MICRO-INSURANCE WORKSHOPMICRO-INSURANCE WORKSHOPHYDERABAD, 14-15 OCTOBER, 2005HYDERABAD, 14-15 OCTOBER, 2005

FROM MICRO TO MACRO:

ADDRESSING THE FINANCING AND DISTRIBUTION CHALLENGES

INTERNATIONAL LABOUR ORGANIZATION (ILO)

STRATEGIES AND TOOLS AGAINST SOCIAL EXCLUSION AND POVERTY (STEP)

MICRO-INSURANCE:MICRO-INSURANCE:THE RIGHTS-BASED APPROACH…THE RIGHTS-BASED APPROACH…

SOCIAL PROTECTION IS A FUNDAMENTAL HUMAN RIGHT (1948)

EACH GOVERNMENT SHOULD PROVIDE SOCIAL PROTECTION TO EACH AND EVERY CITIZEN

UNDER ILO’S DEFINITION NINE MAJOR BENEFITS SHOULD BE COVERED BY SOCIAL PROTECTION SYSTEMS (MEDICAL CARE, SICKNESS BENEFITS, UNEMPLOYMENT BENEFITS, OLD AGE BENEFITS, EMPLOYMENT INJURY BENEFITS, FAMILY BENEFITS, MATERNITY BENEFITS, INVALIDITY BENEFITS, SURVIVOR’S BENEFITS)

IN INDIA TODAY, ONLY 10% OF THE POPULATION ENJOYS SOME LEVEL OF SOCIAL PROTECTION BENEFITS

WHILE 370 MILLION INFORMAL ECONOMY WORKERS CONTRIBUTE TO SOME 63% OF THE GDP, MOST OF THEM REMAIN EXCLUDED FROM SOCIAL PROTECTION SYSTEMS – THEY DO NOT BENEFIT FROM THE WEALTH THEY CONTRIBUTED TO GENERATE

MICRO-INSURANCE IS ONE OF THE INSTRUMENTS THAT CAN BE USED TO COMBAT SOCIAL INJUSTICE

SOUTH ASIA: THE MAGNITUDE OF SOUTH ASIA: THE MAGNITUDE OF THE EXCLUSION PHENOMENONTHE EXCLUSION PHENOMENON

86

88

90

92

94

96

98

%

India

Bangladesh

Nepal

Pakistan

INDIA: INDIA: o 90 %90 %o 950 MILLION950 MILLION

BANGLADESH:BANGLADESH:o 93%93%o 134 MILLION 134 MILLION

NEPAL:NEPAL:o 95%95%o 23 MILLION23 MILLION

PAKISTAN:PAKISTAN:o 97%97%o 147 MILLION147 MILLION

INDIA: A UNIQUE MICRO-INSURANCE INDIA: A UNIQUE MICRO-INSURANCE EXPERIENCE…EXPERIENCE…

THE BIGGEST CHALLENGE: HOW TO EXTEND SOCIAL PROTECTION BENEFITS TO ALL?

A WIDER DIVERSITY OF RISKS (WEATHER, ASSETS, CROP…)

A WIDER DIVERSITY OF ACTORS (INS. COs, BANCASSURANCE…)

A WIDER DIVERSITY OF INNOVATIONS (RISK PACKAGES) AND OPERATIONAL MECHANISMS

SOME OF THE LARGEST MICRO-INSURANCE SCHEMES IN THE WORLD

SOME MICRO-INSURANCE SCHEMES HAVE ALREADY REACHED AN IMPORTANT DEVELOPMENT LEVEL (SEWA, YESHASVINI…)

VARIOUS LINKAGE EXPERIENCES INCLUDING A SUBSIDY COMPONENT (REDISTRIBUTION MECHANISM)

MULTIPLE NEW INITIATIVES AT THE STATE LEVEL

A NEW AMBITIOUS EXTENSION PROGRAMME: TO COVER 300 MILLION INFORMAL ECONOMY WORKERS (NATIONAL COMMISSION DRAFT BILL - 2005)…

SOCIAL PROTECTION PRIORITY SOCIAL PROTECTION PRIORITY NEEDS OF THE POORNEEDS OF THE POOR

☺HEALTH CARE:

