Microinsurance initiatives in India
Microinsurance, which is based on the same principles as Microfinance and Development through enterprise, has become quite popular in India recently, with some of the big players in the Indian insurance space making a foray into this field.
The most inspiring one among these is the "Yeshasvini" initiative, which was pioneered by Dr. Devi Shetty, a heart surgeon, who is also the founder of "Narayana Hrudayalaya", an internationally acclaimed heart care hospital in Bangalore, India. "Yeshasvini", which was launched in 2003, insured 1.6 million in its first year, when the premium was as low as Rs. 60 per annum (about $1.5). The number insured rose to 2.2 million in its second year, but dropped to 1.45 million in the third year owing to an increased premium of Rs. 120 per annum (about $3). Nevertheless, Yehsasvini is a pioneering initiative in India and Dr. Devi Shetty's concern for the health of the rural poor is simply amazing. Dr. Shetty, who studied medicine in India and in the UK, was also Mother Teresa's personal doctor.
Yeshasvini's success is all the more special since it was not driven by any insurance company but was successful in mobilizing co-operative societies, with help from the Karnataka State Government's Department of Co-operation. The scheme has since been launched in other Indian states too. Here is the link to a case study of this scheme by ILO:
http://www.ilo.org/public/english/employment/finance/download/cstudy20.pdf
A personal profile of Dr. Shetty can be found here:
http://www.virtualbangalore.com/Ppl/PplDrDevi.php
The Microinsurance industry in India received a shot in the arm recently, when the state-owned Life Insurance Corporation of India (LIC) decided to enter this segment. LIC of India is one of the world's largest insurance companies, with more than 190 million customers. Almost everyone I know in India has a life insurance with LIC and I have literally seen people making a lucrative career out of being LIC agents. This foray into the Microinsurance sector will be benefitial not only to the poor by giving them access to quality health care but also to thousands of others by providing them employment as agents. Here is the link to a recent article about this initiative by LIC:
http://news.moneycontrol.com/mccode/news/article/news_article.php?autono=274827
Tata, one of the largest business houses in India, announced its foray into the Microinsurance sector last year, through its insurance joint venture, Tata AIG, which became the first insurance company in India to come up with a focused Microinsurance scheme. Tata has always been known for its concern for the community in which it operates and the economic development around its flagship Tata Steel factory in Jamshedpur in Eastern India is a living example. Tata Motors' efforts to come out with a Rs. 1 lakh ($2000) car is well known too. This initative by Tata AIG just re-iterates Tata's commitment to sustainable development in India. Details can be found here:
http://www.tata-aig-life.com/News/Pdfs/Rural_draft%20Press%20Release.pdf
German insurance company, Allianz AG, through its joint venture in India, Bajaj Allianz, also announced its Microinsurance foray last year, in collaboration with CARE International. The first products are expected to roll out this year. For further info, the following link can help:
http://www.allianz.com/en/allianz_group/press_center/news_dossiers/microfinance/news6.html
2 comments:
Hi,
As a professional in the microinsurance field (I am a Director of Operations for the Micro Insurance Academy - www.microinsuranceacademy.org an Indian Charitable Trust working on developing microinsurance capacity building), it concerns me to see so much of the focus in microinsurance shifting on commercial insurers (LIC and company)
It is great that you highlight another example (Yeshasvini, which is essentially a hybrid model of provider-driven initiative, with cooperative (which usually would fall under mutual schemes) taking care of the marketing/distribution, and a commercial insurer underwriting the risk.
Let us remember though, that the biggest payers (not to be confused with players) in the field are neither governments nor insurance companies. It is the poor, who pay the overwhelming majority of healthcare costs out of pocket.
Now, one could assume that the poor, who have to make severe rationing decisions, would know better and opt-in for the wonderful role commercial insurers (by and large) have designated for them: agents, who are to sell policies on their behalf, to reduce transaction and marketing costs.
When reading blogs on microinsurance, a discussion on alternative models, such as provider-driven schemes, charity-based, and community based (in the true mutual sense on which most of the European economies were developed in pre industrial revolution days).
My colleague and I have written a chapter on this (4.4) in the recent ILO/Munich Re publication “Protecting the poor - A microinsurance compendium”
http://www.munichre-foundation.org/NR/rdonlyres/000BDF9A-33A3-4D02-A7F1-2F779DA5ACB4/0/Part4Institutionaloptions.pdf that you might find of interest in this regard.
Essentially I would like to add a few questions to this debate, such as
What are the communities at the end of the day? Merely agents for commercial insurers or agents of change?
Who should MI profit at the end of the day? Foreign shareholders or community stakeholders?
Kind regards,
Iddo Dror
Hey there,
Thanks for the detailed comment to my post. I must say I have never received such a long comment to any of posts before..:-)
Regarding the point that you made, I thought about that too and what you say is probably true. Microinsurance can become a stronger inclusive developmental tool, if it is executed through a comunity-driven, cooperative model.
I am not an expert like you in Microinsurance, but I still think that MNCs and commercial insurers can bring in the moolah and tremendous contacts in the Medical industry, which can only improve the access to quality healthcare to the poor. Of course, I find initiatives such as Yeshasvini much more inspiring than the MNC-driven ones. Anyway, it would be interesting to see the Government-driven cooperative model pitted against the MNC-driven profit model.
I did visit your (MIA) website and also the chapter authored by you in the ILO report and I should say that I am amazed by your concern for the community. I want to feature MIA and your work in my next post on this blog. I hope that is alright. Additionally, do let me know if I can be of any help in your work (volunteering etc).
Regards,
Sagar
Post a Comment