State of Micro Insurance in or and Uk Debashis Shailendra

8/6/2019 State of Micro Insurance in or and Uk Debashis Shailendra

1/22

State of Micro-Insurance in

Orissa and Uttarakhand-Some field observations

Debashis , University of HyderabadShailendra, IBS , Hyderabad


2/22

Motivation

MRAP small grant initiative Familiarizing ourselves with the field

realities

Develop relationships with practitioners

Develop research questions which might

interest the practitioners as well andvisit the field again with substantial

research questions


3/22

Objective/research questions of the

first field visit

To understand the issues concerning supply

and demand of micro insurance products in

Orissa and Uttarakhand.

Do the rural poor customers understand

microinsurance?

Are retail micro insurance products sustainable?

How does introduction of government microinsurance schemes affect the efforts made by the

insurance companies?


4/22

Sample

Risk carriers Uttarakhand-ICICI Lombard Orissa LIC , Birla Sun Life, Tata AIG , United India Insurance , Bajaj Alliance

MFIs and other NGOs as delivery channel/ intermediaries Uttarakhand

IIE, Dehradun

AAGGAS , Chamoli Orissa

Adhikar Microfinace Limited, Bhubaneswar

Gramutthhan, Bhubaneswar

Swayamshree Micro Credit Services(SMCS), Bhubaneswar

Microfinance Limited, Bhubaneswar

Maa Jadua Shakti SHG, Sompur, Cuttack Peoples Rural Education Movement, Gajapati and Puri

Healing field, Rourkela

Beneficiaries Clients of Adhikaar MF in Orissa

Clients of IIE in Uttarakhand


5/22

Method

In depth interviews with the MFI functionaries

(CEOs, operational heads and middle

managers) , risk carriers (Mid-level managers)

and clients.

Interactions with government officials

(Mission Shakti, Orissa)

Participation in the Sa-Dhan interface in Orissa


6/22

Voices from the field


7/22

Conflict of interest among stakeholders - 1

At the moment risk carriers/insurance

companies are not developing products

keeping the poor in mind rather they float

products with exclusion clauses to minimize

claims in general. The kind of products they

develop therefore is not socially sustainable.

The products can be region specific suiting thebeneficiaries

Amin, Aadhikar Micro Finance, Orissa


8/22

Conflict of interest among

stakeholders - 2

In the whole business of micro insurance its

only the insurance companies that make

money not the MFIs or NGO-MFIs. The poor

dont benefit since they are forced to buy

products that they dont require as such. The

MFI is not taken into confidence while

underwriting policies in which case the poorsinterests are not addressed.

Mr Govind Das, Secretary of Gramutthan , Orissa


9/22


stakeholders - 3

MFIs are only interested in products coveringlife risk for the loan tenure and are not willingto collect the premium beyond that tenure.

This is not conducive to providing long terminsurance products to poor people throughthe MFIs as a distribution channel. Hence, thepractice of shallow micro insurance

products. Area Manager, Private life Insurance company in

Orissa


10/22


stakeholders - 4

Clients misplace their bonds, they take

treatment beyond the risk period, go to non-

network hospitals and at times submit bills for

treatment which was before the policy

commencement date. And then they insist on

claim settlement !!!

Area manager, Private Insurance company,Uttarakhand


11/22


stakeholders -5

I would buy health insurance only if somebody

would come and explain it to me. Now that

you have told me about its advantages, I think

I would take health insurace also. But what

about the claims settlement process there?

Abdul Gaffoor, Jatni, Orissa


12/22


stakeholders -6

I got an eye injury and had to travel all the

way to Rishikesh from Dunda for treatment.

Even the network hospital refused and now

the company is saying that the bills from non-

network hospital are fraud and inflated.

Virendra Singh, Dunda, Uttarakhand


13/22


stakeholders -7

Yes we had some insurance and paid for the

same. We were told we will be compensated if

one of our cattle dies. But we dont know the

name of insurance company. The bankmanager knows---Jaddua Shakti SHG


14/22

Key finding-1

Conflicting interests/mindsets

Risk carriers Is it sustainable business ?

Only social obligation as per IRDA guidelines?

Should we go alone or with MFIs?

Intermediaries Only protection of loan?

Cost of bundling in terms of beneficiaries resistance

Is it value addition for my clients(eg.low claims ratio)?

Customized products ?

Clever exclusion clauses?

Mission adrift?

Clients/ beneficiaries What is insurance?

What is claim?

What type of insurance is priority for me?

Objective/research questions

of the first field visit


15/22

Key Finding-2

Bouquet of micro insurance provision

Universal insurance schemes like Rashtriya SwasthyaBeema Yojana

Specific target group schemes like Angan wadi workersBeema Yojana , Rajiv Gandhi Shilpi Swasthya Bima

Yojana Government subsidised microcredit support linked

insurance schemes for various livelihood activitiesthrough lead banks and insurance companies

MFI product linked insurance schemes

NGO led micro insurance schemes (Swayam ShreeCredit, PREM)

SHG Federation led schemes


16/22

Key Finding-3

Entry of government health insurance schemes

Small MFIs feel they would be crowded out.

Large MFIs feel safe as of now as they mostly deal

in credit linked schemes but the scenario would

be different for retail health insurance schemes.

Aarogyashri (Community health insurance) vs

RSBY (Micro health insurance)

Most of the insurance companies are yet toassess the extent of impact on their insurance

portfolio.


17/22

Key Finding-4

Clients

MFI/NGO

Insurance

Company

Demand

Demand

Retail Demand


18/22

Classification of productPRODUCT RISK

CARRIER

MFI

DISTRIBUTING

PRODUCT

Minimum

PREMIUM

SUM

ASSURED

Remarks

Janashree

Bima

Yojana(Loanlinked)

LIC/ICICI

Prudential

Adhikar

Microfinanc

e Orissa

Rs200 per

annum

Rs 35,000-

Rs75,000

Card with

policy

detailsissued

Reliance jan

Samridhi

Yojana(Loan

linked)

Reliance Life

Insurance

Gramauttha

n

Rs500 per

annum

5 times

annualized

premium+ac

cumulationaccount

Add-ons like

P.A. and

Disability,

Policy Bondsissued

Group

persoanl

accident

IFFCO Tokio Gramauttha

na


19/22

Classification of productPRODUCT RISK CARRIER MFI

DISTRIBUTIN

G PRODUCT

Minimum

PREMIUM

SUM

ASSURED

Remarks

Jeevan

Mangal

LIC MFI/NGO/CLU

BS

Rs15 per

week

10,000-50,000 P.A.

benefit/gap

between

deposits

/issue of

receipt

Jeevan

Madhur

LIC MFI/NGO/CLU

BS

Rs25 per

week

5,000-30,000 PA./Disability

Micro health

insurance

HDFC Ergo Healing field Rs350 per

family

Rs25,000 per

family

Many Add-ons

Micro health

insurance

--- SMCS+Plan

international

Ongoing but

not sucessful

Micro health

insurance

PREM+Plan

International

Closed


20/22


21/22

Conclusions

Micro insurance is still supply driven

Customization

geographic/Occupation/Community

Create awareness-People oriented campaign

MFIs should be consulted while designing

products

Need for Insurance Advocacy and Lobby Cell


22/22

Future plans

We aim at second field visit covering more

beneficiaries.

Deeper understanding of beneficiaries

perception of insurance and how do they deal

with its effect on their

consumption/saving/investment.

Interviews with field based agents.

Interviews with health providers.

Documents

State of Micro Insurance in or and Uk Debashis Shailendra