MICRO-INSURANCE
OBJECTIVES
? To understand what Micro-Insurance is. ? To recognize the Potential Market for Micro-Insurance in India. ? To identify the Key Characteristics of Micro Insurance. ? To have a look at the micro-insurance products.
METHODOLOGY
Data has been collected for the following sources:
? Primary data ? Secondary data
All the data has been collected by doing library research, magazines, articles, visiting bank’s official websites and various other web pages.
SCOPE OF THE STUDY
? Meaning and concept of Micro-Insurance. ? Need for developing micro-insurance in India. ? Conducted unstructured interviews sample size of 30 general
people having income less than Rs. 350 per day.
? The area which was selected for the survey is bounded by
central suburbs of Maharashtra State.
? All the data generated for primary data that was generated
directly from face to face communication.
LIMITATIONS
? Data collection was very time consuming.
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MICRO-INSURANCE
? Since it is a new concept, untouched and unaware, the
information was not easily available.
? All the primary information included in the project is completely
based on the data offered by the applicants through survey analysis. There is no alternate source for confirmation of this information and data.
WHAT IS MICRO INSURANCE?
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MICRO-INSURANCE On a daily basis, the poor around the world face a multitude (huge amount) of risks that threaten to derail any progress they have made to work their way out of poverty. The death of a family member, loss of property and livestock, illness, and natural disasters each pose unique dangers. Protecting people against these losses is an important step to alleviating global poverty. Micro insurance - the protection of low-income people against specific perils in exchange for regular monetary payments (premiums) proportionate to the likelihood and cost of the risk involved – seeks to provide a suitable solution for managing these risks. The institutions or set of institutions implementing microinsurance are commonly referred to as a micro insurance scheme.
DEFINITIONS
Micro-insurance is insurance with low premiums and low caps / coverage. In this definition, “micro” refers to the small financial transaction that each insurance policy generates. The Micro-insurance Regulations, issued in 2005 by the Indian Insurance Regulatory and Development Authority (IRDA), for example, adopted this definition in explaining “micro-insurance products” as those within defined (low) minimum and maximum caps. The IRDA’s characterization of microinsurance by the product features is further complemented by their definition for micro-insurance agents, those appointed by and acting for an insurer, for distribution of micro-insurance products (and only those products).
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MICRO-INSURANCE
? Micro-insurance is a financial arrangement to protect lowincome people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. The author of this definition adds that microinsurance does not refer to: (i) the size of the risk-carrier (some are small and even informal, others very large companies); (ii) the scope of the risk (the risks themselves are by no means “micro” to the households that experience them); (iii) the delivery channel: it can be delivered through a variety of different channels, including small community-based schemes, credit unions or other types of microfinance institutions, but also by enormous multinational insurance companies, etc.
? Micro-insurance is synonymous to community-based financing
arrangements, including community health funds, mutual health organizations, rural health insurance, revolving drugs funds, and community involvement in user-fee management. Most community financing schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. The common feature within all, is the active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.
? Micro-insurance is the use of insurance as an economic
instrument at the “micro” (i.e. smaller than national) level of society. This definition integrates the above approaches into
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MICRO-INSURANCE one comprehensive conceptual framework. It was first published in 1999, pre-dating the other three approaches, and has been noted to be the first recorded use of the term “microinsurance”. Under this definition, decisions in micro-insurance are made within each unit, (rather than far away, at the level of governments, companies, NGOs that offer support in operations, etc.).
INTRODUCTION
Micro-insurance, the term used to refer to insurance to the lowincome people, is different from insurance in general as it is a low value product (involving modest premium and benefit package) which requires different design and distribution strategies such as premium based on community risk rating (as opposed to individual risk rating), active involvement of an intermediate agency representing the target community and so forth. Insurance is fast emerging as an important strategy even for the low-income people engaged in wide variety of income generation activities, and who remain exposed to variety of risks mainly because of absence of cost-effective risk hedging instruments. Although the type of risks faced by the poor such as that of death, illness, injury and accident, are no different from those faced by others, they are more vulnerable to such risks because of their economic circumstance. In the context of health contingency, for example, a World Bank study (Peters et al. 2002), reports that about
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MICRO-INSURANCE one-fourth of hospitalized Indians fall below the poverty line as a result of their stay in hospitals. The same study reports that more than 40 percent of hospitalized patients take loans or sell assets to pay for hospitalization. Indeed, enhancing the ability of the poor to deal with various risks is increasingly being considered integral to any poverty reduction strategy (Holzmann and Jorgensen 2000, Siegel et al. 2001).
Of the different risk management strategies, insurance that spreads the loss of the (few) affected members among all the members who join insurance scheme and also separates time of payment of premium from time of claims, is particularly beneficial to the poor who have limited ability to mitigate risk on account of imperfect labour and credit markets.
In the past insurance as a prepaid risk managing instrument was never considered as an option for the poor. The poor were considered too poor to be able to afford insurance premiums. Often they were considered uninsurable, given the wide variety of risks they face. However, recent developments in India, as elsewhere, have shown that not only can the poor make small periodic contributions that can go towards insuring them against risks but also that the risks they face (such as those of illness, accident and injury, life, loss of property etc.) are eminently insurable as these risks are mostly independent or idiosyncratic. Moreover, there are cost-effective ways of extending insurance to them. Thus, insurance is fast emerging as a prepaid financing option for the risks facing the poor.
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MICRO-INSURANCE
HISTORY & VISION
The Micro Insurance Agency has its roots within Opportunity International, a large microfinance network motivated by Jesus Christ’s call to serve the poor. With a network of 47 microfinance institutions, Opportunity International has been serving the entrepreneurial poor since 1971. In partnership with Opportunity’s microfinance institutions, we began working in 2002 on the development of a range of life, property, livestock, crop derivative, disability, unemployment and health insurance products to cover the risks faced by Opportunity’s loan clients. Micro Insurance Agency staff observed that the risks the poor face can often set them back months and years behind where their loans and savings products offered by Opportunity had taken them. For instance, a death of a family member from HIV/AIDS –“pre-condition” most insurance companies would not cover – would often mean expensive funeral costs and the loss of a breadwinner, resulting in increased economic hardship for the family. In response, Micro Insurance Agency staff developed an affordable funeral benefit product that did not exclude any pre-conditions, including HIV/AIDS. This transformed the mindset of retail insurance providers in the country, who later developed similar non-exclusive products in light of the competing environment.
Through the experience of serving Opportunity’s microfinance institutions and their clients, Micro Insurance Agency staff observed
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MICRO-INSURANCE that the products most demanded by the poor are not always the ones available. Health insurance, for example, is a critical need of the poor but the most limited in terms of supply. In addition, policies that are available are often based on first world practices and are too complex for the simple coverage demanded. Further, when offered on an individual, one-off basis, high premium requirements and a need to pay in a single lump sum preclude a huge sector of the market from access. New distribution models and channels were needed to increase access and reduce the effective price charged to clients.
In 2005, the Micro Insurance Agency was founded by Opportunity International as a fully-owned subsidiary capable of offering insurance products and services to a wide range of customers.
Our mission is to empower the materially poor to transform their lives by insuring them against financial risk and its consequences. Specifically, we seek to serve the economically active poor who live on $4 per day or less in developing countries and provide a safety net to reduce economic setbacks.
SCOPE AND FUNCTIONS
A micro-insurance agent shall be appointed by an insurer by a deed of agreement or memorandum of understanding which should clearly
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MICRO-INSURANCE specify the terms and conditions, duties and responsibilities of both the micro-insurance agent and the insurer, and he shall abide by the following:-
? He shall work either for one life insurer or for one general
insurer or for one life insurer and one general insurer;
? He shall be specifically authorized to perform one or more of
the following functions:--
? Maintaining a register of all members and their dependants
covered under the insurance scheme along with details of name, age, address, nominees and thumb impression/ signature;
? Collection of proposal forms; ? Collection of self declaration from the member that he is in
good health;
? Collection of monies for issuance of contract or remittance of
premium;
? distribution of policy documents; ? Assistance in the settlement of claims;
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? Nomination; and ? Any policy administration service. ? The micro-insurance agent or the insurance company shall have
the option to terminate the agreement/ MOU after giving a notice of three months.
? All such agreements/ MOU must have the prior approval of the
Head office of the insurance company.
TYPES OF MICROINSURANCE IN INDIA
Life Insurance
Life insurance pays benefits to designated beneficiaries upon the death of the insured. There are three broad types of life insurance coverage: term, whole-life, and endowment. Term life insurance policies provide a set amount of insurance coverage over a specified period of time, such as one, five, ten, or twenty years. This insurance is appropriate when the policyholder's need for coverage is temporary. Compared with other life insurance policies this is not very complicated for the provider to offer. This is the most widely used life insurance policy in low-income communities in developing countries. Whole life insurance is a cash-value policy that provides lifetime protection. This is hardly offered in low-income markets in the developing countries
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MICRO-INSURANCE Endowment life insurance pays the face value of insurance if the policyholder dies within a specified period. It thus has a longer time horizon that the term life insurance. This is also not offered widely in developing countries.
Health Insurance
Health insurance provides coverage against illness and accidents resulting in physical injuries. MFIs have realized that expenditures related to health problems have been a significant cause of defaults and people's inability to continue improving their economic conditions. Several MFIs have therefore, either started their own health insurance programs or have linked their clients to existing programs. While actual coverage varies, many health insurance providers cover for limited hospitalization benefits for certain illnesses, and for costs of physician visits and medicine. Some insurance providers also make available primary health care services such as immunization and contraceptives.
