Insurance enrollment rates are increased as people understand its importance
Insurance is a primary tool for the prevention of various contingencies that life can throw at us, as well as sharing of damages and losses that can incur should an incidence of natural disaster or any other unforeseen circumstance occur. Therefore, awareness raising becomes of utmost importance, so that the population understands the importance of having insurance policies. One such awareness-raising exercise has been “Insurance in Our Lives” workshop organized in Dornod aimag.
This workshop, which took place at Khulunbuur, Bayantumen, Bayan-Uul, Tsagaan-Ovoo, Choibalsan and Herlen soums of Dornod aimag between October 29 and November 3, 2013, was organized by the Ministry of Population Development and Social Protection and Social Insurance General Office, with support from “Capacity Development for the Micro Insurance Market” project implemented jointly by the Financial Regulatory Committee of Mongolia and UNDP. Spontaneous interviews with the public stopping at the workshop site as well as discussions with officials testify to the fact that the public’s interest in insurance products, their proactivity are strengthening over the last few years.
Insurance is peace of mind
Ms. S.Uugantsetseg, resident of 2nd bagh Kherlen soum Dornod aimag, is a policy holder with Bodi Daatgal Co. She has insured her ‘khashaa’ and house for MNT13mln and her car for MNT1.6mln and paid a premium of MNT104,000 for the first asset, and MNT7,500 for the second, her one-time annual premium totaling MNT111,500. This family of four has an average monthly income of MNT500,000.
“We operate a small shop and have a sawing business on the side. As we have a rather steady cash flow from month to month, this one-time premium payment does not make any dents on our finances” said S. Uugantsetseg, whose family at one time lost their ger to a fire and were left with nothing except what they were wearing. Their insurance policy at that time did not cover any of lost assets, only their motorcycle was covered resulting in a pay-out of only MNT100,000. That was truly a wake-up call for the family, they realized clearly the benefits of having a comprehensive coverage.
“Even if people purchase insurance, they often miscomprehend its benefits and think that they are too limited. Any premiums that are paid are not one’s losses, on the contrary, they provide you with an assurance that in times of need you can recover your losses. One needs to understand that” said further Ms. S. Uugantsetseg sharing her own experience of past losses, lessons learnt and current peace of mind acquired through insurance.
In recent years, with rapid socio-economic development of the country, consumption patterns have changed, and people more than even are in possession of valuable assets items. For instance, the family of H. Bayandelger of the 1stbagh of Kherlen soum, Dornod aimag purchased last summer a 42-inch Mogul brand television set for about MNT1mln. They pay a premium of MNT10000 once a year, so that this valuable item can be protected against any electric malfunction, fire, floods, theft and other risks. “As we cannot repurchase easily such an expensive item, it makes sense to insure. Before, I personally felt uneasy about possible danger to my valuable possession every time we left home for any length of time. Now, with the knowledge that we are protected against any potential losses, we can leave home with a peace of mind wherever we go and for however long we are gone.” said the insured.
It should be noted that the director of Dornod aimag branch office of Bodi Daatgal B. Enkhtuya has confirmed that in the case of any losses to the property of H. Bayandelger all losses with be reimbursed fully and most immediately. Although there is a hefty number of individuals who, like the above referenced individuals, have understood the advantages of having an insurance coverage and in fact acquired that protection, there is still a large segment of the population that lacks proper understanding of the essence of insurance and fails to find an effective way of protecting against risks related to life and property.
Getting covered by micro-insurance
During a wild fire of October 6-8, 2013 that spread through Khulubuur and Bulgan soums of Dornod aimag, many people lost their source of livelihood, as the fire consumed twelve households’gers, tangible assets, winter shelters, fences and stalls, fodder stored for the winter, and a significant number of livestock. Pursuant to applicable laws that stipulate that “one-time reimbursements are to be paid to individuals who lost their primary residence to natural disaster” , each of these individuals received from the Social Welfare Office of the aimag MNT1,200,000 as support toward regaining a place to live, however this amount is hardly sufficient to purchase a full ger. Have they had an insurance policy based on the market price of insured property, they would have recovered fully their losses and retained their livelihood and wellbeing. If we look at the primary reasons why some are still reluctant to get covered, the number one reason is ignorance, and the second is a sheer inability to pay upfront premium payments required.
