Towards a Benchmark for Access to Life Insurance in LSM 1-5
29 Oct 2004, Melzer, I. & Smith, M.

Has FinScope been accurate in its findings about the ownership of insurance products?

The background of this report: the publication of FinScope data regarding ownership of insurance products by adults in LSM 1 ââ?¬â?? 5 generated much discussion. While FinScopeââ?¬â?¢s data has considerable credibility, some have asserted that the survey is not accurate. In order to assess whether FinScopeââ?¬â?¢s estimates are plausible, FinMark, with the cooperation of the LOA, undertook to gather data from the key players in the industry and compare this data with FinScopeââ?¬â?¢s findings. This report summarizes the findings of this process.

Note: LSM refers to ââ?¬Å?Living Standards Measureââ?¬Â?, which measures the living standards of a household based on the number of assets owned.

The paper lists the factors that complicated the study:

• Fin Scope does not report product ownership by company. Direct comparisons between company data and FinScope data are therefore not possible;
  
• It is not possible to determine the number of unique policy holders by product within a company, because data on client identities is often not accessible;
  
• Companies do not gather data on the various living standard indicators that would enable a direct comparison of the number of customers in LSM 1 ââ?¬â?? 5.

The report lists its various assumptions regarding:

• Multiple policy holding within and across companies;
  
• The rate of growth of personal income;
  
• The relationship between personal income and LSM.

The study concludes that:

• FinScopeââ?¬â?¢s estimates appear reasonable in the case of funeral policies and life insurance;
  
• FinScope understates ownership of endowments and ââ?¬Å?credit lifeââ?¬Â?.

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Publisher(s):
FinMark Trust

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