FREE ELECTRONIC LIBRARY - Books, dissertations, abstract

Pages:     | 1 |   ...   | 73 | 74 || 76 | 77 |   ...   | 108 |

«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»

-- [ Page 75 ] --

FHPL plays a critical role as the gate-keeper for approving surgery and then paying the hospital, so policyholders requiring surgery have no out-ofpocket healthcare expenses (see Figure 32). This arrangement is not without difficulties. While outsourcing can increase efficiency, the addition of an extra institution can also add complexity. Sometimes it takes FHPL four or five days to authorize surgery, and occasionally reimbursements to the healthcare providers are also delayed. In general, however, the arrangement of having specialized agencies focusing on their areas of expertise makes sense, especially when dealing with such huge volumes of policyholders accessing services from more than 150 healthcare facilities.

432 Institutional options Yeshasvini’s claim settlement process Figure 32

–  –  –

In terms of the costs, FHPL and Yeshasvini Trust negotiated payment of Rs. 7 million (US$159,000) in Year 1 and Rs. 4 million (US$90,900) in Years 2 and 3. Since these fees are equivalent to 2 to 3 per cent of premiums over the past two years, this seems like a very affordable solution for Yeshasvini.

According to Radermacher et al. (2005b), FHPL claims to implement the scheme on a non-profit basis because it provides it with experience in serving the market at “the bottom of the pyramid”.

3 Distribution alternatives Many clients who currently purchase microinsurance have gained access through financial organizations with which they have an existing loan or savings account. Even though this institutional arrangement has significantly reduced the transaction costs associated with providing insurance, it has limitations because clients can only gain access to insurance when they have an active loan or a savings account.

In principal, there are a multitude of options that could be used to distribute insurance products to low-income households, including:

– Retailers – for example supermarkets that collect premiums at the checkout counter – Workers’ unions and cooperatives – premiums could be deducted from dues – TV/direct sales – advertise products directly to the customer with telephone operators standing by – Cell phones – using the cell phone infrastructure to gather premium payments – Burial societies and ROSCAs – use the informal societies to sell a regulated product – Worksite marketers – sell products to low-income workers during lunch breaks While these channels may work in developed countries, many developing countries do not have sufficient infrastructure or levels of client education to implement such distribution methods. So what alternative forms of distribution have been used to deliver microinsurance? Besides partnerships with retailers, which are discussed in detail in the next chapter, this chapter considers the role of microinsurance agents and independent microinsurance intermediaries.

434 Institutional options

3.1 Microinsurance agents Tata-AIG in India has developed a system of micro-agents to deliver term and endowment polices to the low-income market. In this model, the insurer identifies NGOs that have a good relationship with the community and develops partnerships with them. In return for a consulting fee, the NGOs

suggest persons who could be good agents to sell microinsurance policies:

the micro-agents. If these recommended micro-agents are accepted, they are then asked to form groups of peers.

The group, referred to in the Tata-AIG model as a Community Rural Insurance Group (CRIG), consists of five low-income women living in close proximity, of whom the leader is licensed as an agent. The CRIG is registered as a partnership firm. The CRIG members are typically women because they tend to work with, and come from, self-help groups (SHGs) whose members are usually women. While not the only target market, the SHGs represent an easy way to reach large numbers of potential policyholders because the members are already accessing financial services and making regular payments.

Tata-AIG helps the group leader obtain an agent’s licence, which requires an investment in training the individual. Thereafter the CRIG, as a statutory enterprise, obtains a corporate agent’s licence under the insurance regulator’s guidelines. The members of the group all sell policies for their own account, but the leader with the agent’s licence fills in the forms and submits the policies to the company under the guidance of the NGO. In return for this task, the NGO receives an additional commission percentage from Tata-AIG.

In addition to the group approach, where getting five like-minded, somewhat educated women to start a firm can be difficult, Tata-AIG uses individual micro-agents. Like the CRIGs, individual micro-agents tend to be women (though some are also men) who are either involved in an SHG or voluntary workers of an NGO. After being certified, micro-agents are encouraged to acquire clients in the vicinity of their homes, which may extend to surrounding villages.

The advantage of a CRIG over individual micro-agents is that only one in five agents needs to be licensed, which lowers start-up costs. The group can also structure responsibilities in ways that suit the expertise of the individuals; for example, some people may be better at selling and others may be better at collecting premiums. If a CRIG member is sick or travelling, or chooses to stop working as an agent, other CRIG members can fill in accordingly.

This leads to better management of orphaned policies. In the long run, once fully functional, the CRIG can also be linked to other marketing organizations to distribute non-competing products and services and enhance their income.

Beyond MFIs and community-based models: Institutional alternatives 435 In this model, the NGO carries out a variety of tasks including aggregating premiums and sending them on to Tata-AIG (see Figure 33), allowing the agents to use their offices to conduct business, playing a role in the training of micro-agents and helping in the assembly of claim documentation and the distribution of claim benefits. The model thus has an additional positive spin-off in that it provides a new income stream for rural NGOs and microagents.

