«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
starting point is a community immunization programme. Case studies provide a few examples:
310 Microinsurance operations – Seguro Basico de Salud (SBS), Bolivia, and Seguro Integral de Salud (SI), Paraguay, actively promote the national immunization programmes, including vaccinations specified in the benefits package.
– Several community-based schemes in West Africa have introduced a mandatory vaccination programme for infants. Those not vaccinated are not covered if they get diseases the vaccination programme was designed to prevent.
– UMSGF in Guinea plans formal “partnerships with programmes offering efficient prevention measures for diseases covered, particularly malaria and HIV/AIDS”.
Care for the environment, which is capturing increasing attention in insurance and reinsurance circles, is closely related to loss prevention in life and health insurance. Poor environmental conditions not only adversely affect people’s health, but they can also trigger climate change and some catastrophic losses such as droughts. An issue for future consideration is how “going green” might reduce losses and, in particular, how taking greater care of the environment would in the long run help arrest climate change.
3 Pinpointing prevention While non-life insurers, through their loss prevention specialists, have over the years contributed greatly to safety systems and standards for insured properties and transportation of goods, as well as home and road safety, the same could not be said of life and health insurers (save for readily jumping on the non-smoking bandwagon). Historically, they have not demonstrated as keen an interest in preventing losses.
All accidents and losses seem to have an underpinning cause and effect.
Even so-called natural calamities, such as droughts, floods, tornadoes and hurricanes, are now believed to have a root cause: climate change. So, preventing a loss should not be hard once its cause is known.
Loss prevention specialists have built their discipline in non-life insurance by zeroing in on causes of industrial accidents and finding remedies, and so can life and health insurers. Table 31 illustrates the point by analysing an industrial fire, an injury, a communicable disease and a non-communicable disease. The loss prevention column for each specifies remedial action. All call for improved training and increased awareness. Therein lies the crux of loss prevention in microinsurance: counselling and educating customers in ways of taking good care of themselves and their families and possessions.
Loss control 311 Non-life and life insurance loss prevention Table 31
On the surface, such an undertaking may appear superfluous to microinsurers struggling to build and maintain a book of business. However, if they take a holistic view of the business – not just income, but also the institution’s viability – loss prevention emerges as life-sustaining. The obvious, short-term benefit is that it reduces the frequency and severity of claims, and helps control the insurer’s expenses. But the real advantage is that it protects the insurer’s income over the long term: ensure that customers remain healthy and productive, and the organization will be sure of their continued patronage.
JA Zenchu, the Central Union of Agricultural Cooperatives of Japan, has long recognized the value of such a seemingly extracurricular service that, in effect, adds value for the business as well as the customer. Its chain of multipurpose cooperatives in rural communities provide a popular “better-living guidance” service in addition to the core business lines: marketing of farm products, supplies of production inputs, credit and mutual insurance, and farming advice. The better-living guidance to members and their families 312 Microinsurance operations includes health management, lifestyle counselling and advice, household budgeting, recreational activities and joint purchases of high-quality daily necessities.
Health promotion and prevention activities have a long way to go in the developing world. Indeed, the scope of the work that could be carried out by life and health insurers in this domain is quite different in developed and developing world markets. Microinsurers are perhaps at an advantage in this respect, since they could encourage their clients to do many simple things that do not reduce their capacity to meet basic needs and may over time even enhance their ability to cope (see Box 61).
A number of microinsurance schemes, or related organizations, actively promote healthy living to reduce illness among policyholders, and therefore
reduce claims. For example:
– Karuna Trust (India) runs herbal gardens in six villages used to train clients to produce herbal medicines.
– Bienestar Magisterial (El Salvador) has special programmes for cancer detection, family planning and prenatal care.
– Shepherd (India) runs medical camps for check-ups. It also runs cattlecare camps with free immunization and de-worming. The camps serve a marketing and recruitment purpose too.
– Grameen Bank (Bangladesh) has its “16 decisions” that members recite at meetings, including pledges “to look after our health”, “grow and eat more vegetables”, and “keep our homes and environment clean”.
It makes sense for conventional insurers to remind customers how stress affects the heart and the nervous and digestive systems, to ask them to recognize stress symptoms that can ring the alarm bells before a burnout, and to encourage them to join walking clubs and fitness centres. For microinsurers, however, the focus is likely to be on different issues. For those in Prahalad’s BOP market, loss-prevention initiatives may concentrate on hygiene and cleanliness – how simple things like keeping the “kitchen” clean and washing hands and vegetables before eating can prevent diseases.
counselling sessions, or set up wellness centres to dispense advice, assistance and referrals. However, these measures would hardly be appropriate for the microinsurance market.
Loss prevention initiatives for the low-income market are likely to look
quite different. The approaches might include the following:
– Outreach by sister organizations: VimoSEWA of India, and Grameen Kalyan and BRAC MHIB (both Bangladesh) all have sister organizations involved in healthcare initiatives, such as barefoot nurses and midwives, which are natural partners in prevention campaigns (see Box 3).
– Use of non-formal adult education methods: In some countries, the target market for microinsurance may be illiterate or have limited education. To communicate loss prevention to this audience, innovative techniques are required, such as illustrated posters (see Figure 21) and street theatre. Learning conversations, a technique promoted by Freedom from Hunger, are based on real stories that illustrate the daily problems of the target market.
Discussions about the story serve several purposes: to help participants to become aware of a specific problem, to collectively solve a specific problem faced by members and to reinforce cohesion among group members and enable them to take collective action.
– Hammer home the core messages: Effective campaigns are continuous, relying on a variety of communication channels to ensure that the main messages are absorbed and, hopefully, change behaviour. Indeed, each time a Grameen Bank centre meets, the members recite the 16 Decisions.
– Target the children: One of the most effective ways of changing the behaviour of adults is by educating children, who can then nag and cajole their parents into less risky practices.
Prevention through sister organizations: VimoSEWABox 4
Mainaben, a fish seller, has been a SEWA member for 27 years, borrowing for her business and for her house. Six years ago there was a plague epidemic in some parts of India. SEWA arranged a special community clean-up awareness programme to protect communities against the plague. Mainaben was made an organizer to promote community cleanliness in Chamanpura. She spoke to the local people about keeping their houses clean, and she petitioned the Municipal Corporation and the State to clean up rubbish. The Corporation was so annoyed with her constant petitions and her threats to demonstrate against them that on one occasion they even sent the police to scare her. However, Mainaben prevailed, new rubbish bins were provided, and regular rubbish clean-ups were organized.
Mainaben’s hard work caught SEWA’s attention, and she was trained and employed as a health worker. She covers a community of 200 households.
She sits at SEWA’s clinic from 10:30 in the morning to 1:00 in the afternoon.
From 1:30 to 4:00, she makes the rounds of her neighbourhood. She visits each house at least once a week. She provides information on disease prevention; she provides basic medicine to SEWA members (at a cost of two rupees, or four and half a US cents, for children and four rupees for adults), makes referrals to doctors and hospitals and follows up on patients.
Mainaben encourages everyone to take out health insurance. She tries to convince women to enrol in the fixed deposit programme. If they cannot, she tries to convince them to pay annual premiums. A few women save with her to accumulate the money for the fixed deposit. Women will contact Mainaben for all their insurance claims. Women in the community say that they appreciate Mainaben and her healthcare advice. She has assisted the people in her community to obtain better and, more importantly, more affordable healthcare.
Source: Adapted from McCord et al., 2001. Loss control 315
– Rely on peer pressure: One of the more effective ways of creating sustainable behaviour changes is by using the peer pressure from groups to continue to encourage (or enforce) the new conduct.
– Provide tangible benefits: Sometimes behaviour changes involve artefacts.
For example, SEWA has on occasion provided market vendors with umbrellas to reduce the chances of heat stroke. Microcare subsidizes insecticidetreated bed nets (see Box 64 in Section 6). These tangible benefits help make intangible insurance more acceptable to the poor.
5 Minimization: A stitch in time Prevention, obviously, precedes a loss. Steps to minimize the impact of the loss – that is, reduce it to the smallest possible degree – are taken after it occurs. However, prevention usually involves anticipating or foreseeing a loss, and that process may entail at least a modicum of minimization, actually doing something about the foreseen loss – which may be one reason why the two terms are often synonymous in talk of risk management. Semantics aside, the point is that the more the insurers can do to prepare a policyholder to respond quickly and efficiently to a setback, the better off both the individual and organization will be.
Minimization is particularly relevant for health insurance. Thomas (2004) specifies how the ill effects of an illness or injury might be minimized through better management of time and process from the moment and point of occurrence to admission to the hospital. Most of the steps he described (such as an SOS to ambulance and prompt action by paramedics) were meant for deeppocketed insurers with a wealthier clientele, but they would give those involved in microinsurance an indication of how one might approach minimization. Some of these measures could be adapted and scaled down to fit the budget, resources and community contacts accessible to microinsurers.
The following are key aspects of loss minimization:
– Recognizing body conditions is critical. The insured should be able to recognize ailments and the body’s warning signals. They should know the dos and don’ts in the event of a health condition, and take steps to prevent the condition from worsening.
– Correct information is needed for correct action. Policyholders armed with the right information are better prepared. They should be given brochures containing addresses and telephone numbers of doctors, trauma care centres, and specialized hospitals, and details of procedural formalities on admission.
316 Microinsurance operations – Help when needed. In an emergency, unprepared policyholders can only