) or more be required, to care facilities (see Box 3). Rural households also likely in the case of surgeries or chronic illnesses spent proportionately more on medicines, while urban (Figure 24). Benefit levels may need to be tailored to respondents reported significantly higher other costs urban vs. rural clients: average reported shock costs at a medical care facility, indicating that they might in urban areas are almost 3 times higher than in rural be electing to or able to undergo more expensive areas, USD 138 (ETB 2,028) for urban and USD 48 treatments that rural households do not. Alternatively, (ETB 1,061) for rural. Figure 23. Health Shock Costs and Frequency by Urban and Rural 24% Cost / Savings 24% 109 24 64% Transportation 61% 28 15 33% 29% Other cost At A Medical Facility 85 28 37% Supplies 37% 42 11 92% Medicine 95% 51 26 81% Lab Test 76% 29 7 98% Consultation with A Doctor 93% 34 3 Urban: % of Affected Household s Reporting This Type of Cost Rural: % of Affected Household s Reporting This Type of Cost Urban: Avg. Amount of Cost Reported, If Incurred (USD) Rural: Avg. Amount of Cost Reported, If Incurred (USD) V. SPECIFIC RISK EVENTS, COSTS, AND COPING 32 Figure 24. Average Cost by Type of Health Shock (USD) 464 USD 178 91 78 26 Surgery Chronic Disability Other Serious Minor Illness Illness Figure 25. Distribution of Costs Incurred by a Household During a Health Shock: Urban and Rural (USD) 50%: USD 18 Avg: USD 48 Rural 59% 18% 7% 4%3%2% 8% 50%: USD 24 Avg: USD 137 Urban 51% 15% 8% 4% 2%2% 17% 50%: USD 22 Avg: USD 105 Overall 54% 16% 8% 4% 2% 2% 14% USD 0-250 251-500 501-750 751-1000 >1000 126-150 >150 Box 3. Health Facility Access Access to facilities has an impact on the cost and use of medical care. Most respondents visit a health center when sick, as shown in the figure below; rural residents were more likely to visit a health center, and urban residents were more likely to visit a hospital. 69% 49% Urban 32% Rural 23%20% 22% 1% 3% 3% 5% 1% 2% 2% 3% 1% 3% No Treatment Health Post Health Center Health Clinic Pharmacy Hospital Traditional Healer Other 22% of rural respondents indicated they went to two or more places for treatment, while just 12% of urban respondents sought treatment in two or more places. This indicates that some rural households may have an inefficient process of seeking care due to access challenges. 90% 76% 90% 36% 41% 40 Mins Walk 1-3 Hours By Bus 17 Mins Walk 30-60 Mins By Taxi 30-60 Mins By Bus Rural Residents Urban Residents Health Center Hospital Health Center Hospital WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 33 Coping Mechanisms Used • Cash and savings are the preferred coping strategies for a health event, as well as gifts or loans from Insurance needs to be viewed within the context of friends and family. According to the savings data existing coping mechanisms. 90% of households reported by respondents, about 25% of households used one or more coping strategies to cover health would have enough money to cover the average expenses, and 20% reported not having certain reported cost of a health shock. However, this would strategies available when they were needed. for many mean depleting savings. Some evidence of Almost 75% reported that the coping mechanisms this may be seen (without causality or correlation): they used were sufficient to fully financially recover average savings balances of those households that did after the health shock, with rural respondents having not report a health shock are more than 20% higher a bit lower proportion that are able to recover than those who did have a health shock. Insurance (71%) than urban respondents (76%). This leaves could divert some of the savings into premiums at least 25% of the market who could use additional payments, protecting remaining savings to use for support, and others who may have elected to not seek other financial goals. Focus groups indicated that for treatment because of the cost. Also, despite being serious illnesses and for many low-income families, able to recover financially, the use of some strategies savings would not be sufficient. creates other types of burdens which, if used as a substitute or complement, insurance could alleviate. • If savings and funds from friends and family are unavailable or insufficiently available then the Figure 26 shows the top strategies used by households household will revert to the next coping strategy, after a health shock. selling assets. Rural respondents were more likely to resort to selling assets than urban respondents Figure 26. Coping Strategies Used (10% vs. 4%). Focus group participants also listed After a Health Shock selling assets as a top strategy because it allows them to quickly raise a large amount of money. However, they mentioned that sometimes they 60% must sell at a discount, and that often this means Cash / Savings a long recovery period to get back to normal as 58% they lose a productive asset. 24% Donations or Loan • Loans are sometimes necessary but seen as a last from Family or Friends 20% resort. 4% Selling Assets Response to Product Prototypes 10% In order to gauge possible interest in an insurance Urban 4% solution to better cope with some of the costs Getting Additional Job Rural or Working More 7% commonly incurred in case of an illness, a simple hospital cash insurance product prototype was 3% presented during focus group discussions. The Assistance from Edir prototype is shown in Box 4. 