The Demand for Disaster Microinsurance: Designing Demand Survey for Urban Informal Small Businesses

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Overview

The innovation is a small business disaster microinsurance programme to enhance recovery of local markets that play a critical role in providing goods and services to disaster-affected populations in urban settings.

A demand survey for evolving a suitable microinsurance product

The efficacy and uptake of any microinsurance product depends upon the extent to which it is synced to the needs of its target group. The first step in the piloting of our innovation will be to initiate a demand survey on the need for disaster insurance by small businesses in the local economies of the selected urban sites. This will be immensely helpful in evolving a microinsurance product best suited to the needs of the target group.

Important aspects of such a policy such as the premium, timeframe, claim settlement mechanism, etc. will all depend upon the findings of the demand survey as well as consultations with relevant stakeholders (such as insurance companies, local implementing agencies and the local community). A literature review will also be done on the existing microinsurance schemes for urban communities. This literature review will be immensely helpful in drawing out the best policies, practices and processes that are present in the existing microinsurance products and schemes.

The demand survey will also include key research questions developed from the literature review that remains unanswered in previous disaster microinsurance projects. The most important of these, whether such an intervention induces behaviour change to reduce risk in addition to providing risk coverage, has not been addressed in any other study to date. Ideally, risk coverage through this insurance programme would not serve as an excuse to ignore risks but have a positive effect - promoting action to minimize and mitigate the impacts of those risks. Other questions will help develop a potentially generalizable understanding of what factors may drive or discourage insurance uptake.

The demand survey will consist of a questionnaire that will cover questions that provide an insight into the world of the target group for the innovation. The answers to these questions will shed light on the living conditions, economic status, disaster history, knowledge of and access to insurance services of the targeted group. The data collected will be analysed to design an appropriate disaster microinsurance product.

Pilot of the Questionnaire

The aforementioned questionnaire has already been drafted and piloted in order to finalize the questions. The piloting of the questionnaire has revealed certain interesting patterns about the expectations and the inhibitions of owners of small and informal business enterprises. For instance, it was revealed that the foremost reasons for the low penetration insurance schemes among informal businesses were a lack of information and the inability of the people to afford the premium of normal insurance schemes. All these factors will be suitably addressed to evolve a microinsurance product that is acceptable and affordable.

The pilot questionnaire will now be adapted to make it better suited for the proposed cities where this innovation will be piloted. After questionnaire finalization, the demand survey will be conducted in the proposed sites in the coming months and the findings will shared with you.

Orientation of the team

Prior to the collection of the data through the demand survey, all the team members will take part in site specific orientation. This will help in bringing together all the project partners to accomplish the stated goals of the innovation. Moreover, the local partners will help in giving impetus to the local language during the demand survey to facilitate understanding and uptake by the target group.