A STRONG DEMAND FOR TOTAL COVERAGE (WHOLE CARE VS RARE CARE)

QUALITY IS A MAJOR CONCERN

☺ MATERNITY PROTECTION NEED FOR A BROADER RCH PERSPECTIVE

☺ OLD AGE PENSION A NEW BUT FAST INCREASING DEMAND

☺ LIFE A STRONG DEMAND FOR MATURITY BENEFITS (CASH BACK SERVICES)

☺ ACCIDENTS

1

2

3

4

5

HEALTH INSURANCE:HEALTH INSURANCE:CURRENT « POOR » COVERAGECURRENT « POOR » COVERAGE

N0 OF BENEFIC.N0 OF BENEFIC.

EMPLOYEE S‘ STATE INSURANCE CORPOR.EMPLOYEE S‘ STATE INSURANCE CORPOR. 31,000,00031,000,000

MEDICLAIMMEDICLAIM 9,000,0009,000,000

WELFARE FUNDSWELFARE FUNDS 7,000,0007,000,000

UNIVERSAL HEALTH INSURANCE SCH.UNIVERSAL HEALTH INSURANCE SCH. 80,00080,000

MICRO-INSURANCE SCHEMESMICRO-INSURANCE SCHEMES 7,500,0007,500,000

TOTAL INFORMAL ECONOMYTOTAL INFORMAL ECONOMY 23,580,00023,580,000

GRAND-TOTALGRAND-TOTAL 54,580,00054,580,000

% OF POPULATION % OF POPULATION 5,1 %5,1 %

FORMAL ECONOMY HI SCHEMESFORMAL ECONOMY HI SCHEMESESIC AT A GLANCE…ESIC AT A GLANCE…

ESTABLISHED IN 1948

APPLICABLE TO NON-SEASONAL POWER USING FACTORIES EMPLOYING 10 OR MORE EMPLOYEES

ELIGIBILITY CRITERIA: WORKERS EARNING LESS THAN Rs. 7,500 PER MONTH

COVERAGE: 7,1 MILLION WORKERS (TOT. BENEFICIARIES: 31 MILLION)

BENEFITS: MEDICAL CARE (HOSPITALIZATION) + MATERNITY BENEFITS + SICKNESS BENEFITS + DISABILITY + FUNERAL EXPENSES

CONTRIBUTIONS: EMPLOYEE: 1.75% WAGES – EMPLOYER: 4,75 WAGES + GOVERNMENT CONTRINTION: 12,5% OF ALL MEDICAL COSTS

EXAMPLE: FOR A MONTHLY INCOME OF Rs 5,000:

EMPLOYEE WILL PAY: Rs 1,050 PER YEAR

EMPLOYER WILL PAY: Rs. 2,850 PER YEAR

CLAIM RATIO (2003-2004): 45%

INCOME RATIO (2003-2004): 40%

GOVERNMENT SUBSIDY (2003-2004): 112 CRORE

INFORMAL ECONOMY HI SCHEMESINFORMAL ECONOMY HI SCHEMESTHE TOP DOWN APPROACH…THE TOP DOWN APPROACH…

MEDICLAIM:

CONTRIBUTION VARIES ACCORDING TO INSURED SUM

MANY EXCLUSIONS CLAUSES

VERY HIGH CLAIM RATE (100%... OR MORE)

WELFARE FUNDS:

MOSTLY: FINANCIAL ASSISTANCE IN CASE OF ILLNESS

VERY LOW LEVEL OF REIMBURSEMENT (Rs. 200/EPISODE)

ASSISTANCE MAY BE DECIDED ON A CASE BY CASE BASIS

UNIVERSAL HEALTH INSURANCE SCHEME:

HOSPITALIZATION EXPENSES ONLY

MANY EXCLUSIONS CLAUSES (WOMEN UNFRIENDLY)

YEAR 1: Rs. 100 FLAT SUBSIDY FOR EACH BPL FAMILY

1,1 MILLION COVERED (BUT ONLY 10,000 BPL FAMILIES)

