Consumer protection diagnostic study - FSD Kenya
Consumer protection diagnostic study - FSD Kenya
Consumer protection diagnostic study - FSD Kenya
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8 • CONSUMER PROTECTION DIAGNOSTIC STUDY: KENYA<br />
Nyamithi who was unable to pay for the loan so (the MFI) went to their place<br />
to get the things so they could auction them. On hearing that since the person<br />
also owed (another MFI) some money they also decided to go to the home. So<br />
both groups met and took everything.” This was consistent across semi-formal<br />
and formal lenders.<br />
4.4 INSURANCE<br />
According to the consumer <strong>protection</strong> survey, 26% of respondents held life<br />
insurance, 3% medical insurance, 6% house-building or contents insurance<br />
and a negligible percentage auto insurance. 12<br />
Most FGD respondents did not have experience with insurance. Among those<br />
that did, the experience was often not positive. Most complaints that surfaced<br />
in the FGDs centered on salespeople not clearly explaining the products,<br />
resulting in users not receiving the package they had envisioned. As one man<br />
Table 4: Respondents who received a written loan agreement<br />
Bank loan SACCO MFI ASCA Shylock, money lender, or shopkeeper Employer Hire purchase<br />
% responded yes 93% 95% 100% 77% 41% 80% 92%<br />
% of those<br />
with loan that<br />
responded yes<br />
Table 5: Did someone explain the terms of the loan before you signed?<br />
Bank loan SACCO MFI ASCA Shylock, money lender, or shopkeeper Employer Hire purchase<br />
Table 6: Once you started paying the loan were you surprised by how much you needed to pay, or how long you needed to pay for?<br />
% of those with<br />
loan/credit who<br />
responded yes<br />
Were the details<br />
explained to you in<br />
writing?<br />
94% 93% 97% 97% 97% 83% 100%<br />
Bank loan SACCO MFI ASCA Shylock, money lender, or shopkeeper Employer Hire purchase<br />
9% 8% 9% 6% 0% 0% 0%<br />
Did you understand<br />
the details of the<br />
insurance?<br />
Table 7: Experiences of insurance users<br />
Were you able to take<br />
the agreement away<br />
with you before<br />
from Mombasa explained “It is like they used anyone to sell insurance and they<br />
don’t know the products, so you sign for product and then when the policy<br />
comes you find that it is totally different.” As Table 6 shows, 13% of insurance<br />
users said the details were not explained in writing and 11% said they did not<br />
understand the details of the insurance, in terms of how much would be paid<br />
and what was and wasn’t covered by the policy. 17% reported that they felt<br />
pressured to sign right away. In one case, a man from Mombasa reported in a<br />
FGD that an insurance agent managed to sign him up for a policy he did not<br />
authorize and that he was only able to have the debit order reversed and his<br />
money refunded after hiring a lawyer. Finally, insurance users also reported<br />
that making claims was far from easy, with 26% of survey respondents saying<br />
that their claims were not processed quickly.<br />
Have you made a claim? In your opinion, was the claim<br />
processed quickly?<br />
Yes 87% 89% 74% 19% 74%<br />
No 13% 11% 17% 81% 26%<br />
Total 194 190 191 457 86<br />
12 The share of 2010 survey respondents with life insurance was significantly higher than in the FinAccess<br />
2009 results, where 1% of respondents had life insurance, 4.9% had medical insurance, 0.2% had<br />
house-building or contents insurance and 1.1% had auto insurance.
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