DEVELOPING MODELS FOR DELIVERING INSURANCE THROUGH CDFIS OPPORTUNITIES AND RISKS APPENDICES

DEVELOPING

MODELS

FOR

DELIVERING

INSURANCE

THROUGH

CDFIS

–

OPPORTUNITIES AND RISKS

APPENDICES

A. UK Insurance Scheme Interview Guide

1. What does the organisation do? Where does it operate? Prompt for size of housing

stock, number of tenants

The insurance scheme

2. When did you start up the scheme? Can you tell a bit about the background for the scheme? Prompt for rationale

3. Prior to starting the scheme, did you conduct any form of market research? Ask if

possible to see any documentation. Prompt for findings.

4. Were there any legal requirements for you to start up the scheme? Prompt for

licensing etc

5. How does the scheme work? If I am a target client, how do you sell me insurance? (Talk through process) (Only if not explained in available documentation)

6. What would you say works well with the scheme? What could be improved? 7. What is the completion rate (e.g. how many people end up not taking out a policy

despite having initiated the process)? What are the most common reasons for non-completion?

8. Does the scheme provide insurance at a more affordable rate than if the target clients went out to buy it on an individual basis? If yes, how is the scheme able to provide insurance at a cheaper rate (e.g. whole-sale, additional security/risk reduction schemes, cost transfer mechanisms, subsidy)?

9. Do you operate with risk-reducing interventions? Do you offer any additional support services?

10. Do you have any influence on the product design? Please elaborate. Would such influence be useful? What changes would you make to the product?

Target market, marketing and up-take

11. Who is your target market? Prompt for socio-economic, demographic

characteristics.

12. How do you market your products? Prompt for partnerships, referral mechanisms,

through FI service

13. What is the up-take of the scheme? Have you found it difficult to reach your target market? Why? Why not?

Discontinuation and additional support

14. What is the discontinuation rate for the insurance policies? What are the most common reasons for discontinuing an insurance policy?

15. Does product allow for lapses in payments? Do you have any support arrangements for people who are temporarily unable to pay premiums?

B. International Microinsurance Interview Guide

1. Can you tell me a bit about your organisation? What financial services does the organisation offer? When was it established? Where does it operate? Prompt for

number of clients

The insurance scheme

2. When did you start offering insurance? Can you tell a bit about the background for the scheme? Prompt for rationale

3. Prior to starting the scheme, did you conduct any form of market research? Ask if

possible to see any documentation. Prompt for findings.

4. How does the scheme work? Do you work in partnership with an insurer? What are you responsible for and what is the insurance company responsible for?

Prompt for product design, underwriting, claims settling, claims pay-out

5. Does the scheme provide insurance at a more affordable rate than if the target clients went out to buy it on an individual basis? If yes, how is the scheme able to provide insurance at a cheaper rate (e.g. whole-sale, additional security/risk reduction schemes, cost transfer mechanisms, subsidy)?

6. Do you operate with risk-reducing interventions? Do you offer any additional support services?

7. Are you able to cover all the costs related to insurance provision through the income from commission/premiums?

Institutional impact

8. Were there any legal requirements for you to start up the scheme? Prompt for

licensing etc

9. Were there any technical requirements for you to start up the scheme? For

example, did you have to invest in any IT systems? How did you cover these costs? 10. Did you have to make changes to the way in which the organisation is managed

and administered? Reporting systems, new tasks for management

11. Are the loan officers responsible for selling the insurance products? Did they have to undergo any training? Only if loan officers sell product: The sale of insurance involves another task for the loan officers. Have you found it challenging to motivate the staff to conduct the task? Have you compensated them in any way? Please elaborate? Prompt for reduced sales targets for loans, bonuses/incentives,

increased salary

Social impact

12. Who is your target market? Prompt for socio-economic, demographic

characteristics.

13. What is the up-take of the scheme? Have you found it difficult to reach your target market? Why? Why not? Prompt for particular groups and reasons for low

up-take

14. What do you think has been the impact of the insurance product for your clients? 15. What is the discontinuation rate for the insurance policies? What are the most

common reasons for discontinuing an insurance policy?

16. Does product allow for lapses in payments? Do you have any support arrangements for people who are temporarily unable to pay premiums?

C. Focus group topic guide

Introduce moderator and note-taker

Brief intro to project – a charitable organisation called the Friends Provident Foundation has asked us to get information on how people protect themselves and their belongings against theft, fire and flood, and also to get your views on insurers and insurance products

Explain focus groups - In-depth/confidential - No right or wrong answers - You can change opinion

- Please also share views if differ from what others have said + negative comments - Tape recorder (don’t want to miss any of your comments)

- Use first names, but no names mentioned in report Introduce themselves

- First name

- What do you do day to day? - Where do you live?

- Who do you live with?

- How long have you lived in this area?