YEAR 2: SUBSIDY INCREASE: Rs, 200, Rs 300, Rs 400

80,000 COVERED (20,000 BPL FAMILIES)

HEALTH MICRO-INSURANCE SCHEMESHEALTH MICRO-INSURANCE SCHEMESTHE BOTTOM UP APPROACH…THE BOTTOM UP APPROACH…

OWNERSHIP PROFILE

NGO CBO HP MFI OTHERS TU

HEALTH INSURANCE:HEALTH INSURANCE:LOOKING AT THE BPL ISSUE… LOOKING AT THE BPL ISSUE…

0

10

20

30

40

50

60

70

80

%

Rs. 13Rs. 44Rs. 88

PLANNING COMMISSION PLANNING COMMISSION DEFINITION: VALUE OF A DEFINITION: VALUE OF A SPECIFIED NUTRITION SPECIFIED NUTRITION REQUIREMENTREQUIREMENTo 26%26%o 278 MILLION278 MILLION

UNDP DEFINITION: LESS UNDP DEFINITION: LESS THAN 1 US/DAY/PERSONTHAN 1 US/DAY/PERSONo 35%35%o 374 MILLION374 MILLION

UNDP ANALYSIS: LESSUNDP ANALYSIS: LESSTHAN 2 US/DAY/PERSONTHAN 2 US/DAY/PERSONo 80%80%o 855 MILLION855 MILLION

HEALTH MICRO-INSURANCE:HEALTH MICRO-INSURANCE:HOW MUCH CAN THE POOR HOW MUCH CAN THE POOR

CONTRIBUTE?CONTRIBUTE?

Contributory Capacity

100%97%

90%

54%

42%

31%

26%

18%14% 11% 10%

7% 7% 6% 5% 5% 4% 4% 3%

85%

0%

20%

40%

60%

80%

100%

120%

50 100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

HEALTH MICRO-INSURANCE:HEALTH MICRO-INSURANCE:DO THE SCHEMES NEED FINANCIAL DO THE SCHEMES NEED FINANCIAL

ASSISTANCE?ASSISTANCE?

SCHEMESSCHEMES N0 OF N0 OF BENEFIC.BENEFIC.

TYPE OF TYPE OF SCHEMESCHEME

TYPE OF TYPE OF COVERAGECOVERAGE

TYPE OF TYPE OF BENEFITBENEFIT

TYPE OF TYPE OF SUBSIDYSUBSIDY

YESHASVINIYESHASVINI 1,410,0001,410,000 IN-HOUSEIN-HOUSE TER.TER. CASHL.CASHL. DIRECTDIRECT

DHARAMST.DHARAMST. 300,000300,000 P.AGENTP.AGENT SEC.SEC. CASHL.CASHL. INDIRECTINDIRECT

VHSVHS 145,000145,000 P.AGENTP.AGENT PR/SEC.PR/SEC. CASHL.CASHL. INDIRECTINDIRECT

KARUNAKARUNA 137,000137,000 P.AGENTP.AGENT PR/SEC.PR/SEC. REIMB.REIMB. IND/DIRECTIND/DIRECT

SEWASEWA 133,000133,000 P.AGENTP.AGENT SEC.SEC. REIMB.REIMB. INDIRECTINDIRECT

PREMPREM 108,000108,000 IN-HOUSEIN-HOUSE SEC.SEC. CASHL/REIMCASHL/REIM INDIRECTINDIRECT

AROGYAAROGYA 60,00060,000 P.AGENTP.AGENT SEC.SEC. CASHL.CASHL. INDIRECTINDIRECT

ASHWINIASHWINI 12,00012,000 P.AGENTP.AGENT PR/SEC.PR/SEC. CASHL.CASHL. IND/DIRECTIND/DIRECT

UPLIFTUPLIFT 10,00010,000 IN HOUSEIN HOUSE SEC.SEC. CASHL.CASHL. IND/DIRECTIND/DIRECT

HEALING F.HEALING F. 9,0009,000 P.AGENTP.AGENT SEC.SEC. CASHL/REIMCASHL/REIM INDIRECTINDIRECT

HEALTH MICRO-INSURANCE:HEALTH MICRO-INSURANCE:HOW MUCH WISH THE INSURANCE HOW MUCH WISH THE INSURANCE

COMPANIES CONTRIBUTE?COMPANIES CONTRIBUTE?

