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Library » Micro-Impact : Deconstructing the Complex Impact Process of a Simple Microinsurance Product in Indonesia

Micro-Impact : Deconstructing the Complex Impact Process of a Simple Microinsurance Product in Indonesia
Nov 2009, Hintz, M.

Analyzing social impact of an obligatory life microinsurance product

This paper analyzes the performance of Payung Keluarga, an obligatory enhanced credit life microinsurance product.

Payung Keluarga was launched in Indonesia in 2006. It automatically insured MFI borrowers. In case of death, the outstanding credit balance was canceled and the appointed beneficiary received twice the original loan as an additional payout. Payung Keluarga aimed to protect the already low asset base of poor families. The paper investigates if it achieved this objective. Findings reveal that:

Moral economy norms that denounce self-interested material asset accumulation exert significant clout on the insured;
In reality, there was no post-mortem financial crisis;
Community and family support among low-asset Muslim Indonesians was strong enough to cover funeral expenses and provide for the bereft family;
Payung Keluarga led to the crowding out of community support, and contributed to an inflation of funeral costs;
Customer satisfaction was high with a demand for more such products;
Low-asset people were willing to opt out of the moral economy if they had better alternatives.

The paper demonstrates that microinsurance interventions concerned with social impact should be preceded by contextualization that goes beyond usual demand assessments.

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Publisher(s):
University of Passau