- Do you live in rented or owned accommodation? - Is that furnished or unfurnished?

2. Attitudes towards insurance and insurers

What comes into your mind when you hear the word insurance? Life insurance? Funeral cover? Home contents insurance?

How important do you think it is to insure your possessions?

What experience have you had of insurance companies? What about family and friends? What do you think they’d be like? Why?

What is good about home contents insurance? Why do people buy it? What is less good? Why might people not want to buy it?

3. Experience with insurers

Has anyone had any dealings with insurance companies before?

- Who has tried to get a quote? Getting a quote? Good / bad experience? What would make it easier/better if you were to go back to get another quote tomorrow? - Making a claim? What happened?

Are you aware if any of your friends or family members has had any dealings with insurance companies before?

- Getting a quote?

- Making a claim? What happened? 4. Possession of insurance

Who has home contents insurance?

Why do you not have HCI?

Affordability

- If so, what would be an affordable rate? When you think about how you spend your money, what do you see as being more important than HCI?

Don’t need one

- Nothing worth stealing

- Security not an issue (probe what in case of flood or fire)

Never got around to it

- Never been asked - Never considered it

Refusal

- What happened? Who did you approach? More than one? How did you find their details?

Not a priority

Inappropriate product/payment method

- No bank account, not comfortable setting up standing orders If security not an issue, raise possibility of flood or fire

Have you ever had HCI in the past? - How did you set up the policy? - Did you ever make a claim?

- Why did you stop having this policy (e.g. moved home, change in income)? Have you ever tried to get home contents insurance?

- Why? What happened? Who did you approach? More than one? How did you find their details? How much would it cost?

- Why did you decide not to take up the offer?

Why have you not tried to get home contents insurance?

For those without insurance, what you would you do in event of a burglary, fire or flood?

Has anyone experienced such events before?

What happened? How did you replace your belongings (e.g. donated goods, second-hand items, borrow money)? If no such event how would you replace?

Does anyone have any other form of insurance (e.g. mobile phone, car, life, funeral or pet)?

5. Ideal insurance products and suppliers

If design an ideal product to protect your household, what would it look like?

Cover

- What would it cover?

Buying insurance

- How would you like to buy it? Doorstep? Face-to-face? Internet? - Advice

Paying insurance

- How would you like to pay the premiums? Taken out with rent or other payment? Collected at the door? Direct debit? How often?

- Allowances for missed payments? - What would be an affordable rate?

Providing insurance

- Who would you trust to provide insurance: landlord, SML, employer, government?

D. INTRODUCTION TO ADVICED GUIDED SALES

Guided Sales is a new, straightforward financial advice process created by the FSA’s Retail Distribution Review (RDR). The service will enable the industry to help meet a range of consumers’ savings, investment and protection needs.

Which consumers would benefit from this service?

This service could potentially benefit all consumers, especially those in low to middle income groups with more straightforward needs, for whom a full advice process might not be economical. Higher income groups might also use the service, to access simple, time efficient advice on a limited range of products.

How would the service operate?

A Guided Sales service would be a process driven solution designed to provide consumers with a personal recommendation after a consultation process lasting about 30 minutes. The service would be facilitated by the latest IT technology and

delivered via the internet, over the phone or face-to-face. Any advisor interaction would be restricted and then checked after the recommendation is provided to ensure the pre-determined process was followed, thereby ensuring that consumers receive a consistent recommendation that meets their needs.

What about existing financial advice services?

Guided Sales would provide an economical alternative to existing advice services for those consumers with straightforward needs and could be delivered by insurance companies, banks or financial advisers. Figure 1 shows the current full and focused advice services and where a Guided Sales model would fit. The service would be limited in both depth and breadth, while still delivering consumers with suitable solutions within the limitations of the service. Figure 2 shows the spectrum of advice and sales services that would exist following the implementation of the RDR. Guided Sales would fill a significant gap in the market for individuals that require more than information but do not need a full advice service.

Breadth D e p th Focused Advice Full Advice Guided Sales Full Holistic Advice Execution only Focused Advice Money Guidance Guided Sales

Figure 1 – Guided Sales and existing financial advice services

Figure 2 – Advice and sales services following the implementation of the FSA’s Retail Distribution

Review

1

What about consumer protection?

In additional to ensuring that advisors follow the pre-determined process, additional safety mechanisms would be built into the systems to ensure that the process

delivered good consumer outcomes. These include filtering out consumers’ whose needs do not fall within the scope of the advice and ensuring that users are aware of the limitations of the service. If an individual would be better served by an alternative form of advice, such a debt counselling or full advice, the consumer would be

recommended to seek alternative help.

How would this service be regulated?

The process driven approach of Guided Sales ensures that consumers with the same characteristics receive the same recommendations. This enables individual models to be regulated, rather than each individual outcome.