«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
In most developing countries, women are marginalized. The low social status of women (and girls), and harmful traditional practices (female genital mutilation, dowry murder, honour killings and early marriage) in some societies have adverse affects: non-nutritious diet increases proneness to ill health, and lower priority in getting medical treatment results in poor health.
In their childhood, girls are more likely to receive little or no education and less food than boys. Malnutrition has a chain reaction. It not only weakens children physically, it also impairs their ability to learn. Children who cannot complete primary school are less likely to have the literacy, numeracy and other skills required for a well-paid job in adulthood. Children orphaned or displaced through HIV/AIDS, armed conflicts, riots and civil disturbances are also at risk of missing out on school and the protection of a family.
As adults, they work in laborious yet low-paid jobs. Women workers are over-represented in the informal economy, with no social protection, low wages and high male-female wage differentials even for illiterate workers.
Women have less secure work in the informal sector and are displaced sooner when work becomes more skilled and when technical qualifications are needed.
134 Microinsurance products and services Technological change has deprived women of traditional livelihoods (e.g.
power-loom technology). Since women are usually less educated, they are most affected by this development and entry to more specialized and skilled industrial work is extremely difficult. These problems become more severe as the informal economy expands. Informal women workers are the most ignored in terms of hazardous working conditions, deprivation of maternity benefits and loss of employment during pregnancy.
Women also face domestic violence and abuse. According to the InterAmerican Development Bank, domestic violence alone causes tremendous costs for care and rehabilitation. Women who are victims of violence suffer from serious health problems (IADB, 1999). Apart from the suffering inflicted on the women, violence against women and girls occurs on a scale that places a heavy long-term burden on public health systems (UNICEF, 2000).
2 Microinsurance to address the special needs of women and children Microinsurance was primarily initiated by microfinance institutions that wanted to secure their loan portfolios and lessen the burden of outstanding loan repayments for the family of the deceased member. Some organizations are also keen to provide health microinsurance owing to the lack of affordable and quality healthcare. For example, many groups started communitybased health schemes, especially in Africa (see Chapter 4.3). As these activities were typically initiated by organizations involved in poverty alleviation and women’s empowerment, microinsurance was intended to benefit women (and their families).
An analysis of current microinsurance experiences reveals that some progress is being made to reduce the vulnerability of women and children, but several challenges still have to be addressed. This section considers the experiences of microinsurers in meeting the needs of women and children, and identifies where future improvements might be warranted.
2.1 Product development It is striking that only a few microinsurers distinguish between the special needs and opportunities of women and men. Most organizations refer to “households” or “policyholders” and thus do not explicitly reflect a gender perspective. Many microinsurers serve large numbers of women, so they assume that women are benefiting. In practice, however, microinsurance products are not always designed to address the unique needs of women (or children).
Meeting the special needs of women and children 135 To address this issue, before starting microinsurance, gender-specific demand studies are needed to reveal the specific needs of the target market, including the situation of children (separately for girls and boys). As microinsurance is only one risk-management tool, the existing gender-specific risk-management strategies should be analysed – microinsurance cannot, and should not, solve all risk-related problems.
Once microinsurance is implemented, systematic customer satisfaction assessments are an important source of information to check the ongoing appropriateness of its products and operations, as well as its risk-management effectiveness. Furthermore, the involvement of the target group in the governance and management (e.g. client advisory committees) can help ensure that women’s voices are heard when shaping the design and direction of the scheme.
2.2 Benefits In designing health schemes, microinsurers need to ensure that they cover women’s health concerns, especially those related to pregnancy, delivery and maternity, gynaecological diseases and HIV/AIDS. For example, in Benin AssEF’s benefits largely focus on women’s needs, with a special emphasis on reproductive health (gynaecology and obstetrics). In India, Karuna Trust’s insurance product covers any admission to a public hospital, so that child delivery, caesarean section and other needs of women are covered.
Some schemes, however, shy away from offering maternity benefits because, unlike in the case of illness or accidents, women have (some) control over whether or not they get pregnant. Consequently, pregnancy is not a risk that can be risk-pooled in a pure insurance sense. Furthermore, there is a significant adverse selection risk of women who know they are pregnant (but not yet showing) who then enrol in an insurance scheme.
When Shepherd, an Indian NGO, was negotiating its UniMicro Hospitalization scheme with the state-owned insurer UIIC, if it had included child delivery in the policy, the price would have been roughly double and there would be a nine-month waiting period. Consequently, Shepherd’s members chose not to include it because of the extra cost and because it would only benefit some members. Instead, Shepherd helps its clients cope with maternity expenses through a soft loan scheme (see Box 23). This suggests that if organizations cannot include women-specific risks in an insurance policy, they should consider offering alternative risk-management tools.
