«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
There is a great risk that staff of savings and credit organizations will give priority to their core tasks and pay less attention to the insurance service. It may be necessary either to allocate insurance tasks to specific staff (if the insurance business can carry the cost of such staff) or to reward employees who work with insurance services. Although both measures will increase costs, they may be justified (see Chapter 3.7).
4 Conclusions Savings- and credit-linked insurance products can make an important contribution to the protection of low-income people, and they can benefit the MFIs as well. To take advantage of this potential, MFIs should ensure that they fully exploit the systems they have established for clients’ education, training and information provision to enhance the clients’ awareness and ultimately develop an insurance culture. Client involvement in the development of products and their genuine knowledge about insurance are essential for successful operations.
For most savings and credit organizations, loan protection insurance is a natural starting point for the provision of insurance to the poor. Any additional insurance products or benefits should be simple, affordable and easy to Savings- and credit-linked insurance 129 understand. It should be easy for members to continue paying premiums and get benefits even after their loans have been fully repaid.
A crucial requirement for the success of savings- and credit-linked insurance is for sufficient time and resources to be allocated to train the staff and management of the delivery agent (the MFI). If the MFI’s personnel are involved in the development of the insurance service from the beginning, they are more likely to deliver the service properly. The question of appointing separate insurance staff and/or rewarding the MFI staff involved should be discussed and analysed at an early stage, preferably in dialogue with staff representatives.
Anyone involved in the introduction of insurance in an MFI should ensure that management is committed to the scheme, especially since savings and credit services are their core business and insurance is ancillary. It is important to find ways for insurance to complement and enhance the core business; otherwise it is unlikely to receive enough staff or management attention to succeed.
Savings and credit organizations should fully utilize their specific structure and capacity when introducing microinsurance. Instead of copying the expensive agent system used by the insurance industry, they should leverage their own systems for communicating with clients and for collection of loan repayments. All MFIs that operate savings accounts for their clients should use direct debits, allowing the organization to deduct premiums from clients’ savings accounts at agreed intervals.
It is difficult to run simple microinsurance schemes profitably with low and affordable premiums for clients. Mandatory insurance reduces transaction and other costs substantially and is sometimes the only way to make a scheme viable. If a savings and credit organization plans to introduce compulsory insurance, it should involve the clients in the decision to do so.
Cooperatives should use their democratic structure to get a formal approval by members before such measures are implemented.
2.4 Meeting the special needs of women and children Mosleh Ahmed and Gabriele Ramm The authors thank Irma van Leeuwen (Novib), Linda Mayoux (consultant) and Jyoti Tuladhar (ILO) for providing their pertinent feedback and suggestions.
Although most low-income people working in the informal economy – men and women in paid or unpaid employment – generally face similar risks, their exposure to those risks and the impact of shocks differ due to their social, economic, cultural and political situation. For example, they differ according to their occupation (e.g. accident-prone construction workers), their place of residence (e.g. flood-prone areas) and other factors.
Men, women and children are exposed to different risks calling for different solutions. Therefore, microinsurance – as one possible solution – should be designed to address the specific needs of women (and men) and children (both girls and boys). In particular, more attention is required to integrate the practical needs of women and children (girls and boys) into product design and operations. However, gender equality cannot be attained solely by supporting microinsurance. Structural causes of gender discrimination, such as legal, social and economic policies, also have to be addressed to improve the strategic position of women.
This chapter begins by describing the specific risks to which women and children are vulnerable. It then illustrates how microinsurance can help address some of these risks. The final section explains that microinsurance alone will not be able to solve this problem, and for microinsurance to achieve its potential, significant social and policy changes are also required.
1 Special risks affecting women and children (girls and boys) Women are particularly vulnerable. Seventy per cent of the world’s poor are female. Women and children face more violence, abuse and exploitation than men, such as forced prostitution, battery and extreme cruelty, or exploitative domestic servitude. Home-based women and child workers put in long hours but are paid only for a fraction of their time. In rural areas, cultivating family plots involves hours of backbreaking toil for no payment at all. In urban areas, they work long hours in unregulated, unhealthy and unsafe facMeeting the special needs of women and children 131 tories without the ability to protest or voice their opinions. Hence, there is a larger concentration of women and children at the lower end of the chain of equality and security in life.
This greater vulnerability contributes to stronger risk-averse behaviour.
Women’s tendency to be risk averse may be a rational response to their greater vulnerability and lack of control over their lives. This attitude, however, adversely influences the effectiveness of their risk-management strategies since risk-averse approaches tend to result in low returns, which make it harder to break the cycle of poverty.
