«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»
Besides taking direct action to create a healthier living environment for the poor, the government can also be involved in social marketing campaigns to build greater awareness and understanding among citizens of the significance of risk prevention and risk avoidance. Several microinsurance schemes, including BRAC and Grameen Kalyan in Bangladesh, participate in the government’s immunization programme campaign directed at children. Vaccines are provided free of charge by the health authorities and small contributions are made to cover the cost of promoting the campaign. Such participation may strengthen the schemes’ own prevention programmes and enhance their public image. However, evidence from public health campaigns suggests that they have not always been effective in changing people’s behaviour.
Social marketing can also extend to promoting risk-management strategies and trying to create an insurance culture. Indeed, the lack of an insurance culture is regularly identified as a major obstacle to the expansion of microinsurance, and one that the government could address with limited resources.
The government could either undertake this itself or encourage the insurance industry to assume responsibility.
Sensitization campaigns on the characteristics and specific advantages of microinsurance might explain how to participate in and set up schemes and describe the rights and obligations of policyholders, as well as the costs of cover, which are often overestimated, and the costs of not having social insurance, which are usually underestimated (GTZ, 2005). Social marketing might help reduce consumer misconception and unrealistic expectations, which can represent a major obstacle and lead to mutual lack of understanding (Huber et al., 2003).
In Guatemala, for example, one of the key themes of the Banking Superintendency (which includes the Insurance Delegate) is to promote best practice in risk management, for financial institutions and clients alike. The head of the insurance section is encouraging insurers to take the lead – rather than 514 The role of other stakeholders the Superintendency – in the introduction of best practice for risk management through a focus on: (a) corporate practices, (b) clients’ code of ethics and (c) consumer protection (Herrera and Miranda, 2004).
2.3 Research, information and supply of healthcare facilities Another aspect of the enabling environment is that certain services need to be in place for the insurance industry to function properly, notably research findings, relevant information and a supply of adequate healthcare facilities.
Dealing with risks involves recognizing their sources and characteristics, e.g. whether they affect individuals in an unrelated or simultaneous manner.
The most appropriate combination of risk-management strategies and arrangements in any given situation will depend on the type of risk and on the feasibility of the available instruments (Dixon et al., 2002). Sound information and statistical data may help in arguing the case for universal coverage and hence the need for microinsurance as one element in a larger social protection framework.
Moreover, the more information microinsurers have to determine appropriate prices and product features, the lower the premiums should be for poor policyholders. Statistical services for the insurance industry need resources and capacity. Such services, which could be supported by the state, would provide information that helps insurers in setting premiums and benefit packages. In health insurance, for example, this might include information on disease prevalence, the relative quality of facilities, and the recommended cost of different interventions. It can also facilitate the sharing of experiences and lessons learned among institutions and individuals involved in microinsurance and its promotion.
Another element is the supply of adequate healthcare facilities. In fact, the accessibility of existing health facilities and the quality of care they provide
Health service providers and mutual health organizations (MHOs) in MaliBox 97
The most important partners of UTM (Union Technique de la Mutualité Malienne) are health service providers, which have a symbiotic relationship with the MHOs. Indeed, most MHOs are structured around a health centre (aire de santé) that delivers services to the people living within a certain geographical area. The healthcare providers benefit from the presence of MHOs as they ensure that the local population has the financial means to access services and many have often played a central role in the creation of new MHOs.
Source: Adapted from Fischer et al., 2006a. The promotional role of governments 515
represent key determining factors for any health insurance scheme’s prospects of success (see Box 97). Therefore, governments can support and promote the development of microinsurance by improving the availability, accessibility and quality of health services for all citizens in its primary healthcare centres and public hospitals (ILO, 2002c).
Healthcare providers are an essential element for the success of a health microinsurance scheme. Where the schemes can work in partnership with public providers – like UTM and UMSGF (Guinea) – they are better able to control costs because the public health providers often charge fixed fees. Public healthcare providers tend to be less expensive since their operations are partly or wholly subsidized by the state. If microinsurance schemes want to minimize claims costs, they need to find ways to work with the public health schemes better. A government supportive of microinsurance could certainly help in this regard. For example, in the case of Karuna Trust, a coordination committee has been formed to improve the quality of healthcare services, including representatives of the Ministry of Health and Family Welfare, as well as representatives of Karuna Trust and the insurance company. The coordination committee meets regularly to monitor the implementation of the insurance scheme.
2.4 Corruption and fraud Corruption, if widespread, can present a significant barrier to the development of microinsurance and seriously hamper a scheme’s chances of success.