3% 2% Most focus group participants saw some value in Loan from SACCO a proposed hospital cash insurance product which Bank/Moneylender 3% would supplement current coping mechanisms. Table 8 provides information on the responses from FGD participants to various product features. V. SPECIFIC RISK EVENTS, COSTS, AND COPING 34 Box 4. Hospital Cash Insurance Product Prototype Benefits In case of hospitalisation of insured person, for any reason, insured receives ETB 300 / 500 / 750 / 1000 / 1500 for every night in hospital, up to 40 days maximum. If insured is not hospitalised they receive nothing. Eligibility Anyone between the ages of 18 and 65 Term of cover 1 year: you can renew every year If I need to make a claim? Easy claims request, paid within 3 weeks of the insured providing proof of hospitalisation What if there are A call-in number for any questions, available any time to all who purchase questions or problems? Table 8. Focus Group Feedback on Hospital Cash Product Prototype Features Product feature Responses Benefit Amount: • Most groups chose a daily benefit amount of ETB 750 (USD 34). Participants said this amount would allow them to visit a (public) hospital without fear of the costs – indicating behavior change effect of insurance. • Participants said they would use the money to pay for medicine, transportation, lab tests, and other out-of-pocket fees • Almost all groups discussed using the benefit amount to pay back loans from family and friends, banks, or other moneylenders. Participants understood that insurance money would not be awarded in advance, and therefore they would still need to acquire immediate financing for a health emergency. However, they highlighted the benefit that having insurance should unlock short-term loans – knowing that an insurance payment is coming, they should be able to get people and institutions to lend to them, at lower rates. Premium Payment • For urban population preference was monthly with salary. For rural population preference was to pay premium after harvest. Claims Payment • Desired period to receive the insurance payment: 1 week after filing the claim. • Convenient place to receive the benefit: community committee and formal financial institutions (Banks, MFI’s, cooperatives, SACCO). Eligibility • A disadvantage highlighted by almost all groups was that the insurance excludes children and elderly. Participants in both rural and urban areas were interested in purchasing this product. Based on On average, participants were willing to pay the actual prototype features, and the range of sums 52% of the daily benefit amount, per year, for assured, the premiums that participants were willing this product, or an average of ETB 35 to pay for this product are noted in Table 9 and Table (USD 1.6) per month. This is close to an 10. Participants were willing to pay from 5% to approximate sound premium. 120% of the daily benefit amount for one year of coverage, with most falling in the range of 10-50%. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 35 Table 9. WTP for Hospital Cash Death Risk Events Insurance (% of Coverage) Death Risk Experience Level - % of Daily No. of Participants Benefit Stating WTP (N=75) Although the financial risk of death was noted 5% - 10% 6 by FGD respondents as being limited in terms of cost, likelihood, and level of worry, nearly half of 11% - 25% 19 the deaths reported by survey participants over 26% - 50% 20 the prior one year were of people who contributed financially to the household. This loss of income to 51% -75% 11 sustain the family represents both a negative impact 76% - 100% 8 on the stability of the household, and a verifiable opportunity for insurers to help people manage this More Than 100% 11 loss. What will drive success for new products is how they respond to the various costs faced by the insured Table 10. WTP for Hospital Cash when there is a death in the family. For this we need to understand the types of risks and the financial costs Insurance (ETB) of managing them when there is a death in the family. Monthly Premium No. of Participants (ETB) Stating WTP (N=75) Types and Amounts of Costs Experienced 5 - 20 33 The financial risks accompanying death, especially 21 - 50 29 that of a financial contributor to the household, can result in a significant long-term shock because of the 51 - 75 4 various costs. When there is a death, there are: 76 - 100 9 • Pre-death costs to cover such expenses as end-of- >100 0 life medical care, and outstanding loans Product Specific Design Implications – Health Insurance • Understanding the various components of the cost of health events can help insurers design coverage that will resonate with potential clients. The size of the loss incurred can vary significantly. Components of three types of costs could be covered: • Diagnostic costs, including transportation to facility, consultation fees, and lab tests, were incurred by most but at relatively low cost. For rural respondents, transportation was proportionately higher. • Treatment costs – costs to purchase medicine were experienced by almost all households and composed one of the highest expenses for rural households; other treatment costs at a medical facility were low in frequency but high in cost when occurred, particularly for urban residents. • Lost income – reported by a third of respondents, and the highest cost when it did occur • The perception of financial impact as expressed by FGD participants seems higher than the actual financial impact of health shocks as reported to the survey. Many people fear a high-cost illness, but many events are manageable with existing resources. A well-designed insurance product could leverage existing strategies such as savings, and provide peace of mind. • There are significant gaps in current coping mechanisms and no major complementary activities to manage risks were identified. • There is some apparent rationing behavior by people due to limited access to health care