MICRO-INSURANCE WORKSHOP HYDERABAD, 14-15 OCTOBER, 2005

1. MICRO-INSURANCE WORKSHOPHYDERABAD, 14-15 OCTOBER, 2005 FROM MICRO TO MACRO: ADDRESSING THE FINANCING AND DISTRIBUTION CHALLENGES INTERNATIONAL LABOUR ORGANIZATION (ILO) STRATEGIES AND TOOLS AGAINST SOCIAL EXCLUSION AND POVERTY (STEP)

2. MICRO-INSURANCE:THE RIGHTS-BASED APPROACH… SOCIAL PROTECTION IS A FUNDAMENTAL HUMAN RIGHT (1948) EACH GOVERNMENT SHOULD PROVIDE SOCIAL PROTECTION TO EACH AND EVERY CITIZEN UNDER ILO’S DEFINITION NINE MAJOR BENEFITS SHOULD BE COVERED BY SOCIAL PROTECTION SYSTEMS (MEDICAL CARE, SICKNESS BENEFITS, UNEMPLOYMENT BENEFITS, OLD AGE BENEFITS, EMPLOYMENT INJURY BENEFITS, FAMILY BENEFITS, MATERNITY BENEFITS, INVALIDITY BENEFITS, SURVIVOR’S BENEFITS) IN INDIA TODAY, ONLY 10% OF THE POPULATION ENJOYS SOME LEVEL OF SOCIAL PROTECTION BENEFITS WHILE 370 MILLION INFORMAL ECONOMY WORKERS CONTRIBUTE TO SOME 63% OF THE GDP, MOST OF THEM REMAIN EXCLUDED FROM SOCIAL PROTECTION SYSTEMS – THEY DO NOT BENEFIT FROM THE WEALTH THEY CONTRIBUTED TO GENERATE MICRO-INSURANCE IS ONE OF THE INSTRUMENTS THAT CAN BE USED TO COMBAT SOCIAL INJUSTICE

3. SOUTH ASIA: THE MAGNITUDE OF THE EXCLUSION PHENOMENON • INDIA: • 90 % • 950 MILLION • BANGLADESH: • 93% • 134 MILLION • NEPAL: • 95% • 23 MILLION • PAKISTAN: • 97% • 147 MILLION

4. INDIA: A UNIQUE MICRO-INSURANCE EXPERIENCE… THE BIGGEST CHALLENGE: HOW TO EXTEND SOCIAL PROTECTION BENEFITS TO ALL? A WIDER DIVERSITY OF RISKS (WEATHER, ASSETS, CROP…) A WIDER DIVERSITY OF ACTORS (INS. COs, BANCASSURANCE…) A WIDER DIVERSITY OF INNOVATIONS (RISK PACKAGES) AND OPERATIONAL MECHANISMS SOME OF THE LARGEST MICRO-INSURANCE SCHEMES IN THE WORLD SOME MICRO-INSURANCE SCHEMES HAVE ALREADY REACHED AN IMPORTANT DEVELOPMENT LEVEL (SEWA, YESHASVINI…) VARIOUS LINKAGE EXPERIENCES INCLUDING A SUBSIDY COMPONENT (REDISTRIBUTION MECHANISM) MULTIPLE NEW INITIATIVES AT THE STATE LEVEL A NEW AMBITIOUS EXTENSION PROGRAMME: TO COVER 300 MILLION INFORMAL ECONOMY WORKERS (NATIONAL COMMISSION DRAFT BILL - 2005)…

5. SOCIAL PROTECTION PRIORITY NEEDS OF THE POOR 1 • HEALTH CARE: • A STRONG DEMAND FOR TOTAL COVERAGE (WHOLE CARE VS RARE CARE) • QUALITY IS A MAJOR CONCERN • MATERNITY PROTECTION • NEED FOR A BROADER RCH PERSPECTIVE • OLD AGE PENSION • A NEW BUT FAST INCREASING DEMAND • LIFE • A STRONG DEMAND FOR MATURITY BENEFITS (CASH BACK SERVICES) • ACCIDENTS 2 3 4 5

6. HEALTH INSURANCE:CURRENT « POOR » COVERAGE

7. FORMAL ECONOMY HI SCHEMESESIC AT A GLANCE… • ESTABLISHED IN 1948 • APPLICABLE TO NON-SEASONAL POWER USING FACTORIES EMPLOYING 10 OR MORE EMPLOYEES • ELIGIBILITY CRITERIA: WORKERS EARNING LESS THAN Rs. 7,500 PER MONTH • COVERAGE: 7,1 MILLION WORKERS (TOT. BENEFICIARIES: 31 MILLION) • BENEFITS: MEDICAL CARE (HOSPITALIZATION) + MATERNITY BENEFITS + SICKNESS BENEFITS + DISABILITY + FUNERAL EXPENSES • CONTRIBUTIONS: EMPLOYEE: 1.75% WAGES – EMPLOYER: 4,75 WAGES + GOVERNMENT CONTRINTION: 12,5% OF ALL MEDICAL COSTS • EXAMPLE: FOR A MONTHLY INCOME OF Rs 5,000: • EMPLOYEE WILL PAY: Rs 1,050 PER YEAR • EMPLOYER WILL PAY: Rs. 2,850 PER YEAR • CLAIM RATIO (2003-2004): 45% • INCOME RATIO (2003-2004): 40% • GOVERNMENT SUBSIDY (2003-2004): 112 CRORE

