Understanding the Context is Understanding the Impact : Evidence from a Qualitative Microinsurance Impact Survey in Indonesia

This paper presents the findings from a qualitative-explorative longitudinal impact assessment of an enhanced credit life microinsurance pilot in Indonesia. Different from the practical or econometric-quantitative approaches of the few microinsurance impact assessments available today, the approach applied here is sociological. Emphasis is put on contextualization. A variety of research components were executed: a baseline/endline survey of customers, interviews with 24 Muslim beneficiaries and additional research with loan officers, credit group leaders, experts, and MFI managers. Despite a number of methodological constraints which preempt absolute data accuracy, the breadth of available data nonetheless allows for indicative conclusions. This impact assessment identifies microinsurance as an agent of social change and highlights the complex interplay of the actual product with its respective sociocultural context in producing impact. It turns out that the social impact of the surveyed product which waives the loan balance and provides substantial additional payouts upon death of a micro-borrower, was literally "micro". For reasons of religion and tradition, most additional payouts were used for social investments. Payouts appear to substitute some of the traditional, informal, post-mortem family assistance (crowding out). To some extent, the insurance payouts also seem to have contributed to an inflation of funeral costs. Dependence on informal assistance was reduced leading to a potential erosion of equality-focused social cohesion. Positive impacts were found in the form of an increase in financial literacy. Also peace of mind of the insured increased. However, some of those insured felt less secure for reasons of religion and superstition. Customer satisfaction was nonetheless high. The insured voiced a strong demand for more urgent risk management challenges such as education and health costs