facilities (and cost restrictions). • Interest in a hospital cash prototype was high, with close to half of participants willing to pay a realistic premium. V. SPECIFIC RISK EVENTS, COSTS, AND COPING 36 • Funeral costs covering the festivities, opportunity The costs of these risks can be substantially costs, and other direct costs of the burial. different in rural and urban areas. The frequency of the expense when there is death, as well as the • Medium to long-term costs including family average cost of the category, by rural and urban financial maintenance (given an overall reduction respondents is shown in Figure 27 and Figure 28, in HH income) and traditional funeral events respectively. after 40 and 80 days, and beyond. This information allows an insurer to identify Ethiopians experience each of these groups of costs, costs of particular issues to cover, and the leaving 60% of survey respondents to note that the sequencing—pre-death, funeral, and medium to financial shock related to death create moderate to long-term—with which to address these risks, as great hardship. Although this is the case, both rural well as the average coverage amount needed in and urban focus groups reported death to be their each area. By addressing risk in this way, insurers 4th most difficult risk to manage when considering can provide coverage that more effectively addresses a combination of cost, worry, and frequency. With the real risks of urban or rural households, and they frequency being limited, and a general reluctance to can improve their marketing as they can point out worry about, or even think about death, these factors to people exactly how their product responds to the reduce the overall stress for this event. In most needs of these potential clients. countries, one would generally see death as the first or second most difficult risk to manage. Figure 27. Frequency and Allocation of Costs Faced After a Death – Rural Participants Proportion of HH’s Reporting Expenses - Rural Food & Drinks (Memorial At Time of Death) Medical Care Associated with Death 76% Avg. USD 73 70% (ETB 1,614) 40/80 Days Memorial Services Avg. USD 102 (ETB 2,245) Clothing 43% (for the Deceased and Relatives) Avg. USD 139 Other 70% (ETB 3,057) 13% Avg. USD 21 Burial/Coffin /Interment Avg. USD 199 (ETB 463) 63% Documentation (ETB 4,388) Religious Leader Transportation 8% 38% Avg. USD 49 Avg. USD 23 (of the Body) (ETB 503) 7% (ETB 1075) Avg. USD 12 Avg. USD 123 (ETB 260) (ETB 2,700) WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 37 Figure 28: Frequency and Allocation of Costs Faced After A Death – Urban Participants Proportion of HH’s Reporting Expenses - Urban Food & Drinks Medical (Memorial At Time of Death) 87% Care Associated with Death 80% Avg. USD 145 (ETB 3,198) 40/80 Days Memorial Services Avg. USD 318 (ETB 6,985) 58% Clothing Avg. USD 269 (for the Deceased and Relatives) (ETB 5,917) Other 68% 23% Avg. USD 36 Burial/Coffin Avg. USD 137 (ETB 800) (ETB 3,017) /Interment Documentation Religious Leader 47% Transportation (of the Body) 66% 13% Avg. USD 44 (ETB 974) 26% Avg. USD 184 Avg. USD 25 (ETB 545) Avg. USD 77 (ETB 4,040) (ETB 1,690) Figure 29. Distribution of Expenses After Death – Urban and Rural 50%: USD 127 Avg: USD 243 Rural 74% 13% 6% 3%4% 50%: USD 285 Avg: USD 580 Urban 45% 21% 12% 8% 14% 50%: USD 210 Avg: USD 456 Overall 56% 18% 10% 6% 10% USD 0-250 251-500 501-750 751-1000 >1000 V. SPECIFIC RISK EVENTS, COSTS, AND COPING 38 To help in refining the coverage amounts Figure 29 helps several issues that could be addressed by insurance, to further narrow the coverage requirements, showing or a combination of better savings and credit, mixed that a rural policy with a sum assured of USD 250 (ETB with insurance. 5525) would cover the needs of almost three-quarters of the rural population’s costs, excluding opportunity • Most people are using savings, and they are costs. In the urban areas, the coverage would need to be wiping out their reserves to cover the costs of closer to USD 750 (ETB 16,575). death. Insurance or better loan products could help minimize this negative impact and allow people to retain some resilience. Coping Mechanisms Used The competition for insurance in these markets is • Edirs, generally considered as a key source not so much with other insurers but with current of funeral expense coverage, turn out to be of (though typically insufficient) coping mechanisms. limited impact, as indeed earlier it was noted If the accessibility, proximity to their real needs, by respondents that these are primarily social in and satisfaction with the terms of current coping nature and the financial benefits are limited. mechanisms is acceptable to people, it is unlikely that the market will want insurance products. • Selling assets is a particularly burdensome response, yet in the rural areas it is the second most significant Figure 30 shows the various coping mechanisms that primary coping mechanism. The urgency of the are applied by rural and urban households to cover need for cash, often means people sell their assets the costs related to funerals. This information shows at a discount simply to get money as quickly as possible. This inflates the costs of coping. Figure 30. Coping Mechanisms Used After A Death In Ethiopia, the coping mechanisms invoked in the case of a death are substantially painful and leave the HH with often significantly reduced Cash on Hand or Savings 53% resilience. Given proper products, a fair price, and an of Any Household Member 59% effort to show trustworthiness in the intangible death insurance product, insurers should have a significant Donations/gifts from friends 16% potential market in both urban and rural areas. or family (out of Household) 21% 14% Response to Product Prototypes Assistance from Edir 28% Using cash, savings and Edirs, among the most common responses to financial risks associated with Loan from Friend/SACCO 15% death, are not sufficient in most cases. In order to /Bank/Moneylender 9% Rural gauge possible interest in an insurance solution to better Urban cope with some of the costs, a simple life insurance 11% product prototype was presented during focus group Additional Job/Work More 7% discussions. The prototype is shown in Box 5. 