8. INFORMAL ECONOMY HI SCHEMESTHE TOP DOWN APPROACH… • MEDICLAIM: • CONTRIBUTION VARIES ACCORDING TO INSURED SUM • MANY EXCLUSIONS CLAUSES • VERY HIGH CLAIM RATE (100%... OR MORE) • WELFARE FUNDS: • MOSTLY: FINANCIAL ASSISTANCE IN CASE OF ILLNESS • VERY LOW LEVEL OF REIMBURSEMENT (Rs. 200/EPISODE) • ASSISTANCE MAY BE DECIDED ON A CASE BY CASE BASIS • UNIVERSAL HEALTH INSURANCE SCHEME: • HOSPITALIZATION EXPENSES ONLY • MANY EXCLUSIONS CLAUSES (WOMEN UNFRIENDLY) • YEAR 1: Rs. 100 FLAT SUBSIDY FOR EACH BPL FAMILY • 1,1 MILLION COVERED (BUT ONLY 10,000 BPL FAMILIES) • YEAR 2: SUBSIDY INCREASE: Rs, 200, Rs 300, Rs 400 • 80,000 COVERED (20,000 BPL FAMILIES)

9. HEALTH MICRO-INSURANCE SCHEMESTHE BOTTOM UP APPROACH…

10. HEALTH INSURANCE:LOOKING AT THE BPL ISSUE… • PLANNING COMMISSION DEFINITION: VALUE OF A SPECIFIED NUTRITION REQUIREMENT • 26% • 278 MILLION • UNDP DEFINITION: LESS THAN 1 US/DAY/PERSON • 35% • 374 MILLION • UNDP ANALYSIS: LESS THAN 2 US/DAY/PERSON • 80% • 855 MILLION

11. HEALTH MICRO-INSURANCE:HOW MUCH CAN THE POOR CONTRIBUTE?

12. HEALTH MICRO-INSURANCE:DO THE SCHEMES NEED FINANCIAL ASSISTANCE?

13. HEALTH MICRO-INSURANCE:HOW MUCH WISH THE INSURANCE COMPANIES CONTRIBUTE? • PUBLIC INSURANCE COMPANIES: MAY RECEIVE PUBLIC SUBSIDIES (UHIS) BUT OPERATE NOW IN A NEW COMPETITIVE ENVIRONMENT • PRIVATE INSURANCE COMPANIES: MUST COMPLY WITH SOCIAL OBLIGATIONS (INTERVENTIONS IN RURAL & SOCIAL SECTORS) • NO PREVIOUS EXPERIENCE IN INDIA • NO PREVIOUS EXPERIENCE IN HEALTH INSURANCE • NO PREVIOUS EXPERIENCE IN WORKING WITH THE POOR • INTERNAL CROSS-SUBSIDY MECHANISM ATTACHED TO ALL PRODUCTS PROVIDED TO THE POOR (INCLUDING HEALTH) • SOME SEE THESE INTERVENTIONS AS PART OF THE CORPORATE SOCIAL RESPONSIBILITY PRINCIPLE AND ACCEPT TO LOSE MONEY • SOME SEE THE HIGH DEVELOPMENT POTENTIAL OF THIS NEW HUGE MARKET AND ACCEPT TO INVEST (FOR A WHILE) • SOME SIMPLY WANT THE REGULATIONS TO BE WAIVED • ALL COMPLAIN ABOUT THE LACK OF DATA – HENCE THE NEED TO BE VERY CAUTIOUS (GO FOR THE EASY WAY: REIMBURSEMENT OF HOSPITALIZATION EXPENSES ONLY– TIGHT ELIGIBILITY CONDITIONS AND MULTIPLE EXCLUSION CLAUSES)

14. HEALTH MICRO-INSURANCE:LOOKING FOR THE ELUSIVE DATA… • DATA SHOULD COVER EXTENDED PERIODS • REFERENCE PERIOD IS STILL TOO SHORT (2 TO 3 YEARS) • DATA SHOULD COVER VARIOUS GROUPS IN DIFFERENT SETTINGS • STILL A GREATER FOCUS IN THE SOUTHERN STATES… • DATA SHOULD BE COMPREHENSIVE • MOST SCHEMES ONLY COVER HOSPITALIZATION COSTS… • DATA SHOULD BE RELIABLE • BEING VOLUNTARY, MOST SCHEMES ARE AFFECTED BY AN IMPORTANT ADVERSE SELECTION EFFECT… • DATASHOULD BE THOROUGHLY ORGANIZED AND ANALYZED • STILL A CHALLENGE IN A NON-REGULATED PRIVATE HEALTH SECTOR AND UNDERMANNED PUBLIC HