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2.4 Distribution As described in Chapter 4.7, there are limitations on the reliance on MFIs as a distribution channel for microinsurance. For example, a lack of transparency has been documented if microinsurance is linked to loans; microcredit borrowers in Zambia (Manje, 2005) and Uganda (McCord et al., 2005a) were not aware of the fees charged for loan processing and the microinsurance premium payment (sometimes women were not even aware of their insurance coverage). The deduction of premiums from the loan amounts along with other loan fees has resulted in a perception by clients that insurance is a part of the cost of acquiring a loan. Although these limitations apply to all clients, women may be more affected as they are less familiar with contracts and earn less money.
Cooperatives are also common vehicles for the distribution of microinsurance. However, often the member of the organization is a man. For example, at Columna in Guatemala, the spouses of credit union members are allowed to purchase the Special Life Plan without having to join the cooperative, but very few women actually purchase the insurance. Similar findings come from the credit unions associated with TUW SKOK (Poland) and La Equidad,1 and the cooperatives associated with Yeshasvini (see Box 24).
1 La Equidad has overcome this distribution bias by also collaborating with a microfinance institution, Women’s World Foundation, which serves primarily women.
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Outreach at YeshasviniBox 24
Although some 78 per cent of the adult population in Karnataka, India is in some way connected to a cooperative society, most cooperative members are men. Yeshasvini Trust covers the members of the cooperative societies and is open to their families as well. Yet only 40 per cent of Yeshasvini’s insured members are female. As the women themselves are not usually members of the cooperatives, it appears to be more difficult for them to obtain insurance from Yeshasvini: the member is the first one to enter the scheme and coverage of the family may come later. Changing this, perhaps by introducing a reduced fee when the whole household is covered, could increase women’s access to insurance and reduce adverse selection at the same time.
Adapted from Radermacher et al., 2005b.
As a result, these are not particularly effective distribution channels for reaching women. VimoSEWA has adopted the opposite approach whereby access to the benefits is through women. A female client can decide whether she also wants to add her husband and children. She would not be able to choose coverage for herself and her child if she has a husband; she would not be able to cover her husband and not herself – the priority is to cover women as SEWA is a women’s organization.
“Women-friendly” delivery channels require direct and regular contact with the female clients through trustworthy, familiar people such as the field staff of NGOs/MFIs, committed healthcare personnel, and female insurance agents to reduce the likelihood of misleading selling practices and confusion about insurance contracts. Marketing strategies should also include a strong educational element since a lack of proper understanding of insurance and complicated insurance policies can lead to denial of services as less-educated women cannot (adequately) submit their claims. Lack of comprehension, and the related risk of becoming a victim of fraudulent behaviour, might be more relevant for women than for men.
For example, the door-to-door collection of premium payments by Delta’s field officers and India’s Tata-AIG’s agents generates access to these products for women who for various reasons cannot leave their homes. The fact that the majority of the organizers are women also means that the distribution channel is more approachable by and accessible to women. Indeed, Tata-AIG’s agents are almost all women and they focus first on selling to people that they already know.
Meeting the special needs of women and children 141
2.5 Target groups and policyholders One of the great ironies with many of the microfinance-linked insurance schemes is that they often cover the life of the borrower, who usually is a woman. As a result, for a woman to “benefit” from insurance, she would have to die first. For example, in the Philippines, CARD’s initial insurance scheme simply covered the members in the event of death. The organization realized through discussions with members and staff that the insurance cover provided little benefit to the women themselves. This realization was an important input in the decision-making process that resulted in additional cover for the spouse and children, which were more valuable benefits for CARD’s women members.
Several other MFIs, including ASA, SPANDANA and FINCA Uganda, have gone through this same evolution. Indeed, a priority need for women is life insurance for their husbands. If their husbands die, that is when they really need insurance benefits. Microfinance institutions that have introduced spousal coverage also recognize that the MFI benefits as well, since the woman borrower would have much greater difficulty repaying her loan if she did not have insurance on her husband’s life.
When schemes allow persons to choose who will and will not be covered, often women and girls are not enrolled because their lives or their health is valued less by the household decision-makers. Family coverage, like ServiPerú’s Family Plan or UMSFG’s health insurance (see Box 25), is a way of overcoming the problem caused by the ability to select family members for cover and it helps to control adverse selection risk. TUW SKOK’s “My Family”, an accidental death and disability product, covers the credit union member, his or her spouse and children, and parents of adults up to 65 years of age. Similarly, when VimoSEWA included children in its hospitalization benefit package, it realized that it needed to cover all of the children in the household for one price so that parents would not be forced to choose which child to cover.