18% Selling Assets 7% The life insurance product prototype was acknowledged as a positive addition to risk management strategies, and one for which many 5% Other 1% people will pay an actuarially derived premium. Table 11 provides key information on the responses from FGD participants to the prototype features. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 39 Box 5. Life Insurance Product Prototypes Benefits In case of death of insured person -- for any reason – the family receives ETB _________ If the policyholder does not die during the 1-year period, the family receives nothing Eligibility Anyone between the ages of 18 and 65. Need a separate policy for each family member who is part of the insurance. Term of Cover 1 year: you can renew every year If I Need to Make A Claim? Easy claims request, paid within 3 weeks of the beneficiary providing proof of death What If There Are Questions or A call-in number for any questions, available any time to all who pProblems? purchase Table 11. Focus Group Feedback on Life Insurance Product Prototype Features Product Feature Responses Benefit Amount • Sum assured: selected by groups and ranged between USD 340 (ETB 10,000) and USD 760 (ETB 17,500) • Use of proceeds: Participants would use the insurance benefit to pay burial expenses, cover memorial services, repay loans and buy agricultural inputs and livestock. Premium Payment and Benefit • Timing: For rural areas: August / September, or December / Collection January. • Frequency: Urban prefer to pay monthly with salary, Rural prefer to pay once or twice annually with harvests. • Convenient place to receive the benefit: Banks, MFIs, cooperatives, village community committees Eligibility (Individuals Aged 18-65) • One disadvantage mentioned is that, unlike Edirs, where all family members are covered, life insurance is just for one person. This basic product is one that people will purchase On average, participants were willing to pay in to address some of the risks they have specifically the order of 2.4% of the sum assured, per year, identified. Often death (or life) insurance is an for this product. easy starting point for insurers trying to service the low-income market. In this case, over 50% of the participants would pay at least 240 ETB (~10 USD) Participants in both rural and urban areas were per year for this prototype. interested in purchasing this product. Based on the actual prototype features, and the range of sums assured, the premiums that participants were willing to pay for this product are noted in Table 13 and Table 12. V. SPECIFIC RISK EVENTS, COSTS, AND COPING 40 Table 12. WTP for Life Insurance Table 13. WTP for Life Insurance (ETB) (% of Coverage) Premium in ETB (N=46) As % of Sum Assured (N=46) Monthly Premium No. of Participants Premium as % of No. of Participants Stating WTP (N=46) Cover Stating WTP (N=46) <5 0 <1.0% 13 5 - 10 18 1.0 - 2.0% 11 11 - 20 6 2.0 - 3.0% 4 21 - 40 5 3.01 - 4.0% 9 41 - 60 13 >4.0% 9 61 - 80 2 >80 2 Product Specific Design Implications – Life Insurance • There are three reasonably distinct types of costs related to death: • Pre-death costs (primarily medical care associated with the death) • Funeral costs • On-going HH and memorial costs • Understanding the various components of costs relating to death is an important tool for insurers in developing life insurance products that create value for the market. • Many people will pay an actuarially derived premium for a basic life product as reflected by the prototype. • Premium timing is important, particularly in rural areas, as monthly premiums will not be possible. • Edirs, while a valuable source of social and financial support, are not a significant or sufficient source of funds to cover out of pocket costs in case of death. However, as seen in the focus groups, Edirs are perceived as having an important role in preparing households to cope with a death, and participants would therefore prioritize better risk management for other types of risks. There may nevertheless be ways for insurers to link with Edirs to provide better coverage for death and other risk management products, if there is an effective means of aggregating premiums for a number of Edirs, and the products truly respond to the un-met needs. Although most people ranked death as their number four hardship, more than half of the respondents who experienced a death in the last year noted that death yields moderate to great hardship. The current coping mechanisms are often weak, and there is room for well-designed life insurance products in both the urban and rural areas of Ethiopia. