Unlocking demand: provide and measure value to clients Aparna Dalal IMC Conference, Colombo
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Lives of low-income households Select a photo Who is this? Give a name. Where do they live/work? Who is in the family? Names/ages? What is the income, assets, expenses? What risks do they face? 3
Emerging consumers lead complex financial lives I ncom e and Expenditure ( US$) Cash flows: 30 Income Expense frequent, chaotic 25 25 23 Many competing 20 15 priorities to satisfy 10 with scarce budget 5 0 0 Use many financial Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 services Credit Infor ormal al from Formal mal shop 4 Source: BFA financial diaries
Different patterns Upper and Middle Income Low Income Financial Income Management Function Function Earning and investing are a continuous, Allocate net income to inseparable cycle Receive Salary manage debt, savings, investment Cash flows: regular, orderly Cash flows: frequent, chaotic • • • Financial decisions: large, infrequent, • Financial decisions: small, daily analytical • Requires: discipline Requires: specialized knowledge and • More like managing your diet • analytic skills More like strategic planning • 5 5 Source: BFA, 2013
How LIHs manage risk Low, irregular incomes and few assets make it more difficult and more important to manage risk Need to pool resources from multiple informal and formal tools Manage risk daily, not monthly or annually Behavioural factors are important Low-income households actively look for risk management solutions; they don’t think “insurance” 6
Ten blueprints for providing value http: p://www.i .impa pactins nsurance.org/pu public icatio ions/cvb2 b2 7
Measuring value Understand clients better to target new markets and segments Improve client experience Evaluate value of products for decision making “You are what you measure” 8
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