For instance, healthcare providers are supposed to depend upon formal payments and not demand under-the-table payments for admission to public facilities. Equally important in this context is fraud perpetrated by insureds who, for example, might claim fictitious healthcare costs, or by administrators who divert monies collected by the insurer (Weber, 2002). Governments can play an important role in fighting corruption and ensuring the credible and transparent functioning of healthcare delivery and financial settlement mechanisms (Ranson and Bennett, 2002).
Interestingly, the promotion of microinsurance schemes can also help to reduce fraud to some extent, at least in healthcare centres. For example, at UMSGF in Guinea, preliminary surveys conducted in the region showed that the average declared cost of hospitalization (medical or surgical) was GNF 80,000 (US$33) per stay, which was much higher than the official prices charged by health providers (which on average are GNF 20,000 (US$8.20)).
Consequently, the microinsurance scheme chose to implement a third-party payment arrangement so that members did not have to pay for the treatment up front. By removing the financial exchanges between health staff and patients, it also reduces illegal practices such as over-charging.
516 The role of other stakeholders 3 Strengthening institutions Besides creating an environment in which microinsurance providers and products might flourish, governments can also target interventions at an institution level to strengthen microinsurance providers and facilitate partnerships.
3.1 Networks and apex structures For microinsurance to be successful, local, occupation-based units need to be linked to larger network structures to enhance representational functions and widen their risk pool. The experiences in Mali (UTM), Senegal (CRMST) and Guinea (UMSGF) demonstrate how a federated structure strengthens the system (see Chapter 4.3). This critical linkage also provides a support structure for more professional operations, through internal control and performance-monitoring, advisory services, training, data banks, research facilities, sharing of lessons learned and relevant data, and liaising with external stakeholders. Networks also play a key role in starting up new schemes, and therefore expanding the availability of microinsurance and increasing the economies of scale.
Accordingly, governments should, whenever appropriate, encourage the creation of microinsurance associations or support existing ones. The financing of these support structures poses a major challenge, since many of them do not collect enough from their members to fully cover their costs. This may be an area where government subsidies could also be effective, as discussed in the following section. In addition, the government can also facilitate links to appropriate support organizations, including government agencies and local administrations, to foster mutually beneficial partnerships (see Box 98).
Stewardship in Guinea-Bissau Box 98
The guidelines also specify the responsibility of villages. These include constructing health centres, for which the Ministry of Public Health provides some construction material, and ensuring that there are always adequate drug supplies. In this fashion, the partnership between the Ministry of Public Health and villages benefits from both the stewardship capabilities of the government in the form of guidelines and monitoring and from the local knowledge within villages.
Source: Adapted from Ranson and Bennett, 2002.
3.2 Link to donors and international funds As described in Chapter 5.1, international assistance can help to promote microinsurance schemes, be it through direct cash transfers or through technical assistance. Yet microinsurance providers may not have the capacity, know-how and professional networks to establish contacts and negotiate terms of assistance with potential donors and/or international funds such as the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) and the International Finance Facility (IFF), or under the innovative concept of a Global Social Trust (GST).1 They rely on the government to play an intermediary role between external assistance and – ultimately – the target population (see Box 99). In this context, the government’s interest in microinsurance determines the volume and scope of external donor assistance, for example by setting priorities in bilateral and multilateral negotiations.
Facilitating links to UNDP in IndiaBox 99
The Indian Ministry of Health decided to set up pilot schemes in West Bengal and Karnataka to test community health financing options and to learn from the experiences. It agreed to work in partnership with established and successful NGOs; Karuna Trust was approached in 2001 on the recommendation of the Government of Karnataka. The scheme was designed to focus only on the public health centres. Karuna Trust’s microinsurance operations started in 2002, with the NGO serving as the distribution agent for the government-owned National Insurance Company.
The main benefit of the insurance product is a per-diem payment to the insured when they are in hospital. Public facilities offer free treatment for those living under the poverty line or charge very modest fees for surgery
and hospitalization, outpatient services and (partly) drugs. The basic idea of Karuna Trust’s insurance scheme is for the poor to use these free services instead of having to purchase them from other sources. The benefit package is intended to compensate for the weaknesses in the public healthcare infrastructure by compensating for wage loss. If the policyholder is hospitalized for more than 24 hours in a public health facility, Rs. 50 (US$1.10) is paid per day as compensation for wage loss, for a maximum of 30 days per year. All hospitalized persons are eligible.
To overcome the market’s lack of knowledge of insurance, UNDP agreed to cover the premium costs for the first two years. A fully-subsidized premium might have made sale of the product easy, but in retrospect, it might not have been the best policy. It is difficult to persuade clients to pay for insurance that has been free of charge in the previous two years. Karuna Trust is now striving to overcome this problem.