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 41 ACKNOWLEDGMENTS 42 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE VI. POTENTIAL CHANNELS FOR DISTRIBUTION OF INSURANCE T he preceding sections have demonstrated that there is both a need for insurance as well as an overall open attitude towards insurance. However, unless insurers have a way of reaching Ethiopians in a cost-effective way, it is difficult to meet this potential demand for insurance. Therefore, the study looked at potential distribution channels for insurance, getting information on institutions or groups people go to, how often they visit or meet, and how trustworthy and accessible they would perceive these channels to be in terms of insurance. There are several potential aggregating points for To further explore openness to various channels in accessing potential microinsurance clients, based terms of insurance, the FGDs presented insurance on responses regarding membership / patronage product prototypes and then asked participants where of various institutions. As shown in Figure 31, the they would be most likely to buy insurance, given most common groups are Edirs, savings and credit accessibility and trust of that channel. Summary cooperatives (SACCOs), utility companies, and results are shown in Table 14. equbs. Of note is that they are mostly focused on financial services already, but two of the four are For most focus groups, trust seemed to be a more informal groups, and thus potentially more difficult important factor than accessibility. Trust seems to be for distributing insurance. In considering potential linked to formality and organization, indicating that contact points for insurance, it is notable that despite participants would be concerned about capacity of membership, physical access is infrequent for most the institution to undertake insurance transactions channels; this will have implications for potential rather than general trustworthiness. Without timing of sales and payments, as well as considering exception, every group indicated a high level of trust ways to use insurance to attract clients more frequently. for banks to be able to effectively deliver insurance, Figure 31. Membership and Frequency of Access of Potential Channels – Survey Respondents Edir 2% 50% 48% 0% Utility 61% 38% Company 2% Type of Institution or Group SACCO 33% 65% Equb 21% 58% 21% 1% Agri Input 6% 93% Supplier 1% Cooperative 20%79% 4% MFI 15% 81% 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Number of Respondents Indicating that They Are a Member or Client Frequency of Access Frequently Occasionally Never/Infrequently WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 43 with participants mentioning characteristics such as that they are community-based and run by people they professional staff and established systems for collecting know well. In terms of accessibility, Edirs, SACCOs, money. In contrast, Edirs were ranked low to medium cooperatives, and MFIs are physically more locally on trust, with most participants mentioning that they based, and better serve lower-income clients with their are not well organized, informal, and lack expertise to existing services. Male and female groups end up with manage more complex financial transactions. Those very similar overall rankings and the reasons mentioned groups that did rate Edirs as having high trust mentioned were generally consistent. Table 14. Trust, Ease of Access, and Likelihood of Buying From Potential Distribution Channels (FGDs) Level of Trust (As It Pertains to Overall “Most Likely to Channel Ease of Access Insurance Delivery) Buy Insurance From”16 Bank Moderate (rural) / easy (urban) High – formal and organized, • 19 groups – mostly available at the wereda qualified personnel, secure and • Average rank of 1.3 level. Noted that poor do not use stable, good customer service them currently because they have no extra income for saving MFI Easy / Moderate – easy High / Medium – formal, • 24 groups for those groups who had a well-organized, trusted in the (mostly rural) branch at the kebele level; community, but more complex • Average rank of 1.8 moderate for some groups who processes and wait times than had to go to wereda to access some other channels Cooperative Moderate / Easy – locally Medium / High – sometimes slow • 24 groups situated, most farmers are moving and sustainability and (mostly rural) members. Some groups capacity is questionable (not as • Average rank of 2.7 mentioned that they are formal as banks / MFIs). Groups accessible only to members indicating high trust felt sense of ownership and mentioned that their local cooperatives had received trainings SACCO Easy / Moderate - easy for Medium – Not as well established • 17 Groups those groups who had a branch and organized as MFIs and banks (mostly rural) at the kebele level; moderate for • Average rank of 3.5 some groups who had to go to wereda to access; more likely to serve poorer people Agriculture Easy – located at kebele Medium – generally trusted, but • 13 Groups (all rural) input level, but access mostly complex processes in service • Average rank of 3.5 supplier during farming season provision and concern about being too business-focused and not having time for a non-core activity (insurance) Edir Easy / Moderate – Low / Medium – Individual’s • 29 groups neighborhood based, and character is trusted, but there • Average rank of 3.7 frequently accessed for is low financial capacity and monthly meetings expertise, and they are informal and run by volunteers Note: Other channels considered by fewer than 25% of groups were utility companies, post offices, kebele administration, and money transfer agencies. These channels generally were seen as medium to low trust, and moderate to difficult to access. Each group was asked to rank the channels according to the likelihood that they would buy insurance from that channel, 15 with 1 being the mostly likely. Not all groups included all channels in their list. VI. POTENTIAL CHANNELS FOR DISTRIBUTION OF INSURANCE 44 Key Implications – Distribution • Informal or less formal groups, such as SACCOs and Edirs, reach more people more frequently, and thus are attractive in terms of generating larger volumes of potential clients. However, potential purchasers