Property Insurance
Property insurance provides coverage against loss or damage of assets. Providing such insurance is difficult because of the need to verify the extent of damage and determine whether loss has actually occurred. It is difficult for most MFIs to guard against such moral hazard. A few, however, do provide such coverage. SEWA in India, for example, provides insurance against damage to home and productive assets. Grameen Bank in Bangladesh offers its clients insurance
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MICRO-INSURANCE against the death of livestock and COLUMNA in Guatemala provides insurance against fire damage.
Disability Insurance
Disability insurance in most cases is tied to life insurance products. It provides protection to the policy holder and her family, should she or some of her family suffers from a disability. This is not very widely offered by Micro insurance providers. FINCA, Uganda and CARD in Philippines are examples of MFIs providing clients with disability insurance.
Crop Insurance
Crop insurance typically provides policy holders protection in the event their crops are destroyed by natural calamities such as floods or droughts. The experience with crop insurance in developing countries and even in the developed economies has had mixed results. To improve the ability of rural farmers to repay loans from agricultural development banks (ADBs), many governments developed crop insurance programs in the 1970s and 1980s. These programs typically provided loan repayment and occasionally income supplements to farmers suffering crop yields below an established minimum. Similar programs were developed in countries as diverse as Brazil, India, the Philippines and the USA. In each country the results were disastrous, with expenses (administrative and claims) far outstripping revenues. Reasons for the failure of crop insurance have included: bad program design (such as failure to bring into account the incentives faced by the policy holders), covariant risks typical of rain-fed agriculture
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MICRO-INSURANCE systems dependent on only one or two crops, and in some cases / unanticipated catastrophic natural calamities.
Unemployment Insurance
Unemployment insurance is typically offered by the public sector. Private insurance companies are usually not involved in it. This insurance provides cash relief to individuals who become unemployed involuntarily and who meet certain government requirements. It also helps unemployed workers find jobs. Unemployment insurance attempts to stabilize the economy by enabling people to maintain their purchasing power.
Reinsurance
Reinsurance is the shifting of part or all of the insurance originally written by one insurer to another. This is a central feature of the operations of all commercial insurers. Reinsurance reduces an insurer's risk exposure and acts as an effective source of financing and a valuable source of actuarial expertise. Reinsurance can be used to stabilize profits, instead of having large fluctuations in financial outcomes year to year. It allows smaller insurers to share risk with other insurers in different regions or countries, effectively developing sufficient large risk pools by combining the risks of many insurers. Despite its obvious benefits reinsurance is largely unavailable for micro-insurers. Access to reinsurance can spur both the development of new micro-insurers and the growth of existing ones. An example of an MFI using reinsurance is that of FINCA International, Uganda which
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MICRO-INSURANCE has entered a partnership with American International Group (AIG) to provide its clients life and disability insurance.
MICRO-INSURANCE DELIVERY MODELS
One of the greatest challenges for micro-insurance is the actual delivery to clients. Methods and models for doing so vary depending on the organization, institution, and provider involved. In general, there are four main methods for offering micro-insurance the partneragent model, the provider-driven model, the full-service model, and the community-based model. Each of these models has their own advantages and disadvantages.
? Partner agent model: A partnership is formed between the
micro-insurance scheme and an agent (insurance company, microfinance institution, donor, etc.), and in some cases a thirdparty healthcare provider. The micro-insurance scheme is responsible for the delivery and marketing of products to the clients, while the agent retains all responsibility for design and development. In this model, micro-insurance schemes benefit from limited risk, but are also disadvantaged in their limited control.
? Full service model: The micro-insurance scheme is in charge of
everything; both the design and delivery of products to the clients, working with external healthcare providers to provide the services. This model has the advantage of offering micro-
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MICRO-INSURANCE insurance schemes full control, yet the disadvantage of higher risks.
? Provider-driven model: The healthcare provider is the microinsurance scheme, and similar to the full-service model, is responsible for all operations, delivery, design, and service. There is an advantage once more in the amount of control retained, yet disadvantage in the limitations on products and services.
? Community-based/mutual model: The policyholders or
clients are in charge, managing and owning the operations, and working with external healthcare providers to offer services. This model is advantageous for its ability to design and market products more easily and effectively, yet is disadvantaged by its small size and scope of operations.
THE KEY CHARACTERISTICS
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MICRO-INSURANCE The IAIS-CGAP Joint Working Group on Micro Insurance document on the -regulation and supervision of Micro Insurance identified the following key characteristics of Micro Insurance:
? Inclusiveness: While formal channels of insurance business
tend to exclude low-income households, Micro Insurance schemes generally tend to be inclusive.
? Group Coverage: Group insurance is more inclusive and cost
effective than individual coverage. Even though the informal economy is frequently seen as disorganized, there are groupings available, such as women's associations, informal savings and credit groups, cooperatives, small business associations and the like. These groups effectively by enlisting their support in member selection and reduces insurance risks such as fraud, over-usage and moral hazard.
? Simple Processes, Rules and Restrictions: Insurance
contracts are generally full of complex conditions and conditional benefits. Micro Insurance contracts have to be in plain language (preferably local language) and kept as simple as possible so that everyone has a clear understanding of what is covered and what is excluded.
THE MICRO INSURANCE MECHANISM
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Micro Insurance operates by connecting multiple small units with larger structures and thereby creates networks which enhance both insurance functions (through risk pooling) and support structures for improved governance (i.e. training, data banks, research facilities, access to reinsurance etc.). This insurance mechanism is independent of permanent external financial support. The principal objective of Micro Insurance is to pool both risks and resources of whole groups for the purpose of providing financial protection to all members against the financial consequences of mutually determined risks. Historically, Micro Insurance products have evolved out of community-based financing arrangements with active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.
INTRODUCTION
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MICRO-INSURANCE
Historically in India, a few micro-insurance schemes were initiated, either by non-governmental organizations (NGO) due to the felt need in the communities in which these organizations were involved or by the trust hospitals. These schemes have now gathered momentum partly due to the development of micro-finance activity, and partly due to the regulation that makes it mandatory for all formal insurance companies to extend their activities to rural and well-identified social sector in the country (IRDA 2000). As a result, increasingly, microfinance institutions (MFIs) and NGOs are negotiating with the forprofit insurers for the purchase of customized group or standardized individual insurance schemes for the low-income people. Although the reach of such schemes is still very limited anywhere between 5 and 10 million individuals---their potential is viewed to be considerable. The overall market is estimated to reach Rs. 250 billion by 2008 (ILO 2004).
The insurance regulatory and development authority (IRDA) defines rural sector as consisting of:
? a population of less than five thousand, ? a density of population of less than four hundred per square
kilometer
? More than 25% of the male working population is engaged in
agricultural pursuits. The categories of workers falling under agricultural pursuits are: cultivators, agricultural laborers, and workers in livestock, forestry, fishing, hunting and plantations, orchards and allied activities.
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MICRO-INSURANCE The social sector as defined by the insurance regulator consists of:
? Unorganized sector ? informal sector ? economically vulnerable or backward classes, and ? Other categories of persons, both in rural and urban areas.
The social obligations are in terms of number of individuals to be covered by both life and non-life insurers in certain identified sections of the society. The rural obligations are in terms of certain minimum percentage of total polices written by life insurance companies and for general insurance companies, these obligations are in terms of percentage of total gross premium collected. Some aspects of these obligations are particularly noteworthy. First, the social and rural obligations do not necessarily require (cross) subsidizing insurance. Second, these obligations are to be fulfilled right from the first year of commencement of operations by the new insurers. Third, there is no exit option available to insurers who are not keen on servicing the rural and low-income segment. Finally, non-fulfillment of these obligations can invite penalties from the regulator.
In order to fulfill these requirements all insurance companies have designed products for the poorer sections and low-income individuals. Both public and private insurance companies are adopting similar strategies of developing collaborations with the various civil societies associations. The presence of these associations as a mediating agency, or what we call a nodal agency, that represents, and acts on behalf of the target community is essential in extending insurance
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MICRO-INSURANCE cover to the poor. The nodal agency helps the formal insurance providers overcome both informational disadvantage and high transaction costs in providing insurance to the low-income people. This way micro insurance combines positive features of formal insurance (pre paid, scientifically organized scheme) as well as those of informal insurance (by using local information and resources that helps in designing appropriate schemes delivered in a cost effective way). In the absence of a nodal agency, the low resource base of the poor, coupled with high transaction costs (relative to the magnitude of transactions) gives rise to the affordability issue. Lack of affordability prevents their latent demand from expressing itself in the market. Hence the nodal agencies that organize the poor, impart training, and work for the welfare of the low-income people play an important role both in generating both the demand for insurance as well as the supply of cost-effective insurance.
POTENTIAL MARKET FOR MICRO-INSURANCE IN INDIA
: The UNDP Study
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During 2005-06, the Human Development Report Unit of UNDP conducted a study of the potential Micro Insurance market in India on the basis of field surveys conducted in the States of Orissa, Tamil Nadu and Rajasthan. The UNDP report commented that the potential utility of Micro Insurance may be even broader than that of micro-credit and may be closer to the potential market for micro-savings, balanced by affordability considerations in the early stages. Some 52.4 per cent of India's population of 1.08 billion earns less than US $ 2 a day (in terms of Purchasing Power Parity). Micro Insurance can play an important role in protecting the income of these people.
