From Participation To Repurchase: Low Income Households And Micro‐insurance

Abstract

The paper asks what drives insurance coverage in low income households by analysing repurchase patterns of micro-insurance policies. We use data on customers of a financial services provider from three states in India and find that the probability of repurchase is highest in the first two months after the contract expires, and steadily declines after. This suggests a window of opportunity for financial firms and governments to target customers to ensure continuous insurance purchase. Non-membership of micro-finance groups and poor rainfall in the month of expiry affect the chance of repurchase adversely. Customers who take longer to repurchase tend to increase the amount of insurance cover.

The Efficacy of Micro Life Insurance on Poverty Alleviation in India

“…Rainfall conditions during the policy's expiration month influenced repurchases. Factors like financial literacy, such as availing of credit and membership in any SHGs, promote the idea and interest of saving motives, which also affect the repurchases of micro insurance (Sane & Thomas, 2020).…”