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It is also important to design benefits to accommodate children’s healthcare needs. Health insurance for the entire family benefits girls and may convince husbands to spend money on them, which may be quite relevant if women have limited negotiating power.
For example, ServiPerú’s Previsión Familiar or Family Plan for up to five persons covers medical consultations, diagnosis examinations, medical emergency services, medical care as a result of accident, hospitalization as a result of illness or accident, and funeral services. Health services are provided at its own medical centre, which offers services for women and men of all age
groups. It provides paediatric services for children and there is a gynaecological and obstetrical clinic for women. In addition, the centre runs the following special programmes/clinics:
beneficiaries as it provides them with some ongoing financial support as they grow older.
La Equidad has taken a similar approach to staggering benefits over time.
In Colombia, when a breadwinner in a poor family dies, one of the key coping mechanisms is to take children out of school. Equidad’s Amparar product tries to prevent that eventuality by paying a monthly education benefit for up to 24 months. The family also benefits from a monthly cheque to buy groceries for one year.
Delta Life in Bangladesh has developed a daughter’s marriage endowment policy designed as a savings scheme to benefit the policyholder’s daughter when she turns 18. Although it is marketed as a marriage product, it could be used for education or other purposes. The term can be between five and 16 years depending on the age of the daughter (who must be between two and 13 when the policy commences). If the parent-policyholder dies during the term, then the daughter-beneficiary will receive the full sum insured when she turns 18 (assuming that the premiums were up to date). The timing of the maturity is an intentional effort to provide an incentive for parents to wait until the girl is at least 18 to marry.
This endowment policy was not Delta’s first attempt to address the needs of daughters. In the mid-1990s, it experimented with female child education and offered an insurance product that would pay bonuses when the policyholder’s daughter passed certain education milestones, but a penalty would be charged if the daughter married before a certain age. In collaboration with the government, Delta also offered a family planning and insurance product that paid higher sums insured to policyholders who had fewer children.
Although the product was phased out after the government changed its policy, it is an example of the social engineering that could be associated with insurance for the poor.
2.3 Other product design features Besides the benefit package, it is also important to take into consideration the effects of other product design features on women.
Premium payment: As low-income women are predominantly casual and seasonal workers, regular monthly premium payments can be difficult to pay, but an annual payment may not be suitable either. Flexible arrangements are most appropriate. However, they have to consider the administrative capacity of the microinsurance organization and the transaction costs. Owing to the irregular and low income of women, microinsurers should offer a range of premium payment options, e.g. a grace period of several months and a 138 Microinsurance products and services flexible payment schedule that allows for payment of small amounts according to the particular financial situation of women. This applies particularly to endowment products as the policy’s value is significantly reduced if premiums are delayed (see Chapter 2.2).
Price: There is often a conflict between the desire to offer affordable products for the poor and the desire to become financially viable. This dilemma has sometimes resulted in a focus on higher-income clients and excluded poor women. Charging the poor lower premiums could help avoid some negative implications, especially for women since they typically earn less then men. For example, Grameen Kalyan and BRAC’s MHIB in Bangladesh charge a lower premium to the microfinance clients of their respective sister companies, who are almost all women, than to the general public.
Another approach would be to use the price as a way of creating incentives or encouraging certain behaviour. For example, India’s VimoSEWA offers a Rs. 20 (US$0.45) discount to members who enrol their whole families (see Table 16). Other objectives such as the promotion of small families (reproductive health programmes) could be pursued by charging lower premiums for smaller families.
Table 16 VimoSEWA’s coverage and price in rupees
* VimoSEWA also has another premium payment method – the fixed deposit account – which is described in Chapter 3.3, but family coverage is not available through that payment method.
Note: Rs. 44 = US$1
death during childbirth, Delta Life excludes women in their first pregnancy from taking out a policy. For many insurance products, age limits restrict protection for small children and the elderly, who need protection the most. Ideally, microinsurers should find ways of making their products more inclusive.
Claims settlement: Complicated documentation makes claims settlement more difficult. As women are less familiar with official written procedures, incomplete documentation may lead to rejection of claims. If combined with a low social status and little negotiating power (e.g. with officials), it may be difficult to obtain the necessary documents.
Agent commission: Commissions for renewals are much lower than for new policies. Experience reveals that illiterate people – who are predominantly women – do not remember the expiry date of their microinsurance contract and thus do not renew their policies, but often believe that they are still insured. If the agents receive a higher commission for new contracts, they will prioritize selling new policies rather than following up on renewals – at the expense of less-educated women.