PUBLIC INSURANCE COMPANIES: MAY RECEIVE PUBLIC SUBSIDIES (UHIS) BUT OPERATE NOW IN A NEW COMPETITIVE ENVIRONMENT

PRIVATE INSURANCE COMPANIES: MUST COMPLY WITH SOCIAL OBLIGATIONS (INTERVENTIONS IN RURAL & SOCIAL SECTORS)

NO PREVIOUS EXPERIENCE IN INDIA

NO PREVIOUS EXPERIENCE IN HEALTH INSURANCE

NO PREVIOUS EXPERIENCE IN WORKING WITH THE POOR

INTERNAL CROSS-SUBSIDY MECHANISM ATTACHED TO ALL PRODUCTS PROVIDED TO THE POOR (INCLUDING HEALTH)

SOME SEE THESE INTERVENTIONS AS PART OF THE CORPORATE SOCIAL RESPONSIBILITY PRINCIPLE AND ACCEPT TO LOSE MONEY

SOME SEE THE HIGH DEVELOPMENT POTENTIAL OF THIS NEW HUGE MARKET AND ACCEPT TO INVEST (FOR A WHILE)

SOME SIMPLY WANT THE REGULATIONS TO BE WAIVED

ALL COMPLAIN ABOUT THE LACK OF DATA – HENCE THE NEED TO BE VERY CAUTIOUS (GO FOR THE EASY WAY: REIMBURSEMENT OF HOSPITALIZATION EXPENSES ONLY– TIGHT ELIGIBILITY CONDITIONS AND MULTIPLE EXCLUSION CLAUSES)

HEALTH MICRO-INSURANCE:HEALTH MICRO-INSURANCE:LOOKING FOR THE ELUSIVE DATA…LOOKING FOR THE ELUSIVE DATA…

DATA SHOULD COVER EXTENDED PERIODS

REFERENCE PERIOD IS STILL TOO SHORT (2 TO 3 YEARS)

DATA SHOULD COVER VARIOUS GROUPS IN DIFFERENT SETTINGS

STILL A GREATER FOCUS IN THE SOUTHERN STATES…

DATA SHOULD BE COMPREHENSIVE

MOST SCHEMES ONLY COVER HOSPITALIZATION COSTS…

DATA SHOULD BE RELIABLE BEING VOLUNTARY, MOST SCHEMES ARE AFFECTED BY AN IMPORTANT ADVERSE SELECTION EFFECT…

DATA SHOULD BE THOROUGHLY ORGANIZED AND ANALYZED

STILL A CHALLENGE IN A NON-REGULATED PRIVATE HEALTH SECTOR AND UNDERMANNED PUBLIC HEALTH SECTOR…

DATA SHOULD BE SHARED

TREND TOWARDS MORE COMPETITION…

HEALTH MICRO-INSURANCE:HEALTH MICRO-INSURANCE:WHAT’S NEW?WHAT’S NEW?

A FIRST STAND-ALONE HEALTH INSURANCE COMPANY TO BE OPERATED SOON

POSITIVE TREND BUT… WILL IT HAVE TO COMPLY WITH THE SAME SOCIAL OBLIGATIONS APPLYING TO OTHERS (LIFE & GENERAL)?

FIRST INTERVENTIONS OF PUBLIC HEALTH FACILITIES IN NETWORKS ASSOCIATED TO HEALTH MICRO-INSURANCE SCHEMES

POSITIVE TREND BUT… LEGAL AND FINANCIAL ISSUES STILL TO BE DEALT WITH…

FIRST AGREEMENTS CONCLUDED BETWEEN STATE GOVERNMENTS AND PRIVATE INSURANCE COMPANIES

POSITIVE TREND BUT… WILL IT BE GENERALIZED?MULTIPLE NEW INITIATIVES TAKEN AT THE CENTRAL AS WELL AS AT THE STATE LEVEL

RURAL HEALTH MISSION… HEALTH INSURANCE SCHEMES INITIATIATED (OR PLANNED) IN KARNATAKA, GUJARAT, WEST BENGAL, ASSAM, PUNJAB, KERALA, ANDHRA PRADESH…

THESE NEW INITIATIVES INCREASINGLY RELY ON NEW PATNERSHIP ARRANGEMENTS WITH COMMUNITY-BASED HEALTH MICRO-INSURANCE SCHEMES…

HEALTH MICRO-INSURANCE:HEALTH MICRO-INSURANCE:WHAT IS NOT NEW?WHAT IS NOT NEW?

SCALING UP: A BUMPY ROAD INDEED…

YESHASVINI 700,000 MEMBERSHIP DROP IN YEAR III

INSURANCE EDUCATION FRONT: NOT MUCH TO SEE YET…

URGENT NEED FOR EDUCATION PROGRAMMES AND TOOLS…

HEALTH INSURANCE: MUCH MORE COMPLICATED TO EXPLAIN THAN ANY OTHER INSURANCE PRODUCT…

RENEWAL RATES: STILL VERY LOW… TOP MARK SEEMS TO BE AROUND 50%?

ADVERSE SELECTION: STILL VERY HIGH

SEWA INCIDENCE RATIO: FROM 3 TO 6 PERCENT

YESHASVINI INCIDENCE RATIO: FROM 1 TO 7 PER THOUSAND

EXCLUSION CLAUSES: STILL PREDOMINENT… PREGNANCY-RELATED ILLNESSES (A CHOICE ?)

AND WHAT ABOUT THE ULTIMATE GOAL: QUALITY IMPROVEMENT?… WHERE IS THE EVIDENCE ?

THE FINANCING CHALLENGE:THE FINANCING CHALLENGE:EVERYBODY ALREADY SHARES THE EVERYBODY ALREADY SHARES THE

BURDEN SOMEHOW…BURDEN SOMEHOW…

INSURANCECOMPANIES

CENTRALGOVERNMENT

STATEGOVERNMENTS

NGOSs

TRADEUNIONS

HEALTHPROVIDERS

MFIs

TPAs

EXTERNALDONORS

CORPORATESECTOR

INDIVIDUALS

EMPLOYERS’ORGANIZATIONS

GRASSROOTSORGANIZATIONS

THE FINANCING CHALLENGE:THE FINANCING CHALLENGE:…BUT NOT IN A COORDINATED …BUT NOT IN A COORDINATED

WAY… WAY…

INSURANCECOMPANIES

CENTRALGOVERNMENT

STATEGOVERNMENTS

NGOSs

TRADEUNIONS

HEALTHPROVIDERS

MFIs

TPAs

EXTERNALDONORS

CORPORATESECTOR

INDIVIDUALS

EMPLOYERS’ORGANIZATIONS

GRASSROOTSORGANIZATIONS

THE DISTRIBUTION CHALLENGE:TARGET ORGANIZED GROUPS…

RELY ON ORGANIZED GROUPS BASED ON STRONG SOLIDARITY MECHANISMS (COOPERATIVES, SELF-HELP GROUPS, INFORMAL ECONOMY TRADE UNIONS AND LOCAL ASSOCIATIONS…)

CONTRIBUTE TO THE FURTHER EMPOWERMENT OF THESE GROUPS

FROM MICRO TO MACRO:FROM MICRO TO MACRO:THE WAY FORWARD…THE WAY FORWARD…

START WITH HEALTH MICRO-INSURANCE AS A STAND-ALONE PRODUCT

THE PRESSING NEED OF THE DAY – MORE COMPLICATED

ADDRESS THE SPECIFIC PROTECTION NEEDS OF ORGANIZED GROUPS

COMPREHENSIVE ADAPTED BENEFIT PACKAGE – EASY PAYMENT MECHANISMS…

SET UP A NETWORK OF HEALTH PROVIDERS (PRIVATE/PUBLIC)

