Three agricultural engineers and one administrative assistant were engaged. A contract was signed with the Institute of Peruvian Studies (IEP) for the design and implementation of the baseline, the objective of which was to: 1. gather information about potential microinsurance customers (farmers registered with the irrigation boards); 2. collect information about changes that potential customers would expect with access to insurance; and 3. propose a monitoring and follow-up plan to capture changes in the situation of potential customers and their microinsurance needs.
The agricultural engineers engaged were trained on the following subjects: microinsurance (life insurance, property insurance, health insurance), affiliation procedures, collection of premiums, and claims processing.
Software design and the choice of information technology for the management of the microinsurance plans was not finalized, since it was necessary to have information on the software used by each board and the frequency and mode of payment of the water tariff. Forty-six computers were bought and, by virtue of a transfer of use agreement, given to the JNUDRP, who in turn designated the irrigation boards and/or commissions who were to receive the computers.
Farmer surveys were carried out among a sample of 1,200 farmers in the three regions of Peru (Coast, Sierra and Jungle) and 32 irrigation boards and commissions.
A diversity of water tariff collection mechanisms was discovered; some boards did not have software, and those that did, used different programmes that had been developed by different persons. In addition, the frequency of water tariff billing varied in each users board, ranging from daily to monthly, semi-annually and annually. For the pilot phase, the support for the affiliation procedure and payment and claims reporting was manual, using Excel templates that were designed by staff from the technology and information service of La Positiva’s Affinity and Microinsurance unit.
The project’s team of engineers was trained on the Excel template for registration and collection, how to fill out simplified policies, and how to transfer information to La Positiva’s database. They were also entrusted with the training of sales agents in each of the pilot users boards. The filling was done manually because during the pilot phase, the sale of microinsurance did not coincide with the water tariff payment schedule and in other cases because there was no time to adapt the board’s software for processing premium payments.
The users boards selected for the pilot phase were Medio and Bajo Piura, Rímac, Irchim and Ica (Coastal region); Chili Regulado and Mantaro (Sierra region); and Bagua (Jungle region). Selection criteria were: geographical location, number of users, water tariff payment system. The selected boards that did not participate were: Mantaro, Ica and Bagua.
The microinsurance Agropositiva Vida was presented in the users boards and suggestions from directors and farmers were noted. The most relevant suggestions concerned extension of the maximum age of participation (70 years old), inclusion of medical care, and refund of the premium portion after a defined length of contribution. La Positiva Vida was in charge of designing micro life insurance for farmers, and two products were registered with the Superintendencia de Banca y Seguros (SBS):
a) Agropositiva Vida, designed for farmers of the Sierra and Jungle regions with household coverage (policy-holder, spouse or companion and children)
b) Agropositiva Vida, designed for farmers of the Costal region with household coverage (policy-holder, spouse or companion and children)
The decision was made to include the premium in the irrigation water tariff, making user affiliation sustainable. Officials of the JNUDRP suggested that the only way to guarantee that the majority of farmers subscribe to the microinsurance Agropositiva Vida was to make use of the decision-making mechanisms of the boards and allow the Assembly of Directors to decide to include the microinsurance in the bill for irrigation water.
It was decided for the massification phase to take up the JNUDRP’s suggestion, that is, to include the Agropositiva microinsurance in the water tariff in the boards whose directors had given their approval.
It was decided to redesign Agropositiva microinsurance, extending the maximum age of participation to 80 years (this was requested by many farmers attending training sessions). The technical group of La Positiva Vida Seguros carried out an analysis of the data concerning the “insurable mass” and determined that it was feasible to extend the age limit without raising premiums. During the massification phase, 298 policies of Agropositiva Vida microinsurance were sold, representing 1,192 persons, on the basis of four insured persons per policy, given that Agropositiva microinsurance is a household insurance.
In view of the results achieved during implementation, it was decided to evaluate not only the activities and tasks carried out, but also the assumptions that went into the project’s formulation.
The key assumption to be analysed relates to the marketing channel, in terms of the real possibilities of massive affiliation and the feasibility of including the premiums in water bills, its degree of proximity to the producer, the level of delinquency in the three geographical regions, and its marketing capacity for the sale of intangibles.
The purpose of the analysis is to evaluate the viability of the channel as a marketing agent, take another look at the product, and identify the critical aspects of the product for commercialization that had not been taken into consideration in the proposal.
A study has been undertaken to develop a comprehensive marketing strategy that will be validated in a real sales setting; the desired goal is to have a strategy that has been validated, adapted and can be replicated.
This study envisages creating focal groups and conducting in-depth group interviews with farmers and irrigation managers, directors of users boards and the national board, national government employees who, as water management regulators, are familiar with the workability of the channel, and other specialists. Information on the adjustments needed for the product will be obtained, and an incentive plan for the development of the channel, an adjusted operational model, and a promotion and marketing strategy will be drawn up.
The study will also make it possible to reformulate the objectives, benchmarks and activities of the project, as well as establish a new expenditure flow.