Towards a Benchmark for Access to Life Insurance in LSM 1-5

The background of this report: the publication of FinScope data regarding ownership of insurance products by adults in LSM 1 5 generated much discussion. While FinScope's data has considerable credibility, some have asserted that the survey is not accurate. In order to assess whether FinScope's estimates are plausible, FinMark, with the cooperation of the LOA, undertook to gather data from the key players in the industry and compare this data with FinScope's findings. This report summarizes the findings of this process.

Note: LSM refers to Living Standards Measure, which measures the living standards of a household based on the number of assets owned.

The paper lists the factors that complicated the study:

• Fin Scope does not report product ownership by company. Direct comparisons between company data and FinScope data are therefore not possible;
• It is not possible to determine the number of unique policy holders by product within a company, because data on client identities is often not accessible;
• Companies do not gather data on the various living standard indicators that would enable a direct comparison of the number of customers in LSM 1-5.

The report lists its various assumptions regarding:

• Multiple policy holding within and across companies;
• The rate of growth of personal income;
• The relationship between personal income and LSM.

The study concludes that:

• FinScope's estimates appear reasonable in the case of funeral policies and life insurance;
• FinScope understates ownership of endowments and credit life.