CONCESSIONAL TARIFFS AND INTERVENTION REGULATIONS…

ORGANIZE ACCREDITATION/ MANAGEMENT/MONITORING SYSTEMS ENSURE THE PROVISION OF QUALITY SERVICES…

ENSURE SUSTAINABLE FINANCIAL SUPPORT

LONG-TERM PUBLIC/PRIVATE PARTNERSHIP ARRANGEMENTS AND FINANCIAL SUPPORT…

ENHANCE EMPOWERMENT AND SOCIAL INCLUSION

MEMBERS SHOULD BE ABLE TO «VOTE WITH THEIR FEET» - NEW COLLECTIVE RESPONSIBILITIES…

FROM MICRO TO MACRO:FROM MICRO TO MACRO:TOWARDS THE ULTIMATE MODEL…TOWARDS THE ULTIMATE MODEL…

STABLE FINANCIAL CORPUS

INSURANCE MANAGEMENT

ORGANIZEDGROUPS

WHOLE BPL POPULATION

WHOLE POPULATION

LOCAL SUPPORT

ORGANIZATIONS

HEALTHPROVIDERS’NETWORK

CASHLESS SERVICESEMPOWERMENT

WHOLE CARECOMPULSORY

ALL-INCLUSIVEUNIVERSAL COVERAGE

ADVOCACYADVOCACY

CAPACITY BUILDINGCAPACITY BUILDING

KNOWLEDGE DEVELOPMENTKNOWLEDGE DEVELOPMENT

NEED TO INCREASE THE ACTIVE SUPPORT OF POLICY MAKERS UNDER THE NATIONAL

SOLIDARITY PRINCIPLE

NEED TO ENHANCE THE TECHNICAL CAPACITIES OF THE VARIOUS ACTORS

INVOLVED IN THE MANAGEMENT OF HEALTH MICRO-INSURANCE SCHEMES

NEED TO DEVELOP STRONGER EVIDENCE ON HEALTH MICRO-INSURANCE BEST PRACTICES

AT THE GRASSROOTS LEVEL…

FROM MICRO TO MACRO: MORE ADVOCACY IS NEEDED…

«THERE IS NO ADVOCACY WITHOUT EVIDENCE, HENCE, THE NEED TO DEVELOP MORE KNOWLEDGE AMONG ALL

ACTORS THROUGH ACTIVE NETWORKS»

THE ASIAN MICRO-THE ASIAN MICRO-INSURANCE NETWORKINSURANCE NETWORK

(AMIN)(AMIN)

230 SCHEMES…SO FAR…

SET UP AN EFFICIENT MECHANISM ALLOWING FOR THE REGULAR SHARING OF INFORMATION AND EXPERIENCE AMONG MICRO-INSURANCE PRACTITIONERSDEVELOP THE DOCUMENTATION PROCESS ON MICRO-INSURANCE INITIATIVES, INNOVATIONS AND ACHIEVEMENTSBUILD UP TECHNICAL CAPACITIES OF MICRO-INSURANCE ACTORSSTRENGTHEN COLLABORATION AND PATNERSHIP AMONG MICRO-INSURANCE SCHEMESHIGHLIGHT AND CLARIFY ISSUES, CHALLENGES AND OPPORTUNITIES RELATED TO THE CONTRIBUTION OF MICRO-INSURANCE TO SOCIAL PROTECTION EXTENSION

OBJECTIVES:

THE INTERNATIONAL THE INTERNATIONAL ALLIANCE FOR THE ALLIANCE FOR THE

EXTENSION OF SOCIAL EXTENSION OF SOCIAL PROTECTIONPROTECTION

ILO, ISSA, AIM,IHCO, WIEGO, ICA,

ICMIF

ACT AS A GLOBAL CLEARING HOUSE FOR ALL ISSUES RELATED TO SOCIAL PROTECTION

IDENTIFY, DOCUMENT AND SUPPORT ORIGINAL AND INNOVATIVE EXTENSION APPROACHES

DEVELOP OVERALL CONSENSUS ON KEY EXTENSION ISSUES AND BEST PRACTICES

BRING TRASFERABLE INNOVATIONS AND REGIONAL EXPERIENCES TO THE INTERNATIONAL LEVEL

PLAY AN ADVOCACY ROLE TO ENCOURAGE NEW EXTENSION INITIATIVES AT THE INTERNATIONAL LEVEL

OBJECTIVES: