Initiative

Stree shakti, the SKS Microfinance Way

Hyderabad based SKS Microfinance has attempted to empower poor rural women and their families by rolling out Swayam Shakti Suraksha - a rural health insurance product. Sonal Shukla takes a look

For ages, workers and academicians in the development sector have been crying out that there is an acute need for a health insurance scheme to cover workers in the unorganised sector, especially women. Positively speaking, with the MFI (Micro Finance Institutions) industry coming of age with new technologies, a number of micro health insurance initiatives have been initiated in India. Swayam Shakti Suraksha Health Insurance is one such example.

In the Indian context, 'shakti' has come to symbolise woman power, and thus as the name suggests, Swayam-Shakti (self-empowerment) is an umbrella brand of SKS Microfinance's insurance offerings which seek to empower women through insurance. This rural health insurance product launched especially for poor women and their families from rural India, provides them a safety net of health insurance and helps them to empower themselves. They no longer have to borrow from others to tide them over tough times. Not just Swayam Shakti, but all the SKS Microfinance products and services are targeted at women. "As such all our 2.2 million members are women. Under Swayam Shakti Suraksha, the primary customer is the woman and the cover could be for the family. Historically too we lend only to women. This is mainly for three reasons. One is that women are more committed to repaying a loan. All the money they earn they plough back into the family and under the joint liability group system that we operate, the group dynamics work better with women," says Mamta Bharadwaj, Vice President, Marketing & Communications, SKS Microfinance. The company has initiated the pilot project in north Karnataka in the districts of Gulbarga and Bidar where health awareness and care is lacking. The scheme will be rolled out in phases and next on the radar is Andhra Pradesh and Orissa. By March 2010 the product will be rolled out across all branches in the 15 states where SKS Microfinance has micro credit activities. So far, Swayam Shakti has covered 8,68,300 lives.

Rural India Calling

"Swayam Shakti Health Insurance covers existing and potential illnesses, snake bites, maternity and a three-month cover for the new born and accidents" - KV Rao, Vice President, Member Services

The domestic insurance industry in India is estimated to grow to be around $60.5 billion by 2010, of which $35 billion will come from rural and semi-urban areas. While the life insurance market is expected to grow to $5 billion, non-life insurance market will touch an estimated $25 billion. Currently only 30,111,690 people in the low income category in India are covered by around 130 insurance products. In 2006 health insurance covered only one per cent of the population of the country and accounted for 1.2 per cent of the total healthcare expenditure. "Looking at the low penetration of health insurance and large existing rural population, the market is still untapped due to various challenges in designing appropriate micro insurance products and distributing the same," says Pranav Prashad , Head - Rural & Agricultural Business Group, ICICI Lombard. Agrees MR Rao, COO, SKS Microfinance, "The penetration of health insurance in the country is woefully low and the market size is valued at just Rs 1,200 crore. The total health spend in the country amounts to about Rs 10,000 crore. In rural and semi-urban areas where our distribution strengths are high, the penetration is nil."

The poor are not familiar with the concept of health insurance. When they fall ill, they often postpone treatment till they land up in an emergency situation because they cannot afford to miss even a day of work or they just do not have the money for medical expenses. In case of medical emergencies, they land up selling assets, often those that they use for income generation or borrowing heavily from money lenders, relatives or friends. "There is a definite need for health insurance in these communities which will help them out in such situations without crippling their lives or eating into their savings," adds Rao.

With an aim to meet this huge need for insurance in the rural and semi-urban India, SKS Microfinance partnered with ICICI Lombard which developed the Swayam Shakti Health Insurance product for them. "ICICI Lombard is an organisation of repute and our members get to access a quality insurance product from an organisation which has the clout to negotiate with established hospitals for the best services for our members," says M R Rao.

Getting Focused

"All micro insurance schemes require a high degree of customisation on the part of the insurer to suit the precise requirements and realities of the customer," opines Prashad. There are a number of factors, like the group size, what percentage of the target population would be covered under the scheme, ability and willingness to pay, geographical location(s) and selection and networking of hospitals for provision of cashless facility to the insured, which influence this decision. ICICI Lombard undertook several months of planning to discuss the product offering, enrollment, implementation process and financials with SKS for Swayam Shakti. The processes on both sides were aligned to suit the technology of the partner. The aim was to roll out the scheme in at least dozen states of the country having a very large member base. Therefore a pilot was necessary to test the processes and product and use the learnings of the same. "Since our members are not used to health insurance products, we needed to test the product for three months to see if they would find it useful and adopt it," says Rao.

Raining Benefits

The incidents covered by Swayam Shakti Health Insurance are based on a rural woman's needs. "Swayam Shakti Health Insurance is a very comprehensive product. It covers existing and potential illnesses, snake bites, maternity and a three-month cover for the new born and accidents. It also offers the poor cashless entry into many network hospitals and a reimbursement with non-network hospitals and private nursing homes," shares KV Rao, Vice President, Member Services.

"It's tailor made since it has been designed to cover most healthcare needs of our members with cash and cashless options. Since all our members are women it covers maternity and the new born child. It also covers snake bites which are common in the rural areas," says M R Rao. The member and her family can avail of insurance cover when they require to be admitted in a hospital/nursing home. They can claim expenses up to Rs 20,000. Also, the member and her spouse can avail up to Rs 20,000 each in case of accidental health and permanent disablement. Above all, all the mentioned insurance benefits come a very low premium for the entire family. The product is available to all SKS members and covers them and their families in the age group of a new born to 70 years.

"This is a value-based product which is not available readily in the market. If all the features are added and a product designed, it would cost almost twice the premium," says M R Rao. Due to the large presence of ILGIC (ICICI Lombard General Insurance Company), operation of the scheme also becomes cost effective bringing the premium as low as possible. "The premium is annual and ranges between Rs.250 (for a single member) to Rs.375 (covering four members of a family). On a daily basis this works out to 68 paise to Rs 1and 2 as premium.When the number of people covered is very high we achieve economies of scale," shares Prashad. The benefits are that the members do not get into a downward economic slide when there is illness in the family. They get access to quality health care without cash and the claims get settled on time at their doorstep in the simplest possible way. However, the limitation is that there are not enough healthcare institutions in the areas that SKS Microfinance is currently serving.

Role Play

SKS Microfinance is ably handling the huge untapped customer base with its 6,000 odd field assistants. "We talk to our members about the product and its benefits at our regular center meetings," says K V Rao.

On the other hand, ICICI Lombard apart from carrying the risk in the Swayam Shakti, plays a role in preparing awareness generation material, training support, monitoring of the scheme and linkages with hopsitals. "Being the insurer, we try and settle the claims as quickly as possible after the requisite verification," says Prashad. All the field assistants conduct at least three to four meetings in a day in different centers with 30-40 SKS members. ICICI Lombard has undertaken an intensive exercise of tying up with several hospitals accessible to the rural populations where members of SKS are located.

The selection of the hospitals is made by the SKS field officers in consultation with the members. A list is prepared and sent to ICICI Lombard. "We then approach the hospitals to try tying up with them and if talks are successful, we sign a formal agreement to the effect that the hospitals would provide cashless hospitalisation to the insured patients," says Prashad. This is helpful for poor patients who cannot mobilise cash. Also, in case a patient chooses to visit a Government hospital or any other hospital that has not tied up with ICICI Lombard, they should still be able to enjoy the benefits of insurance. Therefore in such cases, the claim can be settled via the reimbursement mode. "Many existing health insurance products do not offer cashless transactions or benefits are limited to listed establishments. By giving both options, our members get the benefit of getting immediate medical attention without paying any money. They can also access medical establishments which are not listed by opting for a reimbursement option," states Bharadwaj.

Challenges and Solutions

One of the first challenges confronted by SKS was the lack of awareness about health insurance as a product. The target members were not aware of the benefits, workings or premiums that needed to be paid. "When we first launched the product, our members were hesitant. They felt by investing in health insurance they would invite illness. They also saw little value in investing in a problem that they currently did not face. The early adopters were naturally families who had some medical problem that needed attention," says Bharadwaj. However once the community saw the benefits these families got, they were more than willing to sign on. Expectedly, the premium was perceived as too high and there was resistance from not just the members but also SKS staff who were shying away from marketing it.

At the delivery end, there were few hospitals and nursing homes around. Among the few that existed, there was little awareness about the processes that were required for health insurance to work as a product. The field officers of SKS had to undergo extensive training to enroll the members and their families. Application forms and a few other documents had to be filled up at the doorstep of the member. "Initially members were sceptical of insurance and were not sure if their claims would get paid. Moreover, it was difficult to explain the exclusions under insurance and further, they could not comprehend the documents required to file a claim," says Prashad. As a solution, training programmes were undertaken in collaboration with SKS to complete all the above requirements.

SKS conducted training sessions for area managers, unit managers and branch managers on health insurance product and processes. According to Prashad, training is required for field officers and hospital staff. The training is both for the product offerings and the processes. Further there is a need to generate awareness of the product among the end customers as well.

Audio visuals were screened at projection meetings conducted by SKS to create awareness about the need for health insurance and its benefits among new members. The regular center meetings were used as platforms where members were educated on health insurance and concerns were addressed. ICICI Lombard conducted workshops for facilitators in the network hospitals on the processes that need to be followed for cashless treatment.

Whilst the urban healthcare scenario is changing at a mammoth speed, it is indeed applaudable that companies are now focusing on that 70 per cent of larger India, which still struggles hard to even receive basic amenities. "Today, if this scheme is a success, it is because women are finding it invaluable in taking care of their financial situation in case of a medical emergency in the family. A woman is more involved with the healthcare needs of her family and sees value in a product like Swayam Shakti Suraksha," opines MR Rao. It is indeed a very affirmative step that SKS has taken which not only helps the poor, but betters lives every single day. As Gandhi had said once, a woman empowered equals India empowered.

sonal.shukla@expressindia.com