«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
The funds are raised through a solidarity contribution collected under the contributory social insurance scheme and various state subsidies. They are then channelled to several institutions, including 8 mutual benefit associations federated in a national apex organization Gestarsalud, which now covers 60 per cent of the market, “cajas de compensación” (20 per cent of the market), and several private commercial insurance companies that also cover 20 per cent of the market. Today this successful subsidized scheme covers
18.5 million people.
Source: Adapted from Pérez, 1999.
There are three ways to overcome the limitations mentioned above. First, further development of microinsurance is required to increase the population covered, enhance the benefits package and strengthen the capacities of the schemes. Second, linkages need to be developed with other players and institutions. Third, microinsurance needs to be further integrated into coherent and equitable social protection systems.
For microinsurance promoters and operators, this further development may mean altering the way the schemes currently operate. Management must become more professional to enable the schemes to deal with the increasing complexity of meeting the needs of the target group. One way of doing that is to outsource some management functions to specialized organizations. It may also mean setting up new schemes targeting the members of large organizations such as trade unions, cooperatives and occupational associations.
Larger schemes are in a position to provide more comprehensive coverage, particularly against major risks like hospitalization, and they are often more sustainable as they can more easily build up financial reserves.
As described in Chapter 5.3, the state may also support the development of microinsurance through promotion and the sensitization of public opinion (particularly the target population). Other government measures might
– building the capacity of microinsurance schemes through improved management and monitoring systems, – strengthening the viability and the financial capacity of the schemes, for example through reinsurance or guarantee funds, – supporting structures like second-tier associations or networks that provide technical support and training to microinsurance schemes, – facilitating the exchange of information between actors to make sure that successful experiences can be replicated with other groups or in different geographic areas, – formulating recommendations on design: benefits package, affiliation, administration, methods of payment to healthcare providers and – establishing structures to produce information (statistics, indicators) that can be used by these schemes to price their products more accurately.
The sharing of functions or responsibilities according to each party’s core competences may create complementarities, economies of scale and make the schemes more efficient. Examples of linkages include: Yeshasvini in India outsources management functions to a TPA (see Chapter 4.6); formal insurance companies in many countries distribute products through community organizations (see Chapter 4.2); the creation of economies of scale and bargaining power through the grouping of microinsurance schemes, as in the case of emerging African federations (see Chapter 4.3); and channelling subsidies through mutual benefit associations in Colombia (Box 11).
Functional linkages may also be established with other components of social protection to improve the coherence of the national system of social protection. Examples of such linkages include channelling social services to eligible members and distributing social insurance (Box 12).
Linkages in the PhilippinesBox 12
The Philippines Health Insurance Corporation, or PhilHealth, has a mandate to achieve universal coverage by 2012. One of the paramount challenges is to provide health insurance coverage to workers in the informal economy, which is estimated at 19.6 to 21.7 million workers or between 70 and 78 per cent of the employed population.
In response to this challenge, PhilHealth approved a resolution in 2003 to allow partnerships with organized groups on a pilot basis. The partnership, called PhilHealth Organized Group Interface (POGI), is seen as an innovative approach to reach out to workers in the informal economy through The social protection perspective on microinsurance 59 cooperatives. The initiative is being tested with eleven cooperatives that conduct marketing and collect premiums for PhilHealth.
Source: Adapted from GTZ-ILO-WHO, 2005.
A critical linkage to achieving social protection objectives is with healthcare providers. The decentralization of the healthcare sector may facilitate contractual arrangements between microinsurance schemes and healthcare providers at the local level. To ensure that these relationships are mutually beneficial and effective, however, it may be necessary for the government to intervene (Box 13).
Developing balanced linkages in SenegalBox 13
In Senegal, most mutual health organizations sign contractual agreements with healthcare providers. However, the relationship is often unbalanced and the mutual has no real means of compelling the healthcare provider to respect its commitments.
To face this problem, the Ministry of Health recognized the need to design a national contracting policy and framework that gives guidelines and concrete tools to facilitate the contracting process, including stages in the design of an agreement, minimum content of an agreement, commitments of both parties (including financial aspects, invoicing and payment methods), monitoring tools and procedures, and the State’s role. A working group was created in 2006 to design a first draft of this framework that will then be presented to the relevant stakeholders for their feedback.
As illustrated in Box 11, mechanisms to redistribute subsidies can help microinsurance schemes provide a minimum package of social protection to poorer households or individuals with low contributive capacity or high social risks (e.g. the elderly, the chronically ill, certain occupational groups).