Micro-agents, CRIGs and NGOs in the premium-collection process Figure 33

–  –  –

Tata-AIG has not assessed what percentage of the micro-agents’ livelihood is provided by their insurance work, although the monthly income earned by CRIG members ranges from Rs. 55 (US$1.20) to Rs. 2,487 (US$55.26), with an average of Rs. 665 (US$14.78). It is estimated that microagents could earn at least US$15 per month over 15 years, if they sell 250 policies in 2 years, and then service the policies for the full term of 15 years.

The earnings are larger in the first two years because the commissions are front-loaded. However, in the third year micro-agents are trained to enhance their incomes by focusing on sales of higher premium products, so they could earn significantly more than US$15 per month if they succeed with the wealthier market.

Even though the insurer does not incur any fixed costs (e.g. salaries and benefits) for its agents, the micro-agent model can still be an expensive way to deliver insurance. The cost of training and supporting agents is quite high in relation to the premium values. Although initial transaction costs are low for the agents, after they have sold policies to all the people they know and need to sell to strangers, it can become much more expensive and difficult, especially to reach people living far away.

3.2 Independent microinsurance intermediaries Unlike Tata-AIG’s microinsurance agents, there is an increasing role for microinsurance intermediaries that are independent of a single insurance company. An independent intermediary could be a corporate or individual partnership structure, working on either a local or global scale, that collaborates with a risk carrier (probably an insurance company).

While the agents discussed above work on behalf of a single insurance company, a broker works for multiple insurers. To reach the low-income market, the broker seeks to service large groups of clients through aggregators. The most suitable aggregators of low-income persons have an existing financial structure such as MFIs, rural banks and credit unions. However, groupings such as cooperatives, unions and even religious organizations, can

also be targeted. The benefits of the intermediary are as follows:

1. Product development Existing partner-agent models often place the product design in the hands of the risk carrier, which is not ideal. An intermediary that understands the needs of clients, the operational realities of the aggregator and the needs of the insurance company should be able to design a product that is more suitable for all parties.

Beyond MFIs and community-based models: Institutional alternatives 437

2. Transaction costs It is not cost-effective for an individual aggregator to develop its own MIS for transacting insurance business. An intermediary with a wider client base benefits from economies of scale which justify such an overhead. Investment in systems reduces transaction costs and increases operating efficiency by serving a much larger client base than a single aggregator can reach.

3. Administration An intermediary is well-placed to handle administration relating to claims processing as well as reporting to the insurance company who is covered and the premiums due.

4. Additional channels of sale Aggregators are often unable to offer insurance to persons who are not using their credit services. An intermediary brings the capability to track clients and record the premiums paid, even when a loan is not in place.

5. Staff training An intermediary is well placed to provide organizations’ staff with the required training. This increases financial literacy and, ultimately, client satisfaction.

In November 2005, Opportunity International established such an intermediary, the Micro Insurance Agency. Its first subsidiary was opened in Uganda in January 2006 to work as an intermediary for Microcare Insurance Company. Its initial product range has been targeted at the microfinance institutions and is based around a package of credit life, funeral, disability and property coverage. There are plans to introduce healthcare products later in 2006 as well as subsidiaries in Ghana, South Africa and the Philippines.

Besides targeting microfinance clients, the Micro Insurance Agency plans to sell products to client groups served by unions, cooperatives and religious organizations. To reduce transaction costs, Opportunity International has developed its own AIMS software (Automated Insurance Management System).

438 Institutional options 4 Conclusions There are three essential institutional elements for insurance provision: risk carrier, administrator and distributor. Within each of these categories, multiple options could be used to serve low-income communities. By thinking outside the industry’s current collective experience, it should be possible to combine the options into new and innovative ways of providing microinsurance. In addition, by being flexible with the tasks of different entities, it should be possible to reduce transaction costs and provide better products.

Clearly the options in the risk-carrier category are restricted and in the majority of cases utilizing a registered insurance company will remain the most likely outcome. MFIs seem to face increasing levels of regulation brought about by heightened government interest in the sector. This regulatory burden makes self-insurance more difficult and unwise; no microfinance bank wants to face closure as a result of breaching local insurance regulations. The remaining potential risk-carrying alternative is the protected cell company, yet PCCs are rare outside South Africa and Brazil. Perhaps donors and industry practitioners should investigate further the reasons for this and the potential for developing the protected cell as a risk-carrying alternative.

Pages:     | 1 |   ...   | 73 | 74 || 76 | 77 |   ...   | 108 |

Similar works:

«Aus der Klinik für Psychiatrie und Psychotherapie Campus Mitte der Medizinischen Fakultät Charité – Universitätsmedizin Berlin DISSERTATION Herzratenvariabilität als Marker kardialer vagaler Aktivität bei Patienten mit katatonen Schizophrenien im Vergleich zu Patienten mit anderen schizophrenen oder schizophreniformen Störungen zur Erlangung des akademischen Grades Doctor medicinae (Dr. med.) vorgelegt der Medizinischen Fakultät Charité – Universitätsmedizin Berlin von Johanna...»

