Family Income, Saving and Potential Demand for Microinsurance Policy in the Greater Jakarta Area

This study evaluates the gap between the supply and demand for microinsurance products in Indonesia. It examines the potential market for microinsurance, premium consumers' willingness to pay, and their propensity to save as their income increases.The study also examines whether geographical areas and economic sectors affect willingness to pay for insurance and marginal propensity to save. Findings include:

• Market potential of microinsurance is large;
• There is high variability of the sample in terms of economic variables;
• There is coexistence of savings in microinsurance and rotating savings and credit associations (ROSCAs), with ROSCAs often substituting insurance;
• Supply of microinsurance faces operational challenges, such as lack of motivation from insurance agents to market microinsurance;
• Insurance companies need to find the best scheme, both technically and professionally, to improve microinsurance supply;
• Willingness and purchasing power of urban people for risk protection through insurance should be improved to increase demand for microinsurance;
• Developing a national policy on microinsurance requires broader research to map geographic and economic characteristics.