The Impact of Information about Consumer Value and Contract Performance on Demand and Welfare of Insurance

This study evaluates whether interventions that provide information about consumer welfare and contract performance of an insurance-based financial product can increase consumer knowledge, demand, beliefs about contract performance and welfare among pastoralists in the arid and semi-arid lands of Kenya and Ethiopia. The financial product includes subsidized index-based livestock insurance (IBLI) and a savings account, as a packaged financial product aimed at mitigating catastrophic drought risk, designed to protect pastoralists against moderate and catastrophic drought. The study design is a cluster randomized controlled trial in 393 communities and 3143 households. The first information intervention is intended to make salient the potential consumer value of the product. It uses vignettes to show how specific product attributes combined with specific herder characteristics can increase or decrease the consumer welfare of the consumer when purchased or not. The second information intervention -- intended to reduce misperceptions about the product as well as explain grievance address channels -- provides information about a customer care and grievance system. It uses vignettes to show how (perceived) contract non-performance can be addressed using the system. We hypothesize that an increased understanding of product attributes is likely to reduce misperceptions of non-performance, while information about a customer care and grievance system may decrease the perceived likelihood of non-performance. Apriori, it is unclear whether the two information interventions are substitutes or complements in terms of their effects on demand and consumer welfare.