Such mechanisms provide an equitable access to social protection independently of individuals’ characteristics and financial capacity. Beside their redistribution role, these subsidies also make the beneficiary microinsurance schemes more attractive, which helps bolster their membership. Since redistribution at a national level may not be sufficient for poor countries, it is also useful to consider international redistribution (Box 14).
groups that have been excluded from the economic benefits of development.
The basic idea is to request people in richer countries to contribute on a voluntary basis a modest monthly amount (say 0.2 per cent of their monthly income) to a Global Social Trust that will be organized in the form of a global network of national trusts supported by the ILO. The Trust will invest these resources to build up basic social protection schemes in developing countries and sponsor concrete benefits for a defined period until the schemes become self-supporting. For more information, see: http://www.ilo.org/ public/english/protection/socfas/research/global/global.htm
5.3 Integration into coherent and equitable social protection systems Providing social security to citizens remains a central obligation of society.
Through legislation and regulations, governments are responsible for ensuring that the public has access to a certain quality of services. This does not mean that all social security schemes have to be operated by public or semipublic institutions. Governments can delegate their responsibility to organizations in the public, private, cooperative and non-profit sectors.
What is needed, however, is a clear legal definition of the role of the different players in the provision of social security. These roles should be complementary, while achieving the highest possible level of protection and coverage. For example, a social security development plan would define the scope and coverage of services through government agencies, social insurance, private insurers, employers and microinsurance schemes. In this context, governments and social partners should explicitly recognize microinsurance as a social protection tool and integrate it into national strategies of social protection, health development and poverty reduction (e.g. PRSPs in Senegal). The role of health microinsurance in an overall health financing policy coordinated by the State should be recognized as well. The overall aim of such a policy is universal access to healthcare based on pluralistic financing structures (Box 15).
Cambodia’s Master PlanBox 15
In Cambodia, the government recognizes the potential of social health insurance as a major healthcare financing method. To reach universal health coverage, Cambodia’s Master Plan for Social Health Insurance recommends a parallel and pluralistic approach which comprises: (1) compulsory social health insurance through a social security framework for public and private sector workers and their dependants, (2) voluntary insurance through the development of community-based health insurance schemes and (3) social assistance The social protection perspective on microinsurance 61 through the use of equity funds and later government funds to purchase health insurance for non-economically active and indigent populations.
Source: Adapted from WHO Cambodia, 2003.
The design and adoption of appropriate legal frameworks is a key step towards this integration. Such a framework may specify the role of microinsurance in the social protection system and introduce a set of rules and institutions for the supervision of microinsurance schemes. Legislative frameworks can contribute to the development of these schemes, although frameworks with high financial requirements or intensive supervision from the public authorities may restrain their development. To strike an appropriate balance, ILO/STEP is supporting the construction of a regional framework in eight UEMOA (Union économique et monétaire d’Afrique de l’Ouest) countries to design and implement legislation to regulate mutual benefit organizations and support their development.
For microinsurance promoters, the integration into social protection systems has various implications. The benefits package that they provide should include coverage against one or more of the contingencies listed in Convention 102. Moreover, when a minimum guaranteed package of social protection has been defined by the legislation, these schemes should provide this coverage to all their members. Microinsurance schemes’ internal regulations should abide by the principles of equity defined by legislation (if any). Rules such as the exclusion of members over a certain age or calculation of premiums based on individuals’ risks may not be in line with such principles. If microinsurance schemes receive public financial support, they should be accountable for the efficient use of these public funds. This implies that strict rules of management and accounting be enforced. Microinsurance schemes should also agree that their financial statements be supervised by a public or independent regulatory body.
More generally, it is important that promoters and operators of microinsurance be involved – either directly or indirectly through federations representing their interests – in national consultations and negotiations with the state and other stakeholders in the design and implementation of national social protection strategies. Such integration needs a climate of trust and confidence between operators of schemes, networks of schemes, other civil society organizations representing the populations covered by these schemes (trade unions, cooperatives, etc.) and the government (Box 16).
62 Principles and practices An integrated approach to social protection in Senegal Box 16 In Senegal, many actors have contributed to accelerate the process of extending social protection, including the State, local governments, social partners
and other civil society organizations, donors and healthcare providers. Several events have been significant:
– In 2003, the law on mutual health organizations was adopted; a national framework on the development of MHOs was created, as was the national committee on social dialogue.