While some risks can be addressed through appropriate microinsurance products, changes in the institutions involved (meso level), through organizational gender mainstreaming and gender accountability, are also required.
Moreover, microinsurance can only make its maximum impact if improvements in the status of women in society and special protection for children – in particular girls – are achieved through macro-level policy interventions.
Therefore, this section distinguishes between the risks affecting women and children that can be managed through microinsurance and those that require state intervention and a general gender-reorientation in society at the macro level. A combination of the two strategies, complementary to each other, is addressed in this chapter. However, the emphasis is placed on the risks and mechanisms that can be improved through microinsurance.
1.1 Risks that can be (partly) managed through microinsurance Compared to other poverty-alleviation programmes, microinsurance is relatively new and the demand for it needs to be further explored. However, experience has revealed the need for customized microinsurance products, addressing the practical needs of women and children (girls and boys). This section considers the health, property and life-cycle risks for women and children that could be addressed by microinsurance.
Health risks – Women are vulnerable to specific health risks including high maternal mortality and complications surrounding pregnancy and childbirth. An estimated 300 million women suffer from permanent damage to their health due to pregnancy and childbirth (Tuladhar, 2003).
– Women are more susceptible to some illnesses, such as sexually transmitted diseases (including HIV/AIDS) than their male counterparts. The risk for women is greater in societies where male promiscuity is prevalent.
– Children’s higher susceptibility to diseases and accidents inherently puts them at a higher risk for illness. In addition, since crèches are not available, 132 Microinsurance products and services many mothers take their children with them to work, exposing them to workplace accidents.
– The ILO estimates that 218 million children are engaged as child labourers in the world today. Nearly 58 per cent of these children work in hazardous conditions found, for example, in mines and the chemicals and pesticide industries, and with dangerous machinery. Many are less than 10 years old and their physical immaturity leaves them more vulnerable to work-related accidents and illnesses (ILO, 2006).
– Health risks are also related to hazardous working conditions. These risks arise from environments such as work in leather tanneries, which can cause exposure to toxic pesticides and other chemicals; work in the carpet and recycling industries and street trading, which can cause severe respiration problems; and work on construction sites, which is especially prone to accidents.
– Household work has an adverse effect on the health status of women and girls. Carrying heavy loads such as firewood may damage girls’ health by causing conditions such as chronic back pain. Fetching water and daily contact with water (e.g. washing clothes) in tropical regions increase exposure to waterborne diseases such as malaria and schistosomiasis. Other household work, such as cooking with firewood or charcoal, may lead to respiratory problems and burns.
– Traditionally, women are the care-providers for children, the sick and the elderly. For female-headed households, this can have serious economic consequences because of the time women have to spend away from income-generating activities to provide care.
Property risks – Women can be extremely vulnerable in cases of divorce or widowhood owing to unequal control of assets. Even if women are paying for asset insurance, they may not benefit from the protection if the asset does not belong to them.
– Due to their low income, women are less likely to invest in improved business tools or disease-resistant livestock and crops, or to be able to afford veterinary care or other preventive measures.
– Physical vulnerability puts women’s property at risk to theft and crime.
Harassment by local authorities such as confiscation of property and destruction of market stalls affects women more then men, especially where households are headed by a female (Mayoux, 2005).
– Poor women often reside and work in higher-risk areas, which makes their assets more susceptible to damage or destruction (e.g. congested living conditions are prone to fire). The situation escalates as women have little or no money to respond to covariant shocks.
Meeting the special needs of women and children 133 Life-cycle risks – Women are especially vulnerable to the death of their husband because they often lose their property to other relatives. In the event of their own death, women fear that their spouse may use an insurance payout intended for the children’s education to invest in a new wife or for other undesirable purposes.
– Since most women work in the informal economy, they lack protection in old age. Raising children without any maternity benefits leads to part-time work with low income. Thus, even if poor women were in a position to save, it would be insufficient to provide for their retirement needs. With the breakdown of traditional families, other forms of old-age protection become even more important.
– Lower education forces women to take up unskilled labour and increases their likelihood of being unemployed.
1.2 Risks due to gender discrimination that cannot be managed through microinsurance In most cases, microinsurance can only address the symptoms of these risks, such as providing treatment to those who are ill, but it cannot solve the root causes, i.e. the reason why they were ill in the first place. For microinsurance to be effective, there is a need for strategic changes towards gender equality in society. Indeed, as practical needs and strategic interests are interrelated, these approaches – microinsurance and a broader strategy for gender equality – complement each other.