The UNDP report also tried to estimate the potential size of the Micro Insurance market in India. The estimates corresponding to the life and non-life segments are provided in Table 3. The population used for the estimation is 40-50 percent of those earning less than US$ 1 a day and 50-70 per cent of those earning between US$ 1 - 2 a day. The nonlife estimation included four types of coverage - milch animals, livestock, health and crop insurance.
The Potential Market for Micro-Insurance in India
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MICRO-INSURANCE Insurance Segment Market Size (Potential)(Rs. Millions) Life Segment Non-Life Segment TOTAL (Life and Non-Life) 15393-20141 46911.70-64,126.55 62304.70-84,267.55
SOURCE: UNDP (2007). Building Capacity for the Poor Potential and
Prospect for Micro-Insurance in India. UNDP Regional Centre, Colombo.
BACKGROUND
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MICRO-INSURANCE Micro-insurance refers to protection of assets and lives against insurable risks of target populations such as micro-entrepreneurs, small farmers and the landless, women and low-income people through formal, semiformal and informal institutions. Such products are often bundled with micro-savings and micro-credit, thereby allocating scarce resources to micro-investments with the highest marginal rates of return. Micro insurance is the most underdeveloped part of microfinance. Yet various schemes exist that are viable, benefiting both the institutions and their clients. Such schemes have generally served two major purposes: (i) they have contributed to loan security; and (ii) they have served as instruments of resource mobilization. The greatest challenge for micro insurance lies in the combination of viability and sustainability with outreach. Although introduction of sound practices such as appropriate policy sizes and timely payment of installments of premium or positive incentives to renew on time in order to avoid policy getting lapsed can be feasible, the ultimate effectiveness of interventions focusing on institutional transformation and sound insurance practices will vary considerably, depending on the appropriateness of the regulatory environment.
DEVELOPMENT GOAL
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MICRO-INSURANCE To enable micro insurance to be an integral part of a country's wider insurance system, it is important for every insurer to adjust its costs of serving marginal clients in remote areas, collecting premiums and installments, and offering doorstep services. It is also important to recognize a wide network of intermediaries in the rural and social sectors and notify regulations in order to guide and supervise the micro-insurance service providers and their customers.
Today we have a variety of microfinance institutions with national and local outreach. Many of them have already become corporate agents or have entered into referral arrangements with insurers. However, semiformal institutions including savings and credit cooperatives, NGOs and self-help groups which have immense potential in carrying the message of insurance as also solicit insurance business are yet to be utilized in a manner where their true potential can be harnessed to increase the insurance penetration levels. This is due to restrictions in the existing agency regulations in terms of minimum eligibility norms in order to become an agent. Depending on the existence and vigor of such institutions, the following alternatives have emerged, for offering strategic entry points for micro insurance development:
? Adapting formal insurance arrangements to the needs of the
micro-economy.
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MICRO-INSURANCE
? Upgrading non-formal (comprising semiformal and informal)
insurance arrangements with insurance companies.
? Linking formal and non formal insurance institutions with banks
and self-help groups.
? Establishing new local institutions providing micro insurance
services.
The first three strategies may be inter-connected:
? adapting insurance companies to the requirements of the
micro-economy is a first step; then
? Linking them as wholesale institutions to self-help groups as
retailers; and finally,
? Upgrading self-help groups e.g. to the level of financial
cooperatives or village banks.
If insurers are to serve customers who differ widely in terms of service costs and risks, the only viable inducement for them is an adequate margin, lest they exclude small farmers, - micro-entrepreneurs and people in remote areas. Only sound social insurance, which combines a social mandate with profit-making, has a chance of sustainability.
INSTITUTIONAL ADAPTATION
The experience so far has been that formal financial institutions serve but a fraction of the population, which typically lies within the upper
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MICRO-INSURANCE quartile of the social hierarchy. Through adaptation to the microfinance market requirements, they may gradually expand into the second-highest quartile and into segments of the lower quartiles. Within the foreseeable future they will normally not be able to fully serve that market. Non formal finance mostly rests on local institutions which are directly accessible to all segments of the population. Self-Help Groups (SHGs) are member-owned and member-controlled local institutions. They may either be financial groups, with financial intermediation as their primary purpose; or non financial groups, with financial
intermediation as a secondary purpose, such as vendors' associations, family planning groups and numerous other types of voluntary associations.
The functions that need to be focused must include: providing guidance to members, collecting premium installments from members, insurance services to members, communication and exchange of experience, providing linkages with banks, NGOs or donors, supporting the proposals of individual members to insurance companies through recommendations.
LINKAGE TO INSURERS
On a modest scale, various forms of life and health insurance have been successfully practiced by different institutions in different
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MICRO-INSURANCE countries, particularly as part of loan protection schemes. Microinsurance procedures and services should be set by insurers rather than the regulator. Appropriate procedures and services should be applied to attain:
? Sound financial management, ? Convenient and safe savings premium collection and deposit
facilities,
? Appropriate claim appraisal and processing procedures, ? Adequate risk management, ? Timely collection of premium installments, ? Monitoring and ? Effective information gathering, all of which may include
cooperation between different formal and non-formal
intermediaries in fields where each is most effective.
PROPOSED MICRO-INSURANCE REGULATIONS
In order to introduce the concept micro-insurance it is necessary to draft suitable bring in suitable regulations to enable insurers to design and distribute and service micro-insurance products and discharge their obligations to the rural and social sectors as per provisions of the Insurance Act, 1938.
? It is proposed that an insurer transacting life insurance business
shall be permitted to provide life micro-insurance products as
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MICRO-INSURANCE well as general micro-insurance products provided it ties up with an insurer transacting general insurance business for the general micro-insurance products, and vice versa.
? In addition to an insurance agent or corporate agent or
insurance broker who are authorized to solicit and procure insurance business, including micro-insurance business with an insurer in accordance with the provisions of the Insurance Act, 1938 and the regulations made there under it is also proposed to introduce the concepts of “micro-insurance product” and “micro-insurance agent” .
TIE-UP BETWEEN LIFE INSURER AND NONLIFE INSURER
? An insurer carrying on insurance business may offer life microinsurance products as also general micro-insurance products, as provided herein.
Provided that where an insurer carrying on life insurance business offers any general micro-insurance product, he shall have a tie-up With an insurer carrying on general insurance business tor this purpose, and subject to the provisions of section 64VB of the. Act, the premium attributable to the general micro insurance product may be collected from the prospect (proposer) by the insurer carrying on life insurance
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MICRO-INSURANCE business, either directly Or through any of the distributing entities of micro-insurance products as specified in regulation 4, and made over to the insurer on general insurance
business. Provided further that in the event of any claim in regard to general micro-insurance products, the insurer carving on life insurance business or the distributing entities of micro-insurance products, as the case may be, as may be specified in the tie-up referred to in the first proviso, shall forward the claim to the insurer carrying on general insurance business and offer all assistance for the expeditious disposal of the claim.
? An insurer carrying on general insurance business may offer
general micro-insurance products as also life micro-insurance products, as provided herein.
Provided that where an insurer carrying on general insurance business offers any life micro- insurance product, he shall have a tie-up with an insurer carrying on life insurance business for this purpose, and subject to the provisions of section 64VB of the Act, the premium attributable to the life micro insurance product may he collected from the prospect (proposer) by the insurer carrying on general insurance business, either directly or through any of the distributing entities of micro-insurance products as specified in regulation 4, and made over to the insurer carrying on life insurance business.
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MICRO-INSURANCE
Provided further that in the event of any claim in regard to life micro-insurance products, the insurer carrying on general insurance business or the distributing entities of microinsurance products, as the case may be, as may be specified in the tie-up referred to in the first proviso, shall forward the claim to the insurer carrying on life insurance business and offer all assistance for the expeditious disposal of the claim.
CODE OF CONDUCT OF MICRO INSURANCE AGENTS
? Every micro-insurance agent and specified person employed by
him shall abide by the code of conduct as laid down in Regulation 8 of the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000, and the relevant provisions of Insurance Regulatory and Development Authority (Insurance Advertisements and
Disclosure) Regulations, 2000.
Provided that the insurer shall ensure compliance of the code of conduct, advertisements and disclosure norms by every microinsurance agent.
? Any violation by a micro-insurance agent of the code of conduct
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MICRO-INSURANCE and/or advertisement or disclosure norms as aforesaid shall lead to termination of his appointment. in addition to penal consequences for breach of code of conduct and/or advertisement or disclosure norms pursuant to the provisions of sub-regulation (1).
MICRO-INSURANCE AGENT
? A “micro-insurance agent” shall be a Non Government
Organization (NGO) or a Self Help Group (SHG).
? Explanation: For the purposes of this regulation: ? A Non Government Organization (NGO) shall be a registered
non-profit organization under the Society’s Act, 1968 with a proven track record of working with marginalized groups with clearly stated aims and objectives, transparency, and
accountability outlined in
its memorandum, rules and
regulations and demonstrates involvement of committed people.
? Self Help Group (SHG) may be an informal group or registered
under Societies Act, State Co-operative Act or as a partnership firm, consisting of 10 to 20 with a proven track record of working with marginalized groups with clearly stated aims and objectives, transparency, and accountability outlined in its
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MICRO-INSURANCE memorandum, rules and regulations and demonstrates involvement of committed people.
? The minimum number of members comprising a group should
be at least ten for insurance of individuals, and at least fifty for group insurance.
