Perceptions of (Micro)Insurance in Southern Ghana : The Role of Information and Peer Effects

1. Perceptions of (Micro)Insurance in Southern Ghana:The Role of Information and Peer Effects Lena Giesbert, GIGA Hamburg Susan Steiner, DIW Berlin The 2012 Research Conference on Microinsurance, Enschede, University of Twente 13/04/2012

2. Structure • Research Question and Motivation • Background: Insurance Landscape • Methodology • Source of data: Focus Group Discussions • Data Analysis: Content Analysis • Results • Evaluation of (Micro) Insurance • Level of Information • Learning from Peers • Conclusion and Implications

3. Research Question and Motivation • How do people perceive insurance ? How do perceptions come about? • Is it regarded to be good or bad? • What do people mean when they characterise (micro)insurance? • Which factors do people consider when making a judgement? • How are experiences with and opinions about (micro) insurance communicated? How do people influence each other? • Low uptake of microinsurance despite (assumed) large demand • Increasingnumber of studies on determinants of uptakeusing quantitative data (surveys, RCTs, experiments) • Point to importance of behavioral factors (trust, familiarity, social networks…) • Complementary to above literature: explorative approach to study people’s understanding and perception of (micro) insurance

4. Insurance supplied in the study area: Background • National figures: • 66% of population covered with NHIS, 11% with SSNIT. • Market penetration of microinsurance is 0.8% and of conventional commercial insurance about 5%. • Anidaso policy : provided by Gemini Life Insurance Company (GLICO) through rural banks and MFIs, term life (<=60) packaged with accident and hospitalization benefits, optional savings plan

5. Methodology: Source of Data • Four focus group discussions conducted in two towns (Nyakrom, Brakwa) in the Central Region in October 2008 • In each town: 2 FGD with 8 participants, ½ insured / ½ non-insured, 1 female / 1 male, • Participants from “real groups” (market women, dress-makers, farmers, masons)

6. Methodology: Data Analysis • Content analysis of the verbal communication in the FGD • Developed a coding scheme to derive opinions on insurance: • positive/precise • positive/imprecise • negative/precise • negative/imprecise • These categories assigned to evaluative statements about (micro) insurance • Group-to-group validation • In addition, we use direct quotes from the transcripts for better interpretation

7. Results: Perceptions • Purely positive statements about microinsurance in three groups, mixed evaluations in one group • Deviation is due to the bad experience of one participant with the microinsurance provider. Evaluative statements about Anidaso Policy

8. Results: Perceptions • Other types of insurance: • Purely positive image, usually related to particular experiences of a damage followed by an insurance payout • Mostly precise content • Insurance in general • Mixed picture, positive and negative remarks • Concentration of imprecise content of positive remarks

9. Results: Level of Information • Is insurance a panacea for all difficulties in life? • JD: Now, the reason why I joined the Anidaso group is that, even if you build today, there could be a strong wind that will blow off your roof.You may not have money to buy roofing sheets at that time. In some cases, electricity, children being so troublesome, a child may have ironed when you are not around, she might not have switched it off. Fire might gut your room. It is mainly because of that I joined the Anidaso policy. (Brakwa, female, insured) • How does insurance work? • JD: Sister, if you get insured, the aftermath is all joy. If you are able to do it well, it brings peace to the home. Because no one comes to ask you for a loan repayment. (Brakwa, female, insured) • MA: […] or a car has hit someone and they say when you are knocked down by a car, you get insurance, and when going to claim it, you do some papers and things. […] Maybe, if the car that knocks you down doesn’t have insurance, how will you go and claim it? (Nyakrom, female, insured) • Contributing to erroneous expectations: deficits in management

10. A bad experience/opinion can have a strong influence on others. • K: It is what they are saying, that is what some of them are saying, those who went in are not seeing anything. Me on my part, I won’t put it [my money] there. (Brakwa male, not insured) • Learning effect • A good experience/opinion can do the same. • CAO: That is why, me too … So, I asked him [Father] that I who wasn’t a teacher, I was doing my own, could I do some? Then he said oh no, I can’t do some. That is why when I heard this; I said if someone had done it, I will also do what? Do it. For me, too; my children not to suffer in future. (Nyakrom, female, insured) • Especially important are narratives of how people got to first know about insurance (hearsay) • Previous impressions formed of conventional types of insurance often become decisive factor for buying MI Results: Influenceby Peers

11. Given the low uptake of microinsurance our FGD participants have a surprisingly positive picture about it. • Not necessarily good news, because positive (and negative) perceptions are strongly influenced by insufficient information (wrong knowledge, intuition) • Once erroneous expectations are not fulfilled by provider, this may lead to strong negative counter reactions (reduced trust) • Perceptions are also influenced by the experience and opinions of peers. • A previous experience with insurance (incl. conventional) shared among peers can substantially alter someone’s attitude towards this or other insurance (enhance or reduce trust) • People may then even negate concrete information on a policy Conclusion and Implications

12. Three Discussion Points • Future research: • Group dynamics • Policy / practical implications: • How to deal withnegative chain reactions of limited information (intuitiveunderstanding) and mutual personal interference? • Methodology: • FGD participantsnotrepresentative of population at large (more insured, more educated)

13. Thank you! • giesbert@giga-hamburg.de

14. Background Riskmanagementcontext: limited use of insurancepayouts in responsetorisk

15. Results: Perceptions Evaluative statements about other types of insurance

16. Results: Perceptions Evaluative statements about insurance in general