Market Research Methodology

The main goal of the research is to explore low-income households’ needs for microinsurance as well as
opportunities and challenges to microinsurance provision in order to project microinsurance market
development.
Microinsurance is a market-based mechanism to reduce vulnerability of low-income households. Needs
for microinsurance are analyzed from a development perspective - an add value of microinsurance in
building economic security for low-income households. Whereas, analysis of opportunities and challenges
provides insights into business potential of microinsurance.

The main areas investigated in the research are the following:

• What are the most important risks for low-income households in terms of their financial
pressure?
• What are the biggest gaps in risk-management strategies that can be replaced by
microinsurance?

• How can current insurance knowledge, usage and attitude towards it influence launching new
microinsurance products?
• What is willingness to pay for microinsurance?

Qualitative and quantitative research techniques are combined to respond to research objectives.

Qualitative research consists of focus groups (FGs) composed of 6-7 participants. FGs were driven by
participatory rapid appraisal tools and discussion guides. Research was conducted in the capital Baku, in
several regions of the country, in urban and rural areas to control for important cultural differences. FGD
participants are selected from low-income households.

For the quantitative study a survey on representative sample of 1,000 households’ heads iss carried out
using face-to-face method. The sample is stratified by the regions where interviews are proportionally
distributed according to the size of settlement. Settlements are randomly selected from every group of
settlements. Random route sampling technique iss used.

Access frontier methodology developed by David Porteous is an underpinning conceptual framework

for the study.

The total market is divided in four segments:

Main market segments Description of the segment How defined in the study
The maximum percentage of households
Those who are willing to buy suggested
Within access frontier who can access the suggested
microinsurance products.
now microinsurance product concepts on current
terms and conditions.
Within access frontier in A group of households who are likely to The rest of the market.
the future access the suggested microinsurance
product concepts if terms and conditions are
more adapted to them. In the case of
 microinsurance, they are reluctant to buy
now due to limited knowledge, distrust or
underestimation of their capacities to pay
due to poor money management.
A group of households who may wish to buy
Supra-market microinsurance but are unable to, mostly
due to lack of surplus income.
The maximum extent of usage possible after
Natural limit eliminating those who can but choose no to,
use the microinsurance.
It is hard to estimate insurance poverty
line because a big part of the lack of
capacity to pay is cause by poor money
management practices among the low-
income households. It is estimated based
on the income sources, financial
behavior, and price sensitivity.
It poses the biggest conceptual problem
because a big part of those who say “I do
not need the microinsurance product” do
it because of ignorance. The calculations
are based on willingness to buy , age for
life insurance, attitude towards life
insurance and possession of household
assets for property insurance.

The access frontier approach identifies three zones on the market:

• Market enablement zone – this is a group that can be reached now (within access frontier now)
because it is easy to be covered with new microinsurance products that are demanded by
enthusiastic consumers.

• Market development zone – this is a group within access frontier that might be covered if the
new products are well-adapted, effective marketing strategies are in place and there is enabling
environment.

• Market redistribution zone – this is a group defined as supra-market. This is a task for the
government to extend an adequate safety net and provide affordable risk-management tools for
this group.