GENERAL MICRO-INSURANCE PRODUCT
A “general micro-insurance product” means any health insurance contract, any contract covering the belongings such as hut, livestock, any personal accident contract, or tools or instruments, either on
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MICRO-INSURANCE individual or group basis, as per terms stated in the Table below, filed with the Authority:
Type of Cover Minimum Cover Maximum Cover Term Term of Min. Dwelling & content, or livestock or Tools or implements or other named assets/or Crop insurance against all perils Health Insurance Contract (Ind.) Health Insurance Contract (family) (Option to avail limit for Individual/Float on family) Personal Accident (per life/earning Rs. 10,000 Rs. 50,000 1 year 1 year 5 70 Rs. 10,000 Rs. 30,000 1 year 1 year Insurers’ discretion Rs. 5,000 Rs. 30,000 1 year 1 year Insurers’ discretion Rs. 5,000 Per Rs. 30,000 Per 1 year 1 year NA NA of Max. Minimum Maximum Age at age entry at
Amount of Amount of
Cover Cover entry
asset/cover asset/cover
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member of family)
SOURCE: IRDA Micro-Insurance Regulations, 2005,
www.irdaindia.com NOTE: The minimum number of member comprising a group shall be at least twenty for group insurance.
LIFE MICRO-INSURANCE PRODUCT
A “life micro-insurance product” means any term insurance contract with or without return of premium, any endowment insurance contract or health insurance contract, with or without an accident benefit rider, either on individual or group basis, as per terms stated in the Table A below, filed with the Authority:
Type of Cover Minimum Amount of Cover Maximum Amount of Cover Term of Cover Min. Term Insurance with or without return of premium Endowment Insurance Rs. 5,000 Rs. 30,000 5 year 15 years 18 60 Rs. 5,000 Rs. 50,000 5 year 15 years 18 60 Term of Cover Max. Minimum Age at entry Maximum age at entry
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Health Insurance Contract (Individual) Health Insurance Contract (Family) Accident Benefit as rider Rs. 10,000 Rs. 50,000 5 year 15 years 18 60 Rs. 10,000 Rs. 30,000 1 year 7 year Insurers’ discretion Rs. 5,000 Rs. 30,000 1 year 7 year Insurers’ discretion
SOURCE: IRDA Micro-Insurance Regulations, 2005,
www.irdaindia.com NOTE: 1. Group insurance products may be renewable on a yearly basis. 2. The minimum number of members comprising a group shall be at least twenty for group insurance.
RESEARCH METHODOLOGY
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Data collection
For data collection, we developed a well defined questionnaire as a research instrument, consisting questions aimed to measure the people perception about insurance, their need and problems. We conducted unstructured interviews sample size of 30 general people having income less than 350 bugs per day like vendors, rickshaw-wala, milkman, cobbler etc. Survey location was Thane and Mulund etc. All the data generated was primary data that was generated directly from face to face communication.
Data analysis
The data collected based on structured questionnaire is recorded on an excel sheet and with the help of SPSS software a pie chart analysis along with pillar data analysis is generated and based on this findings a qualitative inferences are made for each analysis. The same is being presented in form of graphs and tables
Survey Results
The following are my findings regarding the survey conducted. The following graphs show the potential depth from different perspectives, as shown below:
ANALYSIS AND INTERPRETATION
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Chart 1: Age of the respondents
Age Group
14% 47%
20-25 25-30
21%
30-35 35-40
18%
Inference: The above reveals the fact that Majority of the respondents, about 47% belong to the category of 35-40 ages and 21% belong to the category of 25-35 of age, 18% belong to category 30-34 and 14% belong to the category 20-25 of age.
Chart 2: Educational Qualification
Inference: The above result reveals that majority of respondents i.e. 54% were
Educational Qualification
21%
25%
Up to Primary Higher Sec
54%
Graduation
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educated till higher secondary and the percentage of primary and graduation is very close i.e. 21% & 25%.
Chart 3: Account Holder
Account Holder
11% 14% 32%
Bank a/c Post Office a/c Both
43%
None
Inference: The above result reveals that 11% of respondent don’t have any account any where while majority of the applicants [43%] have post office account, 32% have their Bank a/c and only 14% have both the accounts.
Chart 4: No. of family members
No. of family members
4% 7% 18% 21%
2 members 3 members 4 members 5 members 6 members
50%
Inference: Above result reveals that majority of respondents 50% have 4 members in a family which is ideal whereas only 7% live with joint family or have big size of family.
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MICRO-INSURANCE Chart 5: No. of earning member
Earning member
32% 1 member 68% 2 members
Inference: From the above result it can be clearly seen that about 68% of the respondent were the only earning member of their family, 32% have 2 earning member because of size of family.
Chart 6: Income level
Income level
0% 0%
0-3000 3000-5000 5000-7000
32%
68%
7000-1000
Inf ere nce
: The above result reveals that 68% of respondent have income level between 7000-10000 while 32% have income level between 5000-7000 and no one below it.
Chart 7: No. of dependent
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4%
No. of dependent
14%
18% 25% 39%
1 member 2 members 3 members 4 members 5 members
Inference: The above result reveal that majority of respondent 39% have 3 no. of dependent where as only 4% have 5 dependents.
Chart 8: Expense Pattern
18 16
No. of Applicants
14 12 10 8 6 4 2 0 1st Place 2nd Place 3rd Place 4th Place 5th Place 6th Place
Travelling Clothing Health
Inference: From the above result we can see that out of the three clothing expense is more; least expense is health and expense in travelling is nil but travelling is the highest at number 6th place.
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14 12
No. of Applicants
10 8 6 4 2 0 1st Place 2nd Place 3rd Place 4th Place 5th Place 6th Place
Education Rent & Electricity Drink & Entertainment
Inference: From the graph we can say that out of the three; Rent & Electricity is the highest expense and then comes Education. Least expense is on Drinks & Entertainment but it is highest at 5th place.
Chart 9: Faced problem with health or asset
Health or Asset Problem
36%
YES
64%
NO
Inference: Above result shows that 36% of respondent didn’t face any problem related with health or asset but 64% faced a serious or minor health or asset loss in past of their life.
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Chart 10: Awareness about insurance
Awareness about insurance
0%
NO 100% YES
Inference: Above result reveals that each and every applicant is aware about what the insurance is.
Chart 11: Source of information
Source of information
Hoarding 30% 8% 20% 13% 19% 8% 1% 0% Cinema Halls T.V Company agents Magazine Banners Friends Relatives 1% 0% Radio Newspaper
Inference: The result above reveals that 30% of the respondent got the information about insurance from newspaper, 20% got info from T.V, least from Banners & Hoardings and remaining from the source pattern shown above.
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FINDINGS
? Study reveals that majority of people whose daily income is less
than 350 bugs have ideal family.
? Earning members in majority of family are two so that they are
able to survive and meet their daily requirements.
? Income level lies between 150-350 bugs per day. ? Majority of respondent had post office account and very less
had both bank as well as bank account.
? Majority of respondent have more spending on rent &
Education, after that on food & cloth and Medicare & entertainment.
? Majority of respondent are the only earning member in family
size of 4-5.
? Majority of them managed critical financial problem from their
savings and even borrowed some money. Only few had insurance or taken loan.
? All of them are aware about insurance but not about micro
insurance and best source of information medium found to be newspaper, television and from friends & relatives.
? Many of respondents were not insured just because of either
high premium or lack of complete information.
? Majority of respondent shows keen interest in micro-insurance
policy in life and health, some were very sensitive toward education and like to have education insurance as well.
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CONCLUSION
We all know insurance is a very old concept. But the demand for insurance was increased from a decade. Middle class people take insurance policy according to their ability & capacity to pay premium to secure their life. When we talk about poor people a question comes in mind
Do poor people have any security? What if they face any risk? Who is going to look after them? Their family members? Do they have any insurance policy? Are they capable to pay the premium?
The answer for this is Micro Insurance. Micro Insurance is designed keeping in mind to poor people. Like everybody else, the poor people face a variety of risks such as risk of death, illness, disability, accident, income & property & so on. Like all other, they also need to be protected from these risks.
Policy-induced and institutional innovations are promoting insurance among the low-income people who form a sizable sector of the population and who are mostly without any social security cover. Although the current reach of ‘micro-insurance’ is limited, the early trend in this respect suggests that the insurance companies, both public and private, operating with commercial considerations, can
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MICRO-INSURANCE insure a significant percentage of the poor. Serving low-income people who can pay the premium certainly makes a sound commercial sense to insurance providers. To that extent imposing social and rural obligations by insurance regulator (IRDA) is helping all insurance companies appreciate the vast untapped potential in serving the lower end of the market.
At present microfinance business in the country is unregulated. Regulation of MFIs is needed not only to promote micro-finance activity in the country but also to promote the linking of microinsurance with micro-finance. It is becoming increasingly clear that micro-insurance needs a further push and guidance from the regulator as well as the government. Some of the recommendations could be:
? Simplification of products and bundling where requires making
them easy to understand, easy to use, sill and service.
? Simplifying and making premium payment plans flexible to suit
the needs.
? Focus on volumes by targeting large groups. ? Innovations are required at all stages for products, in pricing
policy and in delivery channels
? Success
of
marketing
micro
insurance
depends
on
understanding the social and cultural needs of the target population
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? Integrating micro finance activities with micro insurance for a
most beneficial outcome.
? Claim settlement to be timely, simple and transparent. ? Maximizing the benefit of connectivity revolution in rural India
to reach the un-served markets.
