Microfinance Focus July 8, 2011: A recent study titled ‘A Landscape Study of Micro Insurance Education’ by The Insurance Education Working Group of the Microinsurance Network, in collaboration with the Micro Insurance Academy and the ILO’s Microinsurance Innovation Facility, says that insurance education is often considered as an integral part of microinsurance schemes.

The analysis of the paper concentrates on a population of 242 respondents from 65 countries and was conducted in three languages such as English, French and Spanish.

“The insurance education is a win-win solution that should add value to clients and providers, and contribute to good practices and consumer protection,” says the study.

Insurance education is a valuable and important activity because the lack of understanding of insurance and its benefits are a major obstacle to the expansion of microinsurance. Those who do not understand how insurance works are unlikely to trust it, and without an understanding of the benefits of insurance, people are less likely to see why the value proposition of insurance can be worth the money spent on it.

By creating awareness about insurance, families are at least given the option of adding insurance to their financial planning strategies.

The profile of respondents revealed in the study say that organisations came from many diverse fields with stakes in insurance education, including NGOs, insurance companies, microfinance institutions, regulators, governments, healthcare providers, universities and banks among others. The insurance sector is generally choosing to focus on basic topics and tools for the time being.

“Nearly all the participants in the in-depth interviews reported that the populations they work with are not only uninsured but they are alarmingly uninformed about the concept of insurance, though the level of awareness varied across different organizations’ target populations,” said the study.

The study also found that the relationship between insurance education program operators and clients was often not the donor-recipient model that one might expect, but was very often symbiotic. The community benefits from insurance education because it allows them a greater understanding of tools for managing risk that are available to them.

“Insurance companies and MFIs simultaneously benefit from insurance education programs because it increases awareness and ultimately makes it more likely that people in the targeted community will buy insurance from them,” said the study.