Despite the impressive growth of premium income in the insurance industry, the insurance penetration rate unfortunately continues to be very low. Insurance penetration, measured as the contribution of premium income to Gross Domestic Product (GDP), currently stands at below 2% (NIC Annual Report, 2016).
One of the key factors attributed to low penetration of insurance in the country is the low level of public awareness about insurance (Finscope, 2010). Thus, it is within this context that the Insurance Awareness Coordinators Group (IACG) and other key stakeholders in the insurance industry recently launched a nationwide insurance awareness campaign to create awareness about insurance and help deepen insurance penetration in the country. However, this write-up seeks to offer a different perspective on the nationwide insurance awareness campaign.
Insurance Awareness Creation
Insurance awareness creation basically involves using various channels of delivering information on insurance to educate the public about insurance, thereby improving public knowledge regarding various aspects of insurance. Due to the negative perception of the public about insurance – resulting in low uptake of insurance in the country, it has become imperative for various stakeholders in the insurance industry to help create the needed awareness by educating the public about the benefits of insurance.
For instance, as part of a team of young managers working with a leading multi-national life insurance company in the early part of 2000s, one of the key focuses of our industrial presentations at various institutions or pay points was to educate members of the institutions on the double hazards of life (i.e. the risk of either dying too early or living too long), and recommend the appropriate insurance solutions for each stage.
Educating the public about insurance helps to improve public knowledge about insurance products. Accordingly, the public will have to be educated about various aspects of insurance – such as claims payment procedures, policy terms and conditions, policyholders’ protection as well as the various types of insurance products.
Insurance education enables individuals and businesses to make very informed decisions and better choices regarding insurance products. Ultimately, with increased insurance awareness through education, there will be an increase in the uptake of insurance products.
Channels of Delivering Information
There are several channels of delivering information on insurance; such as television, newspapers, radios, friends & relatives, insurance agents, social media etc. Nonetheless, there are varied opinions about the key or main channels of delivering information on insurance.
In one opinion, some insurance practitioners argue that insurance agents are the most important channel of delivering information on insurance. In their view, insurance agents have a significant amount of influence on customers. This is due to their daily fieldwork interacting with individuals and businesses, and as such are able to educate the public about various aspects of insurance – enabling the uptake of insurance products.
In another opinion, other insurance practitioners believe that individuals and businesses depend on the print and electronic media such as television, radio and newspapers as their primary or main channel of information about insurance products. In their view, insurance companies tend to use the print and electronic media to create the needed public awareness about insurance products – thereby facilitating the field-work of insurance agents in closing the insurance business.
These opinions seem to support the contention of a positive relationship between insurance awareness and uptake of insurance products by the public. A simple model explaining the relationships between the various channels of delivering information on insurance, insurance awareness parameters and market penetration of insurance is shown below in figure 1.
Furthermore, the recently-launched nationwide insurance awareness campaign was expected to run concurrently on 21 radio stations across the country. Where is the evidence supporting the use of only radio as the key or main channel of delivering information on insurance? For example, it is most likely the formal and informal sectors will have different primary or main channels of delivering information on insurance.
Nationwide Pre- and Post-Launch Study
To the best of my knowledge, apart from a 2013 pilot study conducted by GIZ in four selected districts across four different regions targetted at the low-income or informal sector to assess the level of micro-insurance awareness in the country, no extensive and nationally representative study has been undertaken to assess the current level of public awareness regarding various aspects of insurance in the country.
For instance, what is the level of insurance awareness among the adult population? What is the target growth rate of insurance awareness? Which sector (i.e. formal or informal) has a substantial need for insurance awareness creation? What are the key or main channels of delivering information on insurance?
Thus, to ensure a successful nationwide insurance awareness campaign, a nationwide pre-launch study to assess the current level of public awareness regarding various aspects of insurance and the key or main channels of delivering information on insurance will have to be conducted. The pre-launch study will give a comprehensive picture of the current level of public awareness regarding various aspects of insurance in the formal and informal sectors, as well as the primary or main channels of delivering information on insurance in the formal and informal sectors.
Furthermore, findings from the pre-launch study will inform the various strategies to be adopted during implementation of the nationwide insurance awareness campaign. Finally, after the pre-launch study and implementation of the insurance awareness campaign, a follow-up study will have to be conducted and findings compared with the pre-launch study to help assess the effectiveness and impact of the nationwide insurance awareness campaign in improving public awareness as well as insurance penetration in the country.
One of the key objectives of the National Insurance commission (NIC) is to improve insurance penetration from below 2% to a double-digit figure in three years (Daily Graphic, 19th February, 2018, Page 82). To achieve this objective, a multi-channel nationwide insurance awareness campaign will have to be undertaken to improve insurance awareness over the stated period.
The nationwide insurance awareness campaign’s success in improving market penetration of insurance will largely depend on extensive knowledge of the public awareness regarding various aspects of insurance in the formal and informal sectors being gained.
The writer is a certified insurance & marketing practitioner and a member of the Governing Board of CIMG.
Writers email: [email protected]