? Using additional innovative distribution channels to achieve
cost-efficiency in agricultural markets.
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doc_799273850.docx
OBJECTIVES
? To understand what Micro-Insurance is. ? To recognize the Potential Market for Micro-Insurance in India. ? To identify the Key Characteristics of Micro Insurance. ? To have a look at the micro-insurance products.
METHODOLOGY
Data has been collected for the following sources:
? Primary data ? Secondary data
All the data has been collected by doing library research, magazines, articles, visiting bank’s official websites and various other web pages.
SCOPE OF THE STUDY
? Meaning and concept of Micro-Insurance. ? Need for developing micro-insurance in India. ? Conducted unstructured interviews sample size of 30 general
people having income less than Rs. 350 per day.
? The area which was selected for the survey is bounded by
central suburbs of Maharashtra State.
? All the data generated for primary data that was generated
directly from face to face communication.
LIMITATIONS
? Data collection was very time consuming.
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? Since it is a new concept, untouched and unaware, the
information was not easily available.
? All the primary information included in the project is completely
based on the data offered by the applicants through survey analysis. There is no alternate source for confirmation of this information and data.
WHAT IS MICRO INSURANCE?
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MICRO-INSURANCE On a daily basis, the poor around the world face a multitude (huge amount) of risks that threaten to derail any progress they have made to work their way out of poverty. The death of a family member, loss of property and livestock, illness, and natural disasters each pose unique dangers. Protecting people against these losses is an important step to alleviating global poverty. Micro insurance - the protection of low-income people against specific perils in exchange for regular monetary payments (premiums) proportionate to the likelihood and cost of the risk involved – seeks to provide a suitable solution for managing these risks. The institutions or set of institutions implementing microinsurance are commonly referred to as a micro insurance scheme.
DEFINITIONS
Micro-insurance is insurance with low premiums and low caps / coverage. In this definition, “micro” refers to the small financial transaction that each insurance policy generates. The Micro-insurance Regulations, issued in 2005 by the Indian Insurance Regulatory and Development Authority (IRDA), for example, adopted this definition in explaining “micro-insurance products” as those within defined (low) minimum and maximum caps. The IRDA’s characterization of microinsurance by the product features is further complemented by their definition for micro-insurance agents, those appointed by and acting for an insurer, for distribution of micro-insurance products (and only those products).
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? Micro-insurance is a financial arrangement to protect lowincome people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. The author of this definition adds that microinsurance does not refer to: (i) the size of the risk-carrier (some are small and even informal, others very large companies); (ii) the scope of the risk (the risks themselves are by no means “micro” to the households that experience them); (iii) the delivery channel: it can be delivered through a variety of different channels, including small community-based schemes, credit unions or other types of microfinance institutions, but also by enormous multinational insurance companies, etc.
? Micro-insurance is synonymous to community-based financing
arrangements, including community health funds, mutual health organizations, rural health insurance, revolving drugs funds, and community involvement in user-fee management. Most community financing schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. The common feature within all, is the active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.
? Micro-insurance is the use of insurance as an economic
instrument at the “micro” (i.e. smaller than national) level of society. This definition integrates the above approaches into
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MICRO-INSURANCE one comprehensive conceptual framework. It was first published in 1999, pre-dating the other three approaches, and has been noted to be the first recorded use of the term “microinsurance”. Under this definition, decisions in micro-insurance are made within each unit, (rather than far away, at the level of governments, companies, NGOs that offer support in operations, etc.).
INTRODUCTION
Micro-insurance, the term used to refer to insurance to the lowincome people, is different from insurance in general as it is a low value product (involving modest premium and benefit package) which requires different design and distribution strategies such as premium based on community risk rating (as opposed to individual risk rating), active involvement of an intermediate agency representing the target community and so forth. Insurance is fast emerging as an important strategy even for the low-income people engaged in wide variety of income generation activities, and who remain exposed to variety of risks mainly because of absence of cost-effective risk hedging instruments. Although the type of risks faced by the poor such as that of death, illness, injury and accident, are no different from those faced by others, they are more vulnerable to such risks because of their economic circumstance. In the context of health contingency, for example, a World Bank study (Peters et al. 2002), reports that about
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MICRO-INSURANCE one-fourth of hospitalized Indians fall below the poverty line as a result of their stay in hospitals. The same study reports that more than 40 percent of hospitalized patients take loans or sell assets to pay for hospitalization. Indeed, enhancing the ability of the poor to deal with various risks is increasingly being considered integral to any poverty reduction strategy (Holzmann and Jorgensen 2000, Siegel et al. 2001).
Of the different risk management strategies, insurance that spreads the loss of the (few) affected members among all the members who join insurance scheme and also separates time of payment of premium from time of claims, is particularly beneficial to the poor who have limited ability to mitigate risk on account of imperfect labour and credit markets.
In the past insurance as a prepaid risk managing instrument was never considered as an option for the poor. The poor were considered too poor to be able to afford insurance premiums. Often they were considered uninsurable, given the wide variety of risks they face. However, recent developments in India, as elsewhere, have shown that not only can the poor make small periodic contributions that can go towards insuring them against risks but also that the risks they face (such as those of illness, accident and injury, life, loss of property etc.) are eminently insurable as these risks are mostly independent or idiosyncratic. Moreover, there are cost-effective ways of extending insurance to them. Thus, insurance is fast emerging as a prepaid financing option for the risks facing the poor.
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HISTORY & VISION
The Micro Insurance Agency has its roots within Opportunity International, a large microfinance network motivated by Jesus Christ’s call to serve the poor. With a network of 47 microfinance institutions, Opportunity International has been serving the entrepreneurial poor since 1971. In partnership with Opportunity’s microfinance institutions, we began working in 2002 on the development of a range of life, property, livestock, crop derivative, disability, unemployment and health insurance products to cover the risks faced by Opportunity’s loan clients. Micro Insurance Agency staff observed that the risks the poor face can often set them back months and years behind where their loans and savings products offered by Opportunity had taken them. For instance, a death of a family member from HIV/AIDS –“pre-condition” most insurance companies would not cover – would often mean expensive funeral costs and the loss of a breadwinner, resulting in increased economic hardship for the family. In response, Micro Insurance Agency staff developed an affordable funeral benefit product that did not exclude any pre-conditions, including HIV/AIDS. This transformed the mindset of retail insurance providers in the country, who later developed similar non-exclusive products in light of the competing environment.
Through the experience of serving Opportunity’s microfinance institutions and their clients, Micro Insurance Agency staff observed
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MICRO-INSURANCE that the products most demanded by the poor are not always the ones available. Health insurance, for example, is a critical need of the poor but the most limited in terms of supply. In addition, policies that are available are often based on first world practices and are too complex for the simple coverage demanded. Further, when offered on an individual, one-off basis, high premium requirements and a need to pay in a single lump sum preclude a huge sector of the market from access. New distribution models and channels were needed to increase access and reduce the effective price charged to clients.
In 2005, the Micro Insurance Agency was founded by Opportunity International as a fully-owned subsidiary capable of offering insurance products and services to a wide range of customers.
Our mission is to empower the materially poor to transform their lives by insuring them against financial risk and its consequences. Specifically, we seek to serve the economically active poor who live on $4 per day or less in developing countries and provide a safety net to reduce economic setbacks.
SCOPE AND FUNCTIONS
A micro-insurance agent shall be appointed by an insurer by a deed of agreement or memorandum of understanding which should clearly
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MICRO-INSURANCE specify the terms and conditions, duties and responsibilities of both the micro-insurance agent and the insurer, and he shall abide by the following:-
? He shall work either for one life insurer or for one general
insurer or for one life insurer and one general insurer;
? He shall be specifically authorized to perform one or more of
the following functions:--
? Maintaining a register of all members and their dependants
covered under the insurance scheme along with details of name, age, address, nominees and thumb impression/ signature;
? Collection of proposal forms; ? Collection of self declaration from the member that he is in
good health;
? Collection of monies for issuance of contract or remittance of
premium;
? distribution of policy documents; ? Assistance in the settlement of claims;
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? Nomination; and ? Any policy administration service. ? The micro-insurance agent or the insurance company shall have
the option to terminate the agreement/ MOU after giving a notice of three months.
? All such agreements/ MOU must have the prior approval of the
Head office of the insurance company.
TYPES OF MICROINSURANCE IN INDIA
Life Insurance
Life insurance pays benefits to designated beneficiaries upon the death of the insured. There are three broad types of life insurance coverage: term, whole-life, and endowment. Term life insurance policies provide a set amount of insurance coverage over a specified period of time, such as one, five, ten, or twenty years. This insurance is appropriate when the policyholder's need for coverage is temporary. Compared with other life insurance policies this is not very complicated for the provider to offer. This is the most widely used life insurance policy in low-income communities in developing countries. Whole life insurance is a cash-value policy that provides lifetime protection. This is hardly offered in low-income markets in the developing countries
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MICRO-INSURANCE Endowment life insurance pays the face value of insurance if the policyholder dies within a specified period. It thus has a longer time horizon that the term life insurance. This is also not offered widely in developing countries.
Health Insurance
Health insurance provides coverage against illness and accidents resulting in physical injuries. MFIs have realized that expenditures related to health problems have been a significant cause of defaults and people's inability to continue improving their economic conditions. Several MFIs have therefore, either started their own health insurance programs or have linked their clients to existing programs. While actual coverage varies, many health insurance providers cover for limited hospitalization benefits for certain illnesses, and for costs of physician visits and medicine. Some insurance providers also make available primary health care services such as immunization and contraceptives.
