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Industry Voice
The Road to Make Micro Health Insurance Scheme A Success
All stakeholders need to join hands to develop affordable
and viable micro-insurance schemes
Dr Biswendu Bardhan |
Success of the micro-health insurance scheme is very important
to eradicate poverty. It has been estimated that more than 260 million people
are below the poverty line and hospitalisation is one of the primary cause of
indebtness and poverty, as studies suggest that 24 per cent of all people hospitalised
in India in a single year slipped below the poverty line.
Statistics suggest that one per cent increase in India's rural income, increases
buying power by Rs 10,000 crore. The Insurance Regulatory Development Authority
(IRDA) has already stipulated minimum requirement 15-20 per cent of rural business
from insurance companies to supplement the growth. We have already experienced
the success of Yeshaswini Scheme, Chiranjeevi Scheme, Nandi foundation's school
health programme, SEWA's insurance etc, but micro insurance is still at its
nascent stage. The reach of such schemes is very limited as on date (anywhere
between five and 10 million individuals), but the potential is considered to
be huge and overall market is estimated to reach Rs 250 billion by 2008 (ILO
2004). We need to join hands, build capabilities, create awareness, develop
affordable and viable micro-insurance schemes, build an efficient marketing
channel and overcome challenges towards the growth of the industry and fulfill
our dream of 'healthy' India.
Insurers Role
 Product:
- Innovative micro-insurance products need to be designed
to address the rural consumer's requirement/needs.
- Products should be designed in close consultation
with the stakeholders.
- Follow a product development process when developing
micro-insurance products. When this is done, issues are caught early and cause
fewer problems to the institution.
- Pricing of micro-insurance products needs to be competitive.
Product needs to be priced from professionally derived premium rather then
unscientific assumptions.
Product Marketing
- Partnership with different corporates which have
a strong presence in the rural sector. For instance, ITC (through e-choupal),
DCM (through Hariyali) etc.
- Partnership with bank branches and wide spread post
office network. India has approximately 60,000 bank branches- fourth largest
banking infrastructure and 155,000 post offices— the largest in the world,
which can be used to market micro-insurance.
- Life and non-life companies can tie-up together to
launch composite products (with both general and life covers) for the poor
and share the same marketing channel for its product.
- Involvement of NGOs, self-help groups, micro-finance
institutions to distribute such products. IRDA has already allowed such groups
to act as a micro-insurance agent along with the certified insurance agents
and brokers.
- A dedicated team to counsel and change the mindset
of the people regarding health insurance.
- Ensure client education and awareness.
- Exposure tours, where village leaders with policy
holders are sent to other villages to educate the community regarding the
advantages of having insurance.
- Products should be launched after a careful market
study including qualitative consumer surveys.
Capacity Building
- Micro-insurance is a complex business and thus it
is necessary to build up management capacities.
- Creating proper infrastructure that can support the
servicing of insurance along with improved managerial, administrative and
technical capacities.
Government's Role
- The Government needs to exempt micro-insurance from
payment of service tax to make products cheaper and encourage penetration
of insurance services in low income rural and social sectors. The service
tax of 10.2 per cent on premium adds to the price of insurance. A report by
the UN Development Programme (UNDP) suggests that to help keep premium low
for rural poor, Government could consider waiver of service tax on micro-insurance
products for a limited period.
- Government can encourage the corporates for funding
micro-health insurance schemes by providing some tax-rebate.
- Some special tax benefits can be extended to the
doctors who are practicing or running a hospital/nursing home in the rural
areas.
- Government should extend subsidies on certain high-cost
equipment and such other purchases to enable the private healthcare providers
to deliver more efficient, effective and economic services to the rural population.
- Providing health insurance coverage to the workers
needs to be made mandatory for the small scale industries.
- Providing subsidy to both state and private insurers
to bring uniformity.
- Both Central and State Government needs to finance
micro-insurance schemes. Currently, Central Government and Government of Rajasthan,
Andhra Pradesh, Punjab and some local bodies are financing micro-insurance
schemes to some extent. This needs to more formalised and every State Government
needs to budget for micro-health insurance.
Corporate's Role
- Corporates should come ahead and finance some micro-health
insurance schemes.
- Development of the robust IT infrastructure by the
IT majors. All the IT majors need to come together to form a team for development
of efficient transactional and informational systems.
The Need of the Hour
- Micro-insurers need good accounting and timely access
to management data.
- Pooling of data between insurance companies and the
Government. Building and sharing claims histories can help in aligning pricing
decisions with actuarial calculations, thereby reduce price.
- The staff members managing the micro-health insurance
scheme need to be physically closer to the people and healthcare facility.
- Recruiting some trained professionals who will act
as gate-keepers and help the community people in accessing healthcare services.
This approach will also help in fraud control.
- Careful and well managed rejection of claims whereby
the reasons should be made clear to the villagers.
- The insurers need to be well capitalised and willing
to lose some money while the product is growing.
biswendu@gmail.com
The writer is Manager Operations Back Office-Insurance Patni Computer
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