Exploring Microinsurance Opportunities in the Uganda Bottom of the Pyramid Market:
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Date
2025-01-31
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Publisher
Insurance Training College
Abstract
Purpose: The increasing uncertainties from the volatile environment are exposing a wide group of world’s Bottom of Pyramid (BOP). In this case, microinsurance is considered the solution for the poor which the insurers should consider worthy exploiting. However, there is a gap between what insurers consider important and what customers would prefer if Insurers are to tap opportunities in the Microinsurance market. This study focused on exploring the microinsurance opportunities in the Ugandan bottom of the pyramid market and provide guidance on how insurers can tap into them from the perspective of both insurers and customers. The angle this study took was to establish a gap between what insurers thought was important and what customers considered important for microinsurance success by focusing on two areas. First, to identify the market entry requirements for the BOP market in Uganda and second, to examine the strategies required to tap microinsurance opportunities in Uganda’s BOP market.
Research approach: The study employed an imbedded research design where the study was largely quantitative and qualitative element in the study was used to supplement and provide elaborate explanations to the quantitative finding. Data was collected through questionnaires and interviews from the sample that composed of 60 managers (from the major insurance companies) and 120 microinsurance customers at the bottom of the pyramid classified as those that live on 1.04 dollar a day. A descriptive statistics analysis was used (paired t‐test and independent t‐test) to evaluate the gap between managers and customers perceptions on market entry requirements and strategies for consideration if insurers are to penetrate to microinsurance market in Uganda.
Findings: The results showed that there was a significant difference between customers and insurers perception on various market entry requirements and strategies for tapping microinsurance opportunities from the Ugandan BOP market. For instance, customers attached more importance on affordability (ability to purchase) and acceptability (meeting individual needs) more than awareness (continuous promotions) and accessibility (bring products close). Insurers, on the other hand, attached more importance on awareness and affordability. Furthermore, the results revealed significant difference between customers and insurers perception on what would be the appropriate microinsurance products, pricing, mode of payment and channel of communication for microinsurance success.
Practical implications: From the gap analysis, this study urges insurers to understand how customers perceive the microinsurance products so that insurers can be able to offer valuable microinsurance products that are tailored to demands of the customers at the bottom of the pyramid. Additionally, understanding the customers point of view enables insurers to identify and develop the most appropriate pricing, communication, delivery strategies and modes of payment appropriate for tapping microinsurance opportunities in the Uganda bottom of the pyramid market.
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Keywords
• Microinsurance, • Bottom of the Pyramid, • Uganda Market, • Financial Inclusion, • Insurance Innovation