Property Insurance
Property insurance provides coverage against loss or damage of assets. Providing such insurance is difficult because of the need to verify the extent of damage and determine whether loss has actually occurred. It is difficult for most MFIs to guard against such moral hazard. A few, however, do provide such coverage. SEWA in India, for example, provides insurance against damage to home and productive assets. Grameen Bank in Bangladesh offers its clients insurance
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MICRO-INSURANCE against the death of livestock and COLUMNA in Guatemala provides insurance against fire damage.
Disability Insurance
Disability insurance in most cases is tied to life insurance products. It provides protection to the policy holder and her family, should she or some of her family suffers from a disability. This is not very widely offered by Micro insurance providers. FINCA, Uganda and CARD in Philippines are examples of MFIs providing clients with disability insurance.
Crop Insurance
Crop insurance typically provides policy holders protection in the event their crops are destroyed by natural calamities such as floods or droughts. The experience with crop insurance in developing countries and even in the developed economies has had mixed results. To improve the ability of rural farmers to repay loans from agricultural development banks (ADBs), many governments developed crop insurance programs in the 1970s and 1980s. These programs typically provided loan repayment and occasionally income supplements to farmers suffering crop yields below an established minimum. Similar programs were developed in countries as diverse as Brazil, India, the Philippines and the USA. In each country the results were disastrous, with expenses (administrative and claims) far outstripping revenues. Reasons for the failure of crop insurance have included: bad program design (such as failure to bring into account the incentives faced by the policy holders), covariant risks typical of rain-fed agriculture
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MICRO-INSURANCE systems dependent on only one or two crops, and in some cases / unanticipated catastrophic natural calamities.
Unemployment Insurance
Unemployment insurance is typically offered by the public sector. Private insurance companies are usually not involved in it. This insurance provides cash relief to individuals who become unemployed involuntarily and who meet certain government requirements. It also helps unemployed workers find jobs. Unemployment insurance attempts to stabilize the economy by enabling people to maintain their purchasing power.
Reinsurance
Reinsurance is the shifting of part or all of the insurance originally written by one insurer to another. This is a central feature of the operations of all commercial insurers. Reinsurance reduces an insurer's risk exposure and acts as an effective source of financing and a valuable source of actuarial expertise. Reinsurance can be used to stabilize profits, instead of having large fluctuations in financial outcomes year to year. It allows smaller insurers to share risk with other insurers in different regions or countries, effectively developing sufficient large risk pools by combining the risks of many insurers. Despite its obvious benefits reinsurance is largely unavailable for micro-insurers. Access to reinsurance can spur both the development of new micro-insurers and the growth of existing ones. An example of an MFI using reinsurance is that of FINCA International, Uganda which
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MICRO-INSURANCE has entered a partnership with American International Group (AIG) to provide its clients life and disability insurance.
MICRO-INSURANCE DELIVERY MODELS
One of the greatest challenges for micro-insurance is the actual delivery to clients. Methods and models for doing so vary depending on the organization, institution, and provider involved. In general, there are four main methods for offering micro-insurance the partneragent model, the provider-driven model, the full-service model, and the community-based model. Each of these models has their own advantages and disadvantages.
? Partner agent model: A partnership is formed between the
micro-insurance scheme and an agent (insurance company, microfinance institution, donor, etc.), and in some cases a thirdparty healthcare provider. The micro-insurance scheme is responsible for the delivery and marketing of products to the clients, while the agent retains all responsibility for design and development. In this model, micro-insurance schemes benefit from limited risk, but are also disadvantaged in their limited control.
? Full service model: The micro-insurance scheme is in charge of
everything; both the design and delivery of products to the clients, working with external healthcare providers to provide the services. This model has the advantage of offering micro-
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MICRO-INSURANCE insurance schemes full control, yet the disadvantage of higher risks.
? Provider-driven model: The healthcare provider is the microinsurance scheme, and similar to the full-service model, is responsible for all operations, delivery, design, and service. There is an advantage once more in the amount of control retained, yet disadvantage in the limitations on products and services.
? Community-based/mutual model: The policyholders or
clients are in charge, managing and owning the operations, and working with external healthcare providers to offer services. This model is advantageous for its ability to design and market products more easily and effectively, yet is disadvantaged by its small size and scope of operations.
THE KEY CHARACTERISTICS
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MICRO-INSURANCE The IAIS-CGAP Joint Working Group on Micro Insurance document on the -regulation and supervision of Micro Insurance identified the following key characteristics of Micro Insurance:
? Inclusiveness: While formal channels of insurance business
tend to exclude low-income households, Micro Insurance schemes generally tend to be inclusive.
? Group Coverage: Group insurance is more inclusive and cost
effective than individual coverage. Even though the informal economy is frequently seen as disorganized, there are groupings available, such as women's associations, informal savings and credit groups, cooperatives, small business associations and the like. These groups effectively by enlisting their support in member selection and reduces insurance risks such as fraud, over-usage and moral hazard.
? Simple Processes, Rules and Restrictions: Insurance
contracts are generally full of complex conditions and conditional benefits. Micro Insurance contracts have to be in plain language (preferably local language) and kept as simple as possible so that everyone has a clear understanding of what is covered and what is excluded.
THE MICRO INSURANCE MECHANISM
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Micro Insurance operates by connecting multiple small units with larger structures and thereby creates networks which enhance both insurance functions (through risk pooling) and support structures for improved governance (i.e. training, data banks, research facilities, access to reinsurance etc.). This insurance mechanism is independent of permanent external financial support. The principal objective of Micro Insurance is to pool both risks and resources of whole groups for the purpose of providing financial protection to all members against the financial consequences of mutually determined risks. Historically, Micro Insurance products have evolved out of community-based financing arrangements with active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.
INTRODUCTION
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Historically in India, a few micro-insurance schemes were initiated, either by non-governmental organizations (NGO) due to the felt need in the communities in which these organizations were involved or by the trust hospitals. These schemes have now gathered momentum partly due to the development of micro-finance activity, and partly due to the regulation that makes it mandatory for all formal insurance companies to extend their activities to rural and well-identified social sector in the country (IRDA 2000). As a result, increasingly, microfinance institutions (MFIs) and NGOs are negotiating with the forprofit insurers for the purchase of customized group or standardized individual insurance schemes for the low-income people. Although the reach of such schemes is still very limited anywhere between 5 and 10 million individuals---their potential is viewed to be considerable. The overall market is estimated to reach Rs. 250 billion by 2008 (ILO 2004).
The insurance regulatory and development authority (IRDA) defines rural sector as consisting of:
? a population of less than five thousand, ? a density of population of less than four hundred per square
kilometer
? More than 25% of the male working population is engaged in
agricultural pursuits. The categories of workers falling under agricultural pursuits are: cultivators, agricultural laborers, and workers in livestock, forestry, fishing, hunting and plantations, orchards and allied activities.
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MICRO-INSURANCE The social sector as defined by the insurance regulator consists of:
? Unorganized sector ? informal sector ? economically vulnerable or backward classes, and ? Other categories of persons, both in rural and urban areas.
The social obligations are in terms of number of individuals to be covered by both life and non-life insurers in certain identified sections of the society. The rural obligations are in terms of certain minimum percentage of total polices written by life insurance companies and for general insurance companies, these obligations are in terms of percentage of total gross premium collected. Some aspects of these obligations are particularly noteworthy. First, the social and rural obligations do not necessarily require (cross) subsidizing insurance. Second, these obligations are to be fulfilled right from the first year of commencement of operations by the new insurers. Third, there is no exit option available to insurers who are not keen on servicing the rural and low-income segment. Finally, non-fulfillment of these obligations can invite penalties from the regulator.
In order to fulfill these requirements all insurance companies have designed products for the poorer sections and low-income individuals. Both public and private insurance companies are adopting similar strategies of developing collaborations with the various civil societies associations. The presence of these associations as a mediating agency, or what we call a nodal agency, that represents, and acts on behalf of the target community is essential in extending insurance
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MICRO-INSURANCE cover to the poor. The nodal agency helps the formal insurance providers overcome both informational disadvantage and high transaction costs in providing insurance to the low-income people. This way micro insurance combines positive features of formal insurance (pre paid, scientifically organized scheme) as well as those of informal insurance (by using local information and resources that helps in designing appropriate schemes delivered in a cost effective way). In the absence of a nodal agency, the low resource base of the poor, coupled with high transaction costs (relative to the magnitude of transactions) gives rise to the affordability issue. Lack of affordability prevents their latent demand from expressing itself in the market. Hence the nodal agencies that organize the poor, impart training, and work for the welfare of the low-income people play an important role both in generating both the demand for insurance as well as the supply of cost-effective insurance.
POTENTIAL MARKET FOR MICRO-INSURANCE IN INDIA
: The UNDP Study
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During 2005-06, the Human Development Report Unit of UNDP conducted a study of the potential Micro Insurance market in India on the basis of field surveys conducted in the States of Orissa, Tamil Nadu and Rajasthan. The UNDP report commented that the potential utility of Micro Insurance may be even broader than that of micro-credit and may be closer to the potential market for micro-savings, balanced by affordability considerations in the early stages. Some 52.4 per cent of India's population of 1.08 billion earns less than US $ 2 a day (in terms of Purchasing Power Parity). Micro Insurance can play an important role in protecting the income of these people.