of insurance see them as risky because of their informal status. When considering insurance, people are looking for a formal institution that brings stability and financial capacity. Thus, insurers wishing to tap the larger channels will have to work to build capacity in these institutions and focus their marketing to build up confidence among clients. • Focus groups’ responses to prototypes were strong, and participants showed a strong preference for purchasing from more formal institutions such as MFIs and banks. A well-designed insurance product could draw new clients to such institutions, and potentially facilitate better access as well (e.g. by reducing collateral requirements or risk). • Alternative channels that are starting to be used in other countries – such as utilities, retailers, post offices, mobile phones, and others – are not yet largely in consideration. Level of access is low, and in terms of perception, most people seem hesitant to consider purchasing a financial service from a non-financial service provider. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 45 ACKNOWLEDGMENTS 46 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE CONCLUSIONS AND RECOMMENDATIONS A prerequisite to successful microinsurance is a segmented understanding of the market. This research segments results into rural / urban and male / female perceptions of risk, strategies to manage risk, and potential gaps or burdensome strategies within their approach. Understanding the markets at this level provides key information to allow for the development of successful microinsurance products in Ethiopia. This research was conducted as a means of addressing the gap in understanding the market. From here, the World Bank project will work with insurers and others in the value chain to manage the rest of the product development cycle shown in Figure 32. The results of the study show a clear gap between the People worry most about health-related risks, as well effects of various financial shocks and households’ as their assets. Both urban and rural respondents ranked ability to cope with these shocks. The coping death risks rather low in priority compared to usual mechanisms used in the case of a financial shock can be expectations, as the respondents noted low financial painful and leave a household with often significantly impact from death due to the culture of community reduced resilience. Insurance is typically not part of assistance for funerals. However, the reality appears the risk management toolkit of low-income people, somewhat different. as the survey results show that experience with, and knowledge of, insurance is very low. However, in The analysis provides details on the results of basic the case of microinsurance, this is positive. In most prototype testing for five products that were generated other countries, there is already a substantial negative from the results of initial FGDs and the household impression of insurance leading to negative bias, survey. These suggest the following: which is rather low in Ethiopia. Figure 32. Product Development Process Institutional Assessment 6 Continuous Market Consists of Pre-survey Review Research FGDs Microinsurance Product Partnership Inform Roll Out Development Development Process Pilot Prototype Testing Design & Testing 2,922 HH Product Surveys Design Informs Follow Up By Demand Report + Videos from Results in 32 the Field Post-survey FGDs WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 47 • There is a benefit to the market and insurers in food stores. Any product should address these developing market-segmented products by gender, components. Additionally, there are issues that and by location (rural / urban). The responses were require adaptation in agriculture, and insurance significant such that insurers should see improved can be helpful in providing the comfort level that uptake over segment-agnostic products. might help farmers in the transition. The WFP’s R4 program has taken a comprehensive approach to • The market itself shows broad potential for agriculture risk management. This kind of a broader microinsurance purchase by up to 10 million approach to risk management (rather than simply households, or about 50 million Ethiopians.17 insurance) could be enhanced. This potential could be better met with a market segmented approach. • Segmentation in approaches by gender is also important. There are differences in the women’s • In urban areas risk management approaches that approach to risk priorities, such as with women focus on supplemental health are at the top of the prioritizing road accidents and men with health. The list for market demand. These could be enhanced study made clear that women have an important with added-value linkages and the inclusion of both input in decisions around risk management within accidental cover that provides medical assistance as the household, even when they are not the “head well as disability benefits, and, a concerted effort of household”. This suggests that education and to improve traffic regulations and enforcement. marketing around microinsurance products in Especially in this case, insurance is not enough. Ethiopia should be segmented by gender for more The approach should be around improved risk effectiveness. management which will benefit all parties. Ethiopia provides a significant opportunity for • Death did not score highly on the priority list. It insurers to expand their businesses, the government seemed that this was due to the perception that to improve the overall stability of the low-income people were covered by local mechanisms, and population, and low-income people to stabilize their especially Edirs. However, it also