Client Math is a methodology we developed in partnership with the Microinsurance Centre to measure the value of microinsurance. The premise is that when clients determine the value of an insurance product, they "do the math" in their heads, considering the alternative coping mechanisms they have access to.
Client Math allows us to quickly "do the math" with a beneficiary (after a shock) and assess whether insurance was effective in reducing the need to recur to difficult alternative funding sources (such as reducing consumption, selling assets, or borrowing).
You can learn more about it in our prior post "Clients “Do the Math”––we should too when valuing microinsurance" or in a 2-page brief (here).
There have been many insights from this methodology. In some cases, we found that microinsurance alleviated the financial burden of a shock. For example, the uninsured used more burdensome strategies or under-funded expenses than those with insurance to deal with funeral expenses. In the case of property insurance, we found that covering outstanding loan balances with insurance may have helped clients bounce back more quickly than those without insurance, where loan forgiveness covered 1.7 months of household income. In both cases, however, the insured turned to the same number of alternative funding strategies as the uninsured, highlighting that insurance is a complement and not a replacement for other financial risk management tools.
Complete project lessons are available on the Microinsurance Centre's website.
You can download a Client Math Toolkit for free here or email us for more information. To accompany the Toolkit, we also recommend you watch this video, which offers some practical tips and experiences and walks through some of the steps below for those interested in implementing a study.