The UNDP report also tried to estimate the potential size of the Micro Insurance market in India. The estimates corresponding to the life and non-life segments are provided in Table 3. The population used for the estimation is 40-50 percent of those earning less than US$ 1 a day and 50-70 per cent of those earning between US$ 1 - 2 a day. The nonlife estimation included four types of coverage - milch animals, livestock, health and crop insurance.
The Potential Market for Micro-Insurance in India
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MICRO-INSURANCE Insurance Segment Market Size (Potential)(Rs. Millions) Life Segment Non-Life Segment TOTAL (Life and Non-Life) 15393-20141 46911.70-64,126.55 62304.70-84,267.55
SOURCE: UNDP (2007). Building Capacity for the Poor Potential and
Prospect for Micro-Insurance in India. UNDP Regional Centre, Colombo.
BACKGROUND
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MICRO-INSURANCE Micro-insurance refers to protection of assets and lives against insurable risks of target populations such as micro-entrepreneurs, small farmers and the landless, women and low-income people through formal, semiformal and informal institutions. Such products are often bundled with micro-savings and micro-credit, thereby allocating scarce resources to micro-investments with the highest marginal rates of return. Micro insurance is the most underdeveloped part of microfinance. Yet various schemes exist that are viable, benefiting both the institutions and their clients. Such schemes have generally served two major purposes: (i) they have contributed to loan security; and (ii) they have served as instruments of resource mobilization. The greatest challenge for micro insurance lies in the combination of viability and sustainability with outreach. Although introduction of sound practices such as appropriate policy sizes and timely payment of installments of premium or positive incentives to renew on time in order to avoid policy getting lapsed can be feasible, the ultimate effectiveness of interventions focusing on institutional transformation and sound insurance practices will vary considerably, depending on the appropriateness of the regulatory environment.
DEVELOPMENT GOAL
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MICRO-INSURANCE To enable micro insurance to be an integral part of a country's wider insurance system, it is important for every insurer to adjust its costs of serving marginal clients in remote areas, collecting premiums and installments, and offering doorstep services. It is also important to recognize a wide network of intermediaries in the rural and social sectors and notify regulations in order to guide and supervise the micro-insurance service providers and their customers.
Today we have a variety of microfinance institutions with national and local outreach. Many of them have already become corporate agents or have entered into referral arrangements with insurers. However, semiformal institutions including savings and credit cooperatives, NGOs and self-help groups which have immense potential in carrying the message of insurance as also solicit insurance business are yet to be utilized in a manner where their true potential can be harnessed to increase the insurance penetration levels. This is due to restrictions in the existing agency regulations in terms of minimum eligibility norms in order to become an agent. Depending on the existence and vigor of such institutions, the following alternatives have emerged, for offering strategic entry points for micro insurance development:
? Adapting formal insurance arrangements to the needs of the
micro-economy.
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? Upgrading non-formal (comprising semiformal and informal)
insurance arrangements with insurance companies.
? Linking formal and non formal insurance institutions with banks
and self-help groups.
? Establishing new local institutions providing micro insurance
services.
The first three strategies may be inter-connected:
? adapting insurance companies to the requirements of the
micro-economy is a first step; then
? Linking them as wholesale institutions to self-help groups as
retailers; and finally,
? Upgrading self-help groups e.g. to the level of financial
cooperatives or village banks.
If insurers are to serve customers who differ widely in terms of service costs and risks, the only viable inducement for them is an adequate margin, lest they exclude small farmers, - micro-entrepreneurs and people in remote areas. Only sound social insurance, which combines a social mandate with profit-making, has a chance of sustainability.
INSTITUTIONAL ADAPTATION
The experience so far has been that formal financial institutions serve but a fraction of the population, which typically lies within the upper
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MICRO-INSURANCE quartile of the social hierarchy. Through adaptation to the microfinance market requirements, they may gradually expand into the second-highest quartile and into segments of the lower quartiles. Within the foreseeable future they will normally not be able to fully serve that market. Non formal finance mostly rests on local institutions which are directly accessible to all segments of the population. Self-Help Groups (SHGs) are member-owned and member-controlled local institutions. They may either be financial groups, with financial intermediation as their primary purpose; or non financial groups, with financial
intermediation as a secondary purpose, such as vendors' associations, family planning groups and numerous other types of voluntary associations.
The functions that need to be focused must include: providing guidance to members, collecting premium installments from members, insurance services to members, communication and exchange of experience, providing linkages with banks, NGOs or donors, supporting the proposals of individual members to insurance companies through recommendations.
LINKAGE TO INSURERS
On a modest scale, various forms of life and health insurance have been successfully practiced by different institutions in different
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MICRO-INSURANCE countries, particularly as part of loan protection schemes. Microinsurance procedures and services should be set by insurers rather than the regulator. Appropriate procedures and services should be applied to attain:
? Sound financial management, ? Convenient and safe savings premium collection and deposit
facilities,
? Appropriate claim appraisal and processing procedures, ? Adequate risk management, ? Timely collection of premium installments, ? Monitoring and ? Effective information gathering, all of which may include
cooperation between different formal and non-formal
intermediaries in fields where each is most effective.
PROPOSED MICRO-INSURANCE REGULATIONS
In order to introduce the concept micro-insurance it is necessary to draft suitable bring in suitable regulations to enable insurers to design and distribute and service micro-insurance products and discharge their obligations to the rural and social sectors as per provisions of the Insurance Act, 1938.
? It is proposed that an insurer transacting life insurance business
shall be permitted to provide life micro-insurance products as
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MICRO-INSURANCE well as general micro-insurance products provided it ties up with an insurer transacting general insurance business for the general micro-insurance products, and vice versa.
? In addition to an insurance agent or corporate agent or
insurance broker who are authorized to solicit and procure insurance business, including micro-insurance business with an insurer in accordance with the provisions of the Insurance Act, 1938 and the regulations made there under it is also proposed to introduce the concepts of “micro-insurance product” and “micro-insurance agent” .
TIE-UP BETWEEN LIFE INSURER AND NONLIFE INSURER
? An insurer carrying on insurance business may offer life microinsurance products as also general micro-insurance products, as provided herein.
Provided that where an insurer carrying on life insurance business offers any general micro-insurance product, he shall have a tie-up With an insurer carrying on general insurance business tor this purpose, and subject to the provisions of section 64VB of the. Act, the premium attributable to the general micro insurance product may be collected from the prospect (proposer) by the insurer carrying on life insurance
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MICRO-INSURANCE business, either directly Or through any of the distributing entities of micro-insurance products as specified in regulation 4, and made over to the insurer on general insurance
business. Provided further that in the event of any claim in regard to general micro-insurance products, the insurer carving on life insurance business or the distributing entities of micro-insurance products, as the case may be, as may be specified in the tie-up referred to in the first proviso, shall forward the claim to the insurer carrying on general insurance business and offer all assistance for the expeditious disposal of the claim.
? An insurer carrying on general insurance business may offer
general micro-insurance products as also life micro-insurance products, as provided herein.
Provided that where an insurer carrying on general insurance business offers any life micro- insurance product, he shall have a tie-up with an insurer carrying on life insurance business for this purpose, and subject to the provisions of section 64VB of the Act, the premium attributable to the life micro insurance product may he collected from the prospect (proposer) by the insurer carrying on general insurance business, either directly or through any of the distributing entities of micro-insurance products as specified in regulation 4, and made over to the insurer carrying on life insurance business.
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Provided further that in the event of any claim in regard to life micro-insurance products, the insurer carrying on general insurance business or the distributing entities of microinsurance products, as the case may be, as may be specified in the tie-up referred to in the first proviso, shall forward the claim to the insurer carrying on life insurance business and offer all assistance for the expeditious disposal of the claim.
CODE OF CONDUCT OF MICRO INSURANCE AGENTS
? Every micro-insurance agent and specified person employed by
him shall abide by the code of conduct as laid down in Regulation 8 of the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000, and the relevant provisions of Insurance Regulatory and Development Authority (Insurance Advertisements and
Disclosure) Regulations, 2000.
Provided that the insurer shall ensure compliance of the code of conduct, advertisements and disclosure norms by every microinsurance agent.
? Any violation by a micro-insurance agent of the code of conduct
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MICRO-INSURANCE and/or advertisement or disclosure norms as aforesaid shall lead to termination of his appointment. in addition to penal consequences for breach of code of conduct and/or advertisement or disclosure norms pursuant to the provisions of sub-regulation (1).
MICRO-INSURANCE AGENT
? A “micro-insurance agent” shall be a Non Government
Organization (NGO) or a Self Help Group (SHG).
? Explanation: For the purposes of this regulation: ? A Non Government Organization (NGO) shall be a registered
non-profit organization under the Society’s Act, 1968 with a proven track record of working with marginalized groups with clearly stated aims and objectives, transparency, and
accountability outlined in
its memorandum, rules and
regulations and demonstrates involvement of committed people.
? Self Help Group (SHG) may be an informal group or registered
under Societies Act, State Co-operative Act or as a partnership firm, consisting of 10 to 20 with a proven track record of working with marginalized groups with clearly stated aims and objectives, transparency, and accountability outlined in its
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MICRO-INSURANCE memorandum, rules and regulations and demonstrates involvement of committed people.
? The minimum number of members comprising a group should
be at least ten for insurance of individuals, and at least fifty for group insurance.
