Responsible Finance Forum

Indonesia: Private Sector Engagement in Financial Education for Microinsurance

Allianz SE’s Allianz Care Foundation Financial Literacy Program for Adults (FLAME) in Indonesia shows private sector engagement in microinsurance training and financial education curriculum development.


Download Full Report


The international insurance company, Allianz SE, through its Allianz Care Foundation, started a Financial Literacy Program for Adults (FLAME) in 2012. Partnering with the International Labour Organisation (ILO), Allianz plans to scale up this educational initiative with the engagement of MFI staff nationwide in 2013.

Access to formal finance in Indonesia remains low. The weak educational background of a large share of the population and the geographical challenges of a country with more than 17,000 islands add to the challenge of improving access to finance and promoting responsible use of financial products. Allianz engaged in the Indonesian microinsurance market in 2006 and by the end of 2012 had a base of 1.2 million clients. Life insurance linked to loans is the most common form of insurance in the low-income market. MFIs use both informal mandatory “credit life insurance” and offers voluntary life insurance products to their clients. MFIs are Allianz’s major distribution partners for the formal, voluntary microinsurance products. Allianz’s MFI partners have articulated the need for more information on insurance, since it is a relatively new financial service, and for appropriate ways to communicate this information to their clients. Allianz partnered with the ILO, which developed a curriculum on personal financial management for adults in 2007. This curriculum was amended by a module on insurance developed by Allianz in 2011.


Most MFI clients are unfamiliar with insurance products and lack knowledge of the range of financial services. Reaching scale with educational programs is a challenging task in Indonesia because it is the fourth most populated and the largest island country in the world. Partner MFIs of Allianz stated the need for support from the insurance company in educating their clients on insurance and, if possible, other financial literacy topics such as credit, savings, and budgeting.

FLAME’s goal is to assist low-income adult Indonesians achieve full financial capability, with particular emphasis on insurance. Allianz follows the OECD/INFE definition of financial education and financial literacy: a combination of consumers’ understanding of financial products and concepts and their ability and confidence to appreciate financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.

In late 2011, Allianz developed a module on insurance for the ILO Adult Financial Literacy Curriculum. The curriculum, including the insurance module, was pilot tested in three MFI partner institutions. Twenty trainers went through a “training of trainers” workshop and subsequently trained about 200 clients in Papua, Borneo, and Java.

Lessons learned from the 2012 FLAME pilot are:

  • Selecting participants and location is important to the success of this program. Although specific requirements for training participants (such as age, gender,education, business background) had been presented in advance to MFI partners, some participants were ineligible because they were illiterate, unregistered, or had different expectations of the classes.Some participants arrived late and asked to finish early to travel the long distance to and from their homes.
  • Validation of participants’ eligibility on the established criteria and mapping time and location for class training should be carefully planned with partners. An initial training needs assessment should be planned to meet participants’ expectations, and the question of whether a classroom-based approach is the best alternative for the target group should be addressed.
  • Participation and company buy-in have increased outreach effectively.

For the scale-up in 2013, a network of master trainers of the ILO/Allianz curriculum will be established throughout the country to educate trainers at about 80 MFIs with a total customer base of 1.2 million. The trainings for groups of customers are delivered mostly by MFI staff, but also by Allianz staff who contribute their work time as part of the company’s employee social engagement program.

Allianz has initially assigned two full-time employees as master trainers. More trainers will be added as needed to cover class demand. Allianz also covers costs for travel, accommodations, meals, class training, and logistics.


The 2012 pilot provided important lessons for future efforts. Participants showed improved awareness of insurance and the associated benefits. However, because of a lack of detailed knowledge of insurance processes, such as making claims for benefits, coupled with a short supply of suitable insurance products, insurance penetration remained quite low in all trained MFI client groups.

In addition, a rough assessment of participants’ feedback and follow-up on their financial behavior after the training show that most participants were able to improve their personal financial budgeting, including prioritizing contributions to savings or household expenditures, which showed a positive effect on their ability to pay regular loan installments. Participants also requested Allianz to offer follow-up trainings and a wider range of topics, especially on entrepreneurship (how to start, maintain, and grow their small enterprises).

Success Factors and Challenges

  • A key success factor of this initiative lies with the partner structure. The existence of the ILO curriculum as a basis for the initiative proved to be a valuable asset: Allianz could build the insurance training module on the existing curriculum without starting from scratch. The curriculum as a whole now allows trainers to give MFI clients a full picture of responsible use of financial services.

    The MFIs, as the central implementing partners of the initiative, made a crucial contribution to the training program’s success. Their demand for more customer education on financial capability in general and insurance in particular kicked off the engagement of Allianz in this initiative.

    Allianz staff members in Indonesia are dedicated to social engagement, which helps motivate employees to become voluntary FLAME trainers. The MFI and Allianz management support this engagement by providing the training materials and encouraging staff members to conduct trainings during work hours, so volunteer staff members do not have to spend free time conducting trainings.

    The decentralized structure of regionalized master trainers providing local training-of-trainer sessions for MFI staff, who then educate MFI clients, seems a promising approach to improve outreach in Indonesia’s geographical context. This structure not only overcomes logistical challenges, but also considerably reduces costs.

Key Lessons

  • Having different partners with their respective fields of expertise and experience was a crucial success factor for the initiative. The pilot counted on the expertise of insurance experts from Allianz, training expertise and curriculum development from ILO, and communications and client interface from MFI partners.
  • Linking corporate social responsibility activity with the MFIs’ interest in improving their clients’ knowledge of financial services was a good precondition for the implementation of the initiative.
  • A key challenge during pilot testing was the low supply of financial services: access to financial services remains low in Indonesia, especially in remote areas. The training sessions, which included information on a multitude of services, raised demand by participants for the products about which they learned. Disappointment at being unable to access these products might have a negative influence on people’s attitudes toward those services. Recent research shows financial services knowledge does not last long if it cannot be applied.
  • Until now, the training sessions have been selective and not embedded in a comprehensive structure. Incorporating training into a larger curriculum and follow-up training sessions to deepen knowledge would contribute to the initiative’s impact.

Download Full Report