LIVESTOCK INSURANCE MUTUAL MODEL

1. Indira Kranthi Patham Society for Elimination of Rural Poverty Society for Elimination of Rural Poverty S E R P S E R P LIVESTOCK INSURANCEMUTUAL MODEL P.Chinna Thataiah, Regional Project Director,SERP, Hyderabad.

2. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • Livestock is the most important asset for the poor and are susceptible to different types of risks. • Accidental Death of animals in not uncommon. • The mortality among livestock is one of the principal reasons for the loan default by the poor. • Livestock are subject to risk of disease and death resulting in grievous loss in the livelihoods of the poor in the absence of comprehensive insurance for livestock. PRELUDE

3. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • A detailed analysis by CBOs (VO / MS / ZS) on the disintegration of the groups revealed sudden death of milch animal which is a major source of income resulted in fall in income levels thereby making them to default payments. • To whirl this situation CBOs have demanded to put in place a mechanism to re-create the lost asset. • Outcome of detailed discussions in Zilla Samakhya is to pilot asset insurance scheme to begin with livestock and to pilot it in one District of the State. Emergence of an idea

4. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • The scheme is christened as Loan Protection Scheme with an objective to provide relief to the SHG members who owns the Milch Cattle (Buffalo / Cow), in the case of death of the animals to recreate the lost asset. Vizianagaram Model in Short • This is a premium based scheme with an annual premium @ 2% on the total cost of the animal. The insurance is valid for one year. • 100% of the cost of the animal insured will be paid to the member with in 7 working days after reporting of claim in call centre. • The scheme is totally self-managed by CBOs. Accounting, Monitoring and Documentation systems are conceived and designed in house.

5. Indira Kranthi Patham Submission of application VO / MS recommendation Letter Subject to: Application being accompanied by the above letter DD @ 2% as entrance fee Society for Elimination of Rural Poverty Approval of Zilla Samakhya Issue of Bond S E R P (Certificate of insurance) • Every SHG member intending to join the scheme has to submit a written application to the ZS through MS and VO. • The VO and MS need to recommend the application. • The applications shall be accompanied by an amount equivalent to 2% of the estimated value of the animal. • On approval of the application Zilla Samakhya will issue a bond. • Once the policy bond is provided to the member, it is presumed that the animal is insured from that date for a period of one year. • Two photographs of all the animals insured are taken & kept as record in ZS Call Centre. Insurance Procedure

6. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • Upon the death of insured animal, the information passed to call centre (09701115588 & 09491031113) by either member or VO or Villager. • Call centre directs the Bhima Mitra to visit the Village. • Bhima Mitra along with the VO conducts local enquiry, takes a photograph of the dead animal and submits the documents to the LPS sub-committee in Zilla Samakhya along with recommendations of VO. • Contd.. Redemption of Claim

7. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P Redemption of Claim • LPS sub-committee will either settle or reject the claim based on the merit of the documents produced and recommendations of the BhimaMitra and VO. • The claim is settled to the VO by way of cheque/DD. • The VO will settle the claim to the member in cash / cheque as decided by member / SHG. CLAIM SETTLEMENT PROCEDURE Information to Call Centre Inspection by Area Committee consisting of Community Members Submission of Application in the prescribed format Recommendation by VO, elders of the Village Enclosure of Photograph of the dead animal Recommendation of Mandal Samakhya Approval of the claim by Zilla Samakhya Issue of Cheque / DD in favour of VO Payment to the member by VO / OB

8. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P Performance • The community based animal insurance scheme is perhaps the first of its kind in the country. • The major advantage with the scheme is that it is community owned hence bogus claims can be totally eliminated. • Increase in the number of animals insured and less number of deaths lead to an idea of reducing the premium. (premium reduced from 4% to 2%) • Zilla Samakhyas aim is not to earn money but to mitigate the risk. • The claim settlement process is very simple and time bound.

9. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P Performance • Claim settlement is within 7 days. No Postmartum, No death certificate required from AH Department. Simple certificate by VO, Verification by MS / ZS Bhima Mitras and a photograph of dead animal taken by Bhima Mitra is what all required. • The simplicity of the scheme lies in the fact of intimation of the claim just by a phone call to the call centre. The rest including documentation, photography and Processing of Settlement etc., is all done by the bhima mitras at no cost to the member who never moves out of the village at either enrolment or settlement of claim stage.

10. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P Performance

11. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P DEATHS • Experience of Vizianagaram ZS with Loan Protection Scheme has successfully demonstrated that CBOs can run livestock insurance schemes on a fairly large scale.

12. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P LEARNINGS • Zilla Samakhya is now the largest agency with 90,035 animals in its clientage which is much more than all the insurance companies in Vizianagaram put together. • It is essential to keep the cost of overheads as well as running expenditure at the minimum, to ensure the sustainability of the scheme. • The success of the scheme lies in its simplicity and time boundness in settlement of claim. • The success of the scheme critically hinges on the ability of the CBOs to check bogus claims. The community supervision and vigilance that was found to be very effective should be nurtured further. • An important precondition for the success of the scheme is its ability to negotiate a re-insurance with any company in the market. Re-insurance minimises the total liability on the ZS and distributes the risk port folio. However, economics of re-insurance needs to be worked out carefully. United India Insurance Company came down from 4% to 2% + TAX, keeping in view the experience of Vizianagaram district and also agreed to honour all claims settled by Zilla Samakhya without any fine print.

13. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P Traditional Insurance Our Insurance • Claim settlement process • Claim settlement period • Postmortem • Conditions • Documentation • Very rigid • 30 – 60 Days • Required • Person has to physically carry the animal to the nearest hospital for Postmortem. • Preserve the dead animal for postmortem if in case of 2-3 continuous holidays. • Physically inform the Insurance Company & Physically follow it up till the settlement is over. • Flexible & Community Friendly. • 7 days • Not required • Not required • Not required • Just leave a message in the call centre rest all including documentation & handing over the cheque is taken care by BhimaMitras. Lot of money saved, Time saved and Hardship saved

14. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • During the current year, in addition to Vizianagaram, Cattle insurance shall be scaled-up in 6 more Districts. • By 2010 around 6.00 million SHG women shall be covered under loan / Credit Insurance. • By 2011 Cattle insurance will be universalized to all the Districts in Andhra Pradesh State covering around 10 million CATTLES. Road ahead

15. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • The main aim of Zilla Samakhya in running this scheme is to mitigate the risk. • Zilla Samakhya in convergence with Animal Husbandry Department has prevented large number of deaths since last year by pressing in services of qualified veterinary doctors to attend to animal emergences. • All the animals insured with Zilla Samakhya have been vaccinated for Foot & Mouth decease, Black Quarter, Haemorrhagis septicaemia and Antrax by Animal Husbandry Department meaning there is special medical attention for each and every animal. • Result – Sizeable decreases in deaths. Road ahead

16. Indira Kranthi Patham Society for Elimination of Rural Poverty S E R P • Since the scheme is on to huge expansion as part of replication it is decided to bring in State - of the - art technology to keep up the pace of settlement of claims. • Various technology options are under consideration. • Talks are on with technology providers. Technologies

17. Thanks for your patience Q ? Government of Andhra Pradesh partnering with World Bank in poverty reduction through empowerment of poor people.