became clear that economic status. However, it is also clear that there the Edirs are primarily social, and that people cannot is much that is necessary to make this happen. The count on them for significant financial contributions demand work presented here helps to define the needs to the costs of a funeral. Additionally, there is little and potential risk management responses that could available for family assistance after the death of a enhance the structure of the project’s product and breadwinner. These risk management areas could marketing level inputs. The regulation component benefit from some additional exploration. of the project shows specific alterations to the legal structure that could improve the ability and motivation • In rural areas, people tend to be concerned about of insurers to enter or expand within this market. The their farming yields, for income and / or subsistence. supply side component provides guidance for capacity Ethiopia in particular has very high levels of risk, improvements with the industry. The financial though there are significant topographical climes education component has uncovered important that make the diversity intense to such a level that it knowledge gaps and means of “educating” the is difficult to get to scale with any traditional index Ethiopian market. Combining these inputs is critical type product. A broader approach to agriculture to implement a comprehensive approach to improving and livestock insurance cover is needed. When risk management in Ethiopia. One component is losses are experienced, they come on three levels: not enough, but all responses must include direct often repaying an input loan, replanting (if early consideration of clients’ needs, abilities, and priorities. in the season), and in replacing lost income / lost This comes from the 65% of the survey group determined to be in the range for microinsurance converted conservatively 17 to people and households. CONCLUSIONS AND RECOMMENDATIONS 48 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE REFERENCES Central Statistical Agency of Ethiopia (CSA), February 2017. Living Standards Measurement Study (LSMS) – Integrated Surveys on Agriculture Ethiopia Socioeconomic Survey (ESS) 2015/2016. World Bank and National Bank of Ethiopia. Central Statistical Agency of Ethiopia (CSA), October 2012. Household Consumption and Expenditure (HCE) Survey 2010/11, Analytical Report. GSMA Intelligence, Country data dashboards. https://www.gsmaintelligence.com/ Data retrieved 17 October 2017. Klapper, L., A. Lusardi, and P. van Oudheusden. Financial Literacy Around the World: Insights from the Standard and Poor’s Ratings Services Global Financial Literacy Survey. http://gflec.org/wp-content/ uploads/2015/11/Finlit_paper_16_F2_singles.pdf Schreiner, Mark, October 2016. Simple Poverty Scorecard – Ethiopia. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 49 III. MANDATORY REPORTING AND INFORMATION SHARING 50 FINANCE, COMPETITIVENESS & INNOVATION INSIGHT | LONG-TERM FINANCE APPENDICES Appendix 1 – Sampling Frameworks for Household Survey and Focus Group Discussions Methodology for establishing sample size. The basis for the computation of sample size was calculated using the following coverage formula: n = D(Zα/2+Zβ)2 ((P) (1 – P) / (e)2) Where: • n is the required minimum sample size (eligible households), • Zα/2 is a factor to achieve the 90% level of confidence (Corresponding tabular value of 1.28), • Zβ is the power of a test (for 95% power corresponding z value is 1.65) • P is the anticipated proportion for the key indicator, • D is the square root of design effect (2), • e is the acceptable margin of error between actual value and estimate from the survey (4%) 90% 10% Initial Planned Level of 95% Non- Sample Sample Confidence Power(Zβ) P 1-P D e e2 response Size Size 1.28 1.65 0.5 0.5 2 0.04 0.0016 268 2677 2945 This particular formula was selected by JaRco’s to keep homogeneity at cluster level and to get a Senior Statistician to gather a statistically sufficient sample size for reporting at the zonal and significant amount of data on the target clients and wereda levels, approximately 50 households were microinsurance in Ethiopia. After taking the non- surveyed per kebele, for a total of 2,922 households. response rate and proportional sampling adjustments The number of clusters / Kebeles assigned in each into consideration, 16 zones, 31 weredas, and 59 selected wereda in each region was allocated based kebeles (enumeration areas) across the five regions on population (Table 15), with the final sampling were covered in the household survey. In order framework shown in Table 16. WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 51 Table 15. Sampled HHs Distributed to the Regions # of HHs Targeted Region Per Region Population18 % of Total Population Tigray 200 5,247,005 6% Amhara 750 21,134,988 22% Addis Ababa* 650 3,433,999 4% Oromia 800 35,467,001 38% SNNPR 550 19,170,007 20% Dire Dawa* 0 466,000 <1% Harar* 0 246,000 <1% Afar 0 1,812,002 2% Benishangul-Gumuz 0 1,066,001 1% Gambela 0 453,999 <1% Somali 0 5,748,998 6.1% Special Enumeration Areas 0 123,001 <1% Total 2950 94,251,001 *Cities Table 16. Household Survey Sampling Framework Region Zone Woreda Kebele HHs Surveyed Esetumite 50 Semen Achefer Yismala town 50 West Gojjam Arefa medihani alem 38 Degadamot Feres bet 50 Tare Senba 50 Ebinat Ebinat - Town (Kebele 01) 49 South Gonder Kebele 21 40 Amhara Simada Wegada - Town 49 (701 Households) Werenito 50 Legambo Akesta - Town 50 South Wello Gishen Mariam 38 Ambasel Wuchale - Town 37 Anazted 50 Menz Geramidir North Shewa Mehal Meda - Town 50 Asagirt Welda Hager 50 Ethiopia Central Statistical Agency, Population projection