ILO Logo

Joint liability and the demand for health insurance in micro-credit groups

About the Project

 
Project Name: Joint liability and the demand for health insurance in micro-credit groups
Type of Facility Project: Research grantee
Country of Operation: Tanzania
Region: Africa
Sub Topics: Demand, Health
 

Project Description

Read the final research paper here.

The demand for health insurance in developing countries remains low even when offered at affordable premiums. This research investigates whether the provision of insurance through existing micro-credit groups enhances enrolment through peer pressure in the context of joint liability. It also studies whether own and others’ health shock and loan repayment histories influence enrolment decisions. The data are based on framed micro-finance games with real payoffs that will be conducted among micro-credit group participants in Tanzania.

Microinsurance games played with microcredit clients confirm that less risk-averse clients are tempted to free-ride and forgo individual insurance and demonstrate limited coordination failures under individual insurance. Group insurance increases demand in the games. These findings provide a potential solution for low uptake of microinsurance.