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In terms of long-term risk reduction, a number of
indicators tell us that the clients are aware of some of
the risks they face and may be proactively engaging
in decreasing some of the vulnerabilities themselves.
Indeed, 387 people (24 per cent of the total) identified
the need to reinforce parts of their home, and 68 per
cent of these also stated that they had done this over
the past ten years to reduce the impact of disasters. This
evidence shows that clients perceive some amount of
personal risk, although it is difficult to ascertain the
extent of their knowledge since this study did not allow
for in-depth probing of this issue. The extent of knowl-
edge can be useful and valuable for future product
design. It is clear, however, that disaster recovery is
a ‘window of opportunity’; one that brings positive
changes for the future. The study found that after
disasters, clients had greater improvements in shelter
– additional roofing, better walls, stronger pillars, and
new toilets – than non-clients.
The importance of trust cannot be underestimated.
Findings show that if an organization has a positive
reputation, there is a far higher chance that clients
will not just sign up, but will also renew each year. Of
the people surveyed, 88 per cent said that they would
renew their disaster insurance policy in the future.
Of those people, 40 per cent said that this was solely
because they had a good perception of the insurance
agency such as SEWA or BASIX, Yasiru or Proshika.
Historically, low levels of insurance penetration in the
region can be attributed to the negative reputation of
insurance companies, and low levels of cover and long
delays in payment to the beneficiary. Rapport with
the community, trust networks and improved claims
processes are essential for the further development of
disaster microinsurance in South Asia.
Finally, the key to reducing risk seems to be aware-
ness and information. The study signalled high demand
for disaster microinsurance after non-insured clients had
been given information showing the relevance and pricing
of such products, as well as the power of organizations
to reach more clients. Knowledge of disaster insurance
was generally low considering the significant role that
disasters play in the everyday life of the communities
interviewed. The majority of people in the control group
(69 per cent) had heard about some type of insurance
before, whereas 21 per cent had not, and another 10 per
cent had heard only a little. Over half of the respondents
(52 per cent) did not know what disaster insurance was.
An overwhelming majority (80 per cent) of clients felt
that because of this lack of knowledge, disaster microin-
surance should be promoted to many more people.
Recommendations for the future
With disaster microinsurance in its infancy in the
region, a number of things are required – many of
which are beyond the scope of the study. The promotion
of regulatory and developmental systems in countries
that do not have a legal apparatus for microinsurance,
an increase in the number of reinsurance options,
Seven disaster products were evaluated: one for Yasiru, AIDMI, and
SEWA, while two different products were surveyed for Basix and
Proshika.
Survey questionnaires were administered in local languages by 85 local
and trained volunteers and representatives of the participating organiza-
tions, from October 2008 to September 2009. A total of 2,171 surveys
were completed, with 1,640 client evaluations and 531 responses from
non-insured clients across India, Bangladesh and Sri Lanka.
While this study references the larger and growing body of
literature on disaster microinsurance and findings from previous
qualitative reviews, the analysis it offers is based solely on the find-
ings from the survey of the five participating organizations.
Lessons learned
Overall, the results of the study show that people have an interest
in, and are willing to pay for disaster microinsurance programmes
in South Asia. The knowledge that they were covered in case of
disaster was a big factor in their decision to purchase insurance. The
majority of people also seemed happy with the amount of money
they had to pay. Nearly 77 per cent of people surveyed said that the
cost of microinsurance was adequate, whereas a little less than 7 per
cent indicated that the amount they pay is too much. The products
are reaching poor clients, many of whom are below the poverty line,
highly in debt, and unable to cope after a disaster.
However, the findings have also revealed some problems with
the process: funds are often late in reaching clients, with 26 per
cent of people stating that they received their money after two
months, and 30 per cent stating that it took as long as three months.
Though this delay is common in many financial and welfare serv-
ices in South Asia, it was especially pinching to recent victims
of large natural disasters. This delay can negatively influence the
way that money is spent when or if it does finally arrive. There
are also reported difficulties with the claim process, with 85 per
cent of people saying that the process was hard to understand and
that they required help (89 per cent said that they subsequently
received adequate help from the organizations, which illustrates
the importance of the role of civil society organizations (CSOs)
at local level in DRR). There were also reports of inadequate total
coverage. A total of 272 people stated that the money they received
from an insurance claim was not sufficient.
As a result of these problems, a number of individuals have had to
borrow additional funds frommoneylenders, friends and family. Clients
usually have high existing levels of debt, which are only exacerbated
after disasters. In other words, disasters wipe out the repayment capac-
ity of the indebted poor. This calls for a review of modification in
product offerings, safety nets, and other risk managing financial serv-
ices in combination with disaster microinsurance. In addition, there is a
need to review products and potential clients in communities to ensure
that although ‘the poor’ are being served, the ‘poorer than poor’ are not
being excluded due to costs and information barriers. For this there are
neither any studies available, nor are any pilots funded.
Though the insurance agencies claimed that their plans helped people
get back to work faster, increased investment activities and increased
human welfare, the study did not completely corroborate these claims.
Study analysis found no significant change in workdays lost or welfare
(measured through levels of savings and debt). However, this is not to
say that microinsurance has no long-term developmental impact; the
study was just unable to see any significant changes in the surveyed
group in this round.