of Ethiopia for all Regions at wereda level from 2014 - 2017, 18 2017 Regional Population APPENDICES 52 Ado Lalisa 50 Limu East Welega Gelila - Town (Kebele 01) 50 Zone Jawis 49 Boeya Boshe Bilo - Town(Kebele 01) 51 Tiritira 03 50 Golo Oda Burka - Town(Kebele 01) 50 East HarrgeZone Melka 50 Fedis Oromia Boko - Town(Kebele 01) 50 (800 Households) Gedebo Jema 50 Hidabu Abote North Shewa Ejere - Town (Kebele 01) 50 Zone Lemi 50 Yya Gulele Fital - Town(Kebele 01) 50 Bite Daba 50 Ziway Dugda Golcho - Town(Kebele 01) 50 Arsi Zone Guracha Chisa 50 Sude Kula - Town(Kebele 01) 50 Gacheno 50 Damot Gale Bodite - Town 50 Wolayta Koyisha Gola 50 Humbo Tebela - Town 50 Hafursa Nemeto 50 SNNPR Arbe Gona Yaya - Town 50 (550 Households) Sidama Mudamu Seneka 55 Boricha Yaya - Town 45 Adis Birihan 50 Gewata Kefa Konda - Town 50 Cheta Arara 50 Hawulti 50 Raya Azebo Tigray Mehoni - Town 50 Southern Tigray (200 Households) Korema Town 49 Ofla Hashenge 51 WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 53 Ketena 1 50 Woreda 3 Ketena 5 49 Gulele Sub City Ketena 2 50 Woreda 6 Ketena 5 51 Ketena 8 50 Woreda 7 Kolfe Keranio Ketena 10 64 Addis Abeba Sub City Ketena 3 46 (671 Households) Woreda 10 Ketena 5 50 Ketena 1 50 Woreda 1 Ketena 9 50 Nefas Silik Lafto Ketena 6 50 Woreda 4 Ketena 8 50 Woreda 8 Ketena 4 61 Focus Group Discussion Sampling Framework Summary Location: Urban-13 Rural-25 g Crop (5) Gender: Male-22 Female-16 Livestock (5) Tool Used: Pre-Survey-6 Post-Survey-32 Health (10) Region: Addis Ababa-8 Life (6) Amhara-6 Property (6) Oromia-11 SNNPR-7 Tigray-6 Urban / Nr. Economic Region Kebele Rural Gender Tool Used Participants Profile Addis Ababa 1 Urban Female Post Survey 6 Government (Life Prototype) Worker Addis Ababa 1 Urban Male Post Survey 6 Government (Life Prototype) Worker Addis Ababa 10 Urban Female Post Survey 10 Self Employed (Health Prototype) Addis Ababa 10 Urban Male Post Survey 6 Government (Health Prototype) Worker Addis Ababa 3 Urban Female Post Survey 9 Self Employed (Property Prototype) Addis Ababa 3 Urban Male Post Survey 7 Self Employed, (Property Prototype) Day Labor Addis Ababa Betel Urban Female Pre-Survey 7 Self Employed, Day Labor Addis Ababa Betel Urban Male Pre-Survey 8 Self Employed Day Labor APPENDICES 54 Amhara Ambasel/02 Rural Male Post Survey 6 Farmer (Livestock Prototype) Amhara Semen Achefer/ Rural Male Post Survey 7 Farmer Yismala (Crop Prototype) Amhara Asagirt Rural Male Post Survey 6 Farmer (Health Prototype) Amhara Asagirt Rural Female Post Survey 6 Farmer (Health Prototype) Amhara Ambasel/ Urban Male Post Survey 6 Self Employed Wuchale (Property Prototype) Amhara Ambasel/ Urban Female Post Survey 6 Self Employed Wuchale (Property Prototype) Oromia Gela Gure Rural Female Post Survey 10 Farmer (Livestock Prototype) Oromia Gela Gure Rural Male Post Survey 6 Farmer (Livestock Prototype) Oromia Iftu Rural Male Post Survey 9 Farmer (Crop Prototype) Oromia Halo Rural Male Post Survey 7 Farmer (Life Prototype) Oromia Halo Rural Female Post Survey 8 Farmer (Life Prototype) Oromia Illu Dire Rural Male Post Survey 10 Farmer (Health Prototype) Oromia Illu Dire Rural Female Post Survey 10 Farmer (Health Prototype) Oromia Wererso Malima Rural Male Pre-Purvey 7 Farmer Oromia Wererso Malima Rural Female Pre-Purvey 7 Farmer Oromia Boko Urban Male Post Survey 9 Self Employed (Property Prototype) Oromia Boko Urban Female Post Survey 9 Self Employed (Property Prototype) SNNPR Abela Sipa Rural Male Post Survey 7 Farmer (Livestock Prototype) SNNPR Gachano Rural Male Post Survey 8 Farmer (Crop Prototype) SNNPR Gachano Rural Female Post Survey 6 Farmer (Crop Prototype) SNNPR Boricha Boneya Rural Male Post Survey 6 Farmer Chire (Health Prototype) SNNPR Boricha Boneya Rural Female Post Survey 6 Farmer Chire (Health Prototype) SNNPR Beteo Rural Male Pre-Purvey 8 Farmer SNNPR Yaye Urban Female Pre-Purvey 8 Farmer WHAT PEOPLE WANT: INVESTIGATING INCLUSIVE INSURANCE DEMAND IN ETHIOPIA 55 Tigray Geniye Rural Male Post Survey 10 Farmer (Livestock Prototype) Tigray Adigolo Rural Male Post Survey 7 Farmer (Crop pPrototype) Tigray Hayalo Rural Female Post Survey 10 Farmer (Life Prototype) Tigray Wemberta Rural Male Post Survey 10 Farmer (Life Prototype) Tigray wergiba Rural Male Post Survey 7 Farmer (Health Prototype) Tigray Tsigia Rural Female Post Survey 8 Farmer / (Health pPrototype) Housewife Appendix 2 – Additional Survey Data on Perceptions of Insurance Figure 33. Attitudes Towards Insurance19 It Does Not Make Sense to Insure As Nothing Serious Will Happen to My Family or Me Disagree Moderate Agree Don't know 59% 12% 5% 24% It Does Not Make Sense to Insure Because We Can Manage Problems Ourselves Disagree Moderate Agree Don't know Perception 57% 12% 8% 23% on Usefulness/ Insurance Is A Good Use of Money Need for Agree Moderate Disagree Don't know 41% 22% 9% 27% Insurance When Somebody is Insured He/She Can Live Without Worry Agree Moderate Disagree Don't know 30% 22% 23% 25% Insurers Sometimes Manipulate Conditions or Trick People so They Don’t Have to Pay Disagree Moderate Agree Don't know 40% 14% 6% 40% Insurers are Stable Financially and Cannot Go Bankrupt Easily Agree Moderate Disagree Don't know Perception 29% 16% 14% 42% on Insurers Insurance is Expensive Disagree Moderate Agree Don't know and Service 19% 12% 18% 51% Provision It is Quick and Easy to Access Benefits/Payouts from Insurance When the Covered Event Happens Agree Moderate Disagree Don't know 15% 20% 20% 44% Participants were asked to whether they agree or disagree with statements about insurance. Responses are reported here 19 with favorable answers toward insurance on the left in green, and answers unfavorable for insurance toward the right, in red. APPENDICES 56