Family coverage at UMSFGBox 25
At UMSFG in Guinea, membership in an MHO is family-based. All dependants must be registered. Group leaders are responsible for ensuring that no household members (particularly children) are excluded from coverage. To ease their task, MHOs offer free coverage for children born during the budget year. In polygamous households, which are numerous in some areas, family registration is carried out separately for each spouse and her dependants.
One membership card is issued for each mother and her children.
Adapted from Gautier et al., 2005.
142 Microinsurance products and services If a woman has life insurance coverage, she should be able to choose who the beneficiary is. When given the choice, many women nominate their daughters, so the benefit could be used for their education. If the children are minors and the woman does not trust her husband to use the benefit according to her wishes, then she should be able to name a guardian whom she trusts.
3 Policy tasks to improve the strategic situation of women and children Considering the needs and the current experiences with microinsurance, a number of measures are required for providing more comprehensive protection to women and children – with the emphasis on girls. Several practical needs of women, girls and boys can be taken up through improved microinsurance product design at the micro level, and operations at the meso level, while other strategic interests require long-term changes in the labour policy and the status of women in the society (macro level).
Since this book’s focus is on microinsurance, policies for improving the strategic situation of women and children are only discussed briefly, as they are beyond the scope of microinsurance alone to implement. Nevertheless, they are essential for strengthening the impact of microinsurance and advancing towards the goal of gender equality.
State responsibility for social protection: However successful microinsurance might be, it will never be in a position to provide substantial protection, as discussed in Chapter 1.3. Private mechanisms have a supplementary role – comprehensive social protection is the responsibility of the state. Recognizing this responsibility, the state-run microinsurance schemes in Peru (SMI), Bolivia (SMS) and Paraguay (SI) all started by focusing on the most important epidemiological needs of maternity and early childhood diseases – risks that private insurers, even microinsurers, are less likely to address.
Similarly, the state has an important role to play in protecting vulnerable groups against covariant risks, which microinsurers cannot easily address since it is often difficult or not cost-effective for them to access reinsurance.
For poor families, and women in particular, ex post coping strategies are not sufficient to cover losses resulting from catastrophic events – they require assistance from the state.
Thus, lobbying and advocacy work by civil society organizations is an important means for providing comprehensive risk coverage. This must be approached with some caution, however, since the increased supply of microinsurance should not be a justification for a decreasing role of the government in the provision of social protection.
Meeting the special needs of women and children 143 Community-based risk pooling mechanisms are particularly vulnerable because of their limited financial resources. Catastrophic losses, repeated idiosyncratic risks and poor controls may deplete their resource pools and lead to their collapse. UMASIDA in Tanzania had to suspend operations after only six months, and then restart several months later when it had restructured its controls (McCord, 2000). When schemes fail, poor women who do not have access to any microinsurance are likely to suffer more than men because of their lower earning capacity and limited assets.
Legal and regulatory issues: Formal and informal laws determine issues related to inheritance, marriage, rights over assets, income and labour utilization – and thus have an impact on women’s bargaining power over scarce resources at home and in society. In this context, formalizing working conditions and ensuring equal property rights are important steps towards improved protection and the social status of women.
Formalizing contractual arrangements in the informal economy and encouraging employers to pay for social security would benefit women in particular. Creating a suitable regulatory environment that promotes the formalization of informal work would enable low-income market women to access appropriate benefits. This includes the official recognition of civil society as an essential promoter of microinsurance and suggests that there should be financial compensation for their services (e.g. commissions paid by insurance providers or administration fees paid by government institutions).
Signing conventions on child labour and human rights and strengthening the enforcement of these laws are also essential for the protection of children.
Improvement of existing services: Women’s participation in the monitoring, management and planning of government programmes such as healthcare centres and rehabilitation programmes for catastrophic events will increase the likelihood that these services will meet the needs of women.
Economic reforms: Even if new technologies are introduced, which, in principle, could increase productivity and enhance the wealth of men and women, women might be worse off after such innovations. As women have less access to education and vocational training than men, they are displaced more easily from traditional jobs. A consequence for policymakers is that whenever technological changes occur, intervention may be necessary to make sure that the status of women is not undermined. Such intervention might include affirmative action creating new opportunities, skill training and quality employment for women.
144 Microinsurance products and services 4 Conclusions Owing to a number of factors, including social, economic and political conditions, women, men and children are exposed to different types of risk. Furthermore, the same risks can affect them differently. Their behaviour towards risk management and their access to risk-management strategies may also differ.