It was noted by B. Javkhlant, Director of General Insurance Division of Financial Regulatory Committee and Alternate National Project Director for “Capacity Development for the Micro Insurance Market” project, that “all efforts are being made to put in place an effective framework for offering most affordable and most accessible insurance products in health, property and natural disaster protection.”
Citizens’ perceptions are important
It was mentioned earlier that the chief reason for citizens’ unsatisfactory enrollment in insurance is their ignorance, i.e. their lack of understanding of advantages provided by insurance. The workshop titled “Insurance in our lives” was truly instrumental in closing this gap.
Director of Social Insurance Division of Dornod aimag G. Saran commented that “There is generally a shortage of such community-driven workshop programs. This workshop exercise could not have been more timely and it did deliver results. Citizens often misinterpret social insurance as pension relations, whereas it is a complex system that spans from birth to death and beyond. It is extremely important for citizens to understand that it provides necessary safety net against any possible risks.”
Have you subscribed to insurance policy?
Dornod aimag has a population of 75,000, of which 44,000 are of working age. As of 2013, the number of population covered by mandatory social insurance was 10,000 and by voluntary social insurance -3,300, which leaves 30,000 as completely not covered.
G. Bayarsaikhan, a 32-year old resident of 6thbagh of Kherlen soum, has been a self-employed interior designer for the last four years. He is married with 2 children, and their monthly income is approximately MNT800.000.They have a social insurance book that was opened 8 years ago, but no entries have been made in it. Explanation provided by Bayarsaikhan was “lack of knowledge” about its implications. “Financially, I am more than capable to come up with a premium, but we are doing fine right now, and, frankly, we did not see a pressing need to pursue this”, he said, and continued “Many self-employed like myself do not pay any premiums for social insurance as well., for exactly the same reasons as mine, and they don’t feel the need to pay diligently now as they feel they are doing fine, so far away from pension and are quite skeptical about future benefits.” he reasoned. For the sake of letting citizens understand the true benefits of getting enrolled in social insurance scheme, let us look at the following case.
Z.Tserenchimed, resident of the 10thbagh of Kherlen soum, is one of most diligent voluntary social insurance policy holders. With her husband and five children, the five of them enrolled in voluntary insurance scheme back in 2007. When Z. Tserenchimed lost her ailing husband last April, her three children were eligible to regular payments of MNT200,000 as survivorship benefit thanks to regular contribution payment made previously. In the case of any of her own hospitalization, she is also eligible to receive, in accordance with the law, temporary disability payments from the Insurance Fund and purchase with proceeds required medicaments and supplies at discounted prices. The two of her children who are students also pay social insurance premiums from MNT70,000 they receive as student allowances. Daughter Ts.Khishgee is 8-months pregnant now. As she paid her contributions regularly in the last two years, she will be a recipient of Social Insurance Fund’s pre- and post-natal benefits equaling approx. MNT400.000. Z.Tserenchimed pays her contributions on a monthly basis, by 25th of every month, from her MNT140.000 disability benefits. Inspired by this diligence and seeing realistic benefits, around 200 people, mostly her relatives, friends and acquaintances, have also joined the social insurance. Z. Tserenchimed was thus able to prove to them that it is much more prudent to invest in one’s life-long security through enrolling in such programs than spend recklessly what one earns.
In conclusion, the very purpose of insurance is to protect persons from potential losses and risks and provide the adequate assurance mechanism. It should be noted that local citizens and local government officials alike were expressing their sincere gratitude for the concerted efforts of public and private sector entities as well as international organizations guided by common goals of greater well-being of their communities, for organizing inclusive and effective activities in their communities, and disseminating the much needed knowledge and information.