GENERAL MICRO-INSURANCE PRODUCT
A “general micro-insurance product” means any health insurance contract, any contract covering the belongings such as hut, livestock, any personal accident contract, or tools or instruments, either on
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MICRO-INSURANCE individual or group basis, as per terms stated in the Table below, filed with the Authority:
Type of Cover Minimum Cover Maximum Cover Term Term of Min. Dwelling & content, or livestock or Tools or implements or other named assets/or Crop insurance against all perils Health Insurance Contract (Ind.) Health Insurance Contract (family) (Option to avail limit for Individual/Float on family) Personal Accident (per life/earning Rs. 10,000 Rs. 50,000 1 year 1 year 5 70 Rs. 10,000 Rs. 30,000 1 year 1 year Insurers’ discretion Rs. 5,000 Rs. 30,000 1 year 1 year Insurers’ discretion Rs. 5,000 Per Rs. 30,000 Per 1 year 1 year NA NA of Max. Minimum Maximum Age at age entry at
Amount of Amount of
Cover Cover entry
asset/cover asset/cover
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member of family)
SOURCE: IRDA Micro-Insurance Regulations, 2005,
www.irdaindia.com NOTE: The minimum number of member comprising a group shall be at least twenty for group insurance.
LIFE MICRO-INSURANCE PRODUCT
A “life micro-insurance product” means any term insurance contract with or without return of premium, any endowment insurance contract or health insurance contract, with or without an accident benefit rider, either on individual or group basis, as per terms stated in the Table A below, filed with the Authority:
Type of Cover Minimum Amount of Cover Maximum Amount of Cover Term of Cover Min. Term Insurance with or without return of premium Endowment Insurance Rs. 5,000 Rs. 30,000 5 year 15 years 18 60 Rs. 5,000 Rs. 50,000 5 year 15 years 18 60 Term of Cover Max. Minimum Age at entry Maximum age at entry
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Health Insurance Contract (Individual) Health Insurance Contract (Family) Accident Benefit as rider Rs. 10,000 Rs. 50,000 5 year 15 years 18 60 Rs. 10,000 Rs. 30,000 1 year 7 year Insurers’ discretion Rs. 5,000 Rs. 30,000 1 year 7 year Insurers’ discretion
SOURCE: IRDA Micro-Insurance Regulations, 2005,
www.irdaindia.com NOTE: 1. Group insurance products may be renewable on a yearly basis. 2. The minimum number of members comprising a group shall be at least twenty for group insurance.
RESEARCH METHODOLOGY
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Data collection
For data collection, we developed a well defined questionnaire as a research instrument, consisting questions aimed to measure the people perception about insurance, their need and problems. We conducted unstructured interviews sample size of 30 general people having income less than 350 bugs per day like vendors, rickshaw-wala, milkman, cobbler etc. Survey location was Thane and Mulund etc. All the data generated was primary data that was generated directly from face to face communication.
Data analysis
The data collected based on structured questionnaire is recorded on an excel sheet and with the help of SPSS software a pie chart analysis along with pillar data analysis is generated and based on this findings a qualitative inferences are made for each analysis. The same is being presented in form of graphs and tables
Survey Results
The following are my findings regarding the survey conducted. The following graphs show the potential depth from different perspectives, as shown below:
ANALYSIS AND INTERPRETATION
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Chart 1: Age of the respondents
Age Group
14% 47%
20-25 25-30
21%
30-35 35-40
18%
Inference: The above reveals the fact that Majority of the respondents, about 47% belong to the category of 35-40 ages and 21% belong to the category of 25-35 of age, 18% belong to category 30-34 and 14% belong to the category 20-25 of age.
Chart 2: Educational Qualification
Inference: The above result reveals that majority of respondents i.e. 54% were
Educational Qualification
21%
25%
Up to Primary Higher Sec
54%
Graduation
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educated till higher secondary and the percentage of primary and graduation is very close i.e. 21% & 25%.
Chart 3: Account Holder
Account Holder
11% 14% 32%
Bank a/c Post Office a/c Both
43%
None
Inference: The above result reveals that 11% of respondent don’t have any account any where while majority of the applicants [43%] have post office account, 32% have their Bank a/c and only 14% have both the accounts.
Chart 4: No. of family members
No. of family members
4% 7% 18% 21%
2 members 3 members 4 members 5 members 6 members
50%
Inference: Above result reveals that majority of respondents 50% have 4 members in a family which is ideal whereas only 7% live with joint family or have big size of family.
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MICRO-INSURANCE Chart 5: No. of earning member
Earning member
32% 1 member 68% 2 members
Inference: From the above result it can be clearly seen that about 68% of the respondent were the only earning member of their family, 32% have 2 earning member because of size of family.
Chart 6: Income level
Income level
0% 0%
0-3000 3000-5000 5000-7000
32%
68%
7000-1000
Inf ere nce
: The above result reveals that 68% of respondent have income level between 7000-10000 while 32% have income level between 5000-7000 and no one below it.
Chart 7: No. of dependent
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4%
No. of dependent
14%
18% 25% 39%
1 member 2 members 3 members 4 members 5 members
Inference: The above result reveal that majority of respondent 39% have 3 no. of dependent where as only 4% have 5 dependents.
Chart 8: Expense Pattern
18 16
No. of Applicants
14 12 10 8 6 4 2 0 1st Place 2nd Place 3rd Place 4th Place 5th Place 6th Place
Travelling Clothing Health
Inference: From the above result we can see that out of the three clothing expense is more; least expense is health and expense in travelling is nil but travelling is the highest at number 6th place.
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14 12
No. of Applicants
10 8 6 4 2 0 1st Place 2nd Place 3rd Place 4th Place 5th Place 6th Place
Education Rent & Electricity Drink & Entertainment
Inference: From the graph we can say that out of the three; Rent & Electricity is the highest expense and then comes Education. Least expense is on Drinks & Entertainment but it is highest at 5th place.
Chart 9: Faced problem with health or asset
Health or Asset Problem
36%
YES
64%
NO
Inference: Above result shows that 36% of respondent didn’t face any problem related with health or asset but 64% faced a serious or minor health or asset loss in past of their life.
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Chart 10: Awareness about insurance
Awareness about insurance
0%
NO 100% YES
Inference: Above result reveals that each and every applicant is aware about what the insurance is.
Chart 11: Source of information
Source of information
Hoarding 30% 8% 20% 13% 19% 8% 1% 0% Cinema Halls T.V Company agents Magazine Banners Friends Relatives 1% 0% Radio Newspaper
Inference: The result above reveals that 30% of the respondent got the information about insurance from newspaper, 20% got info from T.V, least from Banners & Hoardings and remaining from the source pattern shown above.
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FINDINGS
? Study reveals that majority of people whose daily income is less
than 350 bugs have ideal family.
? Earning members in majority of family are two so that they are
able to survive and meet their daily requirements.
? Income level lies between 150-350 bugs per day. ? Majority of respondent had post office account and very less
had both bank as well as bank account.
? Majority of respondent have more spending on rent &
Education, after that on food & cloth and Medicare & entertainment.
? Majority of respondent are the only earning member in family
size of 4-5.
? Majority of them managed critical financial problem from their
savings and even borrowed some money. Only few had insurance or taken loan.
? All of them are aware about insurance but not about micro
insurance and best source of information medium found to be newspaper, television and from friends & relatives.
? Many of respondents were not insured just because of either
high premium or lack of complete information.
? Majority of respondent shows keen interest in micro-insurance
policy in life and health, some were very sensitive toward education and like to have education insurance as well.
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CONCLUSION
We all know insurance is a very old concept. But the demand for insurance was increased from a decade. Middle class people take insurance policy according to their ability & capacity to pay premium to secure their life. When we talk about poor people a question comes in mind
Do poor people have any security? What if they face any risk? Who is going to look after them? Their family members? Do they have any insurance policy? Are they capable to pay the premium?
The answer for this is Micro Insurance. Micro Insurance is designed keeping in mind to poor people. Like everybody else, the poor people face a variety of risks such as risk of death, illness, disability, accident, income & property & so on. Like all other, they also need to be protected from these risks.
Policy-induced and institutional innovations are promoting insurance among the low-income people who form a sizable sector of the population and who are mostly without any social security cover. Although the current reach of ‘micro-insurance’ is limited, the early trend in this respect suggests that the insurance companies, both public and private, operating with commercial considerations, can
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MICRO-INSURANCE insure a significant percentage of the poor. Serving low-income people who can pay the premium certainly makes a sound commercial sense to insurance providers. To that extent imposing social and rural obligations by insurance regulator (IRDA) is helping all insurance companies appreciate the vast untapped potential in serving the lower end of the market.
At present microfinance business in the country is unregulated. Regulation of MFIs is needed not only to promote micro-finance activity in the country but also to promote the linking of microinsurance with micro-finance. It is becoming increasingly clear that micro-insurance needs a further push and guidance from the regulator as well as the government. Some of the recommendations could be:
? Simplification of products and bundling where requires making
them easy to understand, easy to use, sill and service.
? Simplifying and making premium payment plans flexible to suit
the needs.
? Focus on volumes by targeting large groups. ? Innovations are required at all stages for products, in pricing
policy and in delivery channels
? Success
of
marketing
micro
insurance
depends
on
understanding the social and cultural needs of the target population
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? Integrating micro finance activities with micro insurance for a
most beneficial outcome.
? Claim settlement to be timely, simple and transparent. ? Maximizing the benefit of connectivity revolution in rural India
to reach the un-served markets.
? Using additional innovative distribution channels to achieve
cost-efficiency in agricultural markets.
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doc_799273850.docx