«About Carbon Monoxide The Case of the CO Leak: Solving the Mysteries of Carbon Monoxide Exposures By Thomas Greiner Carbon monoxide causes more deaths from poisoning annually than any other substance, but diagnosing its source eludes all but the best-trained contractors. Thomas H. Greiner dissects the various ways CO exposures happen, and how they are commonly misdiagnosed. A colorless, odorless, flavorless, nonirritating gas, carbon monoxide (CO) causes more poisoning deaths today than any...»

«Aus der Zahnklinik 1 – Zahnerhaltung und Parodontologie der Friedrich-Alexander-Universität Erlangen-Nürnberg Direktor: Prof. Dr. A. Petschelt Der Einfluss unterschiedlicher Prophylaxepulver auf die adhäsive Verbundfestigkeit von Etch&Rinseund Self-Etch-Adhäsiven Inaugural-Dissertation zur Erlangung der Doktorwürde der Medizinischen Fakultät der Friedrich-Alexander-Universität Erlangen-Nürnberg vorgelegt von Kathrin Schwientek aus Nürnberg Gedruckt mit Erlaubnis der Medizinischen...»

«STATE OF ARIZONA MEDICAID ESTATE RECOVERY PROGRAM DE-810 (Rev. 07/15) Page 1 This brochure provides a general description of the Arizona Estate Recovery Program. Individual circumstances may vary and affect how law or policy is applied. Additionally, Federal and State laws and regulations are always subject to change. AHCCCS continues to update this brochure as changes occur in the Estate Recovery Program. INTRODUCTION After almost two months in the hospital during the summer of 2015, Mr....»

«NATIONAL HEALTH ACCOUNTS (NHA) IN EASTERN AND SOUTHERN AFRICA: A COMPARATIVE ANALYSIS Executive Summary Most of the sub-Saharan countries are implementing a number of health sector reforms that target improvement in efficiency and management of health services. NHA help to assess health system performance, and identify health sector problems and opportunities for change. The framework estimates and tracks total financing expenditure on health care. It also helps in the development of reform...»

«The Comprehensive Behavioral Health Reform and Recovery Act of 2016 SECTION-BY-SECTION SEC. 1TABLE OF CONTENTS TITLE I-STRENGTHENING AND INVESTING IN SAMHSA PROGRAMS SECTION 101ASSISTANT SECRETARY FOR MENTAL HEALTH AND SUBSTANCE USE DISORDERS This section would establish an Assistant Secretary for Mental Health and Substance Abuse, to serve as the primary advocate for individuals with mental health and substance use disorders within the Department of Health and Human Services and with other...»

«Aus der Klinik für Allgemeine Chirurgie der Universität zu Lübeck Direktor: Prof. Dr. med. H.P. Bruch Multiple Karzinome: Prognosefaktoren bei Patienten mit kolorektalem Karzinom? Inauguraldissertation zur Erlangung der Doktorwürde der Universität zu Lübeck -Aus der Medizinischen Fakultätvorgelegt von Janina Humke aus Kiel Lübeck 2009 1. Berichterstatter: Priv.-Doz. Dr. med. Philipp Hildebrand 2. Berichterstatter: Priv.-Doz. Dr. med. Jan Kramer Tag der mündlichen Prüfung: 02.02.2010...»

«2/3/2015 Promoting Healthy Movement and Natural Alignment – Research – Herman Miller Where to Buy Newsletters Contact Search PRODUCTS DESIGN RESOURCES RESEARCH WHY ABOUT US STORE Research Solution Essays Promoting Healthy Movement and Natural Alignment Topics Research Summaries Solution Essays Case Studies Ergonomics Promoting Healthy Movement and Natural Alignment: The Research and Design Behind the Embody Tilt...»

«Peter Berling Kreuzzug der Kinder Roman Den Freundinnen meines Lebens gewidmet NEC SPE NEC METU Dramatis Personae Aus Deutschland (1212 ) Nikolaus (14), genannt Niklas, armer Leute Kind aus der Umgebung von Köln, der sich zum Führer eines deutschen Kreuzzugs aufschwingt (›der Heiler‹). Richard van de Bovenkamp, genannt Rik (17), Söldner aus dem Niederrheinischen, Romantiker, der eigentlich Dombaumeister werden wollte. Oliver von Arlon (17), sein Compán, Söldner aus dem Ardenner Wald,...»

«The Suruhanu and Suruhana of the Commonwealth of the Northern Mariana Islands EDCS 606 Dora Borja Miura Spring 2010 P a g e  | 1    INTRODUCTION Growing up in Saipan, I often heard stories about the taotaomona 1. I was told that we had to respect the taotaomona because they could harm us if we were intentionally disrespectful. Later, I learned that the taotaomona were also helpful and kind to those who possessed a gift to heal. The local healers of our islands are called the suruhåno and...»

<<  HOME   |    CONTACTS
2016 www.book.dislib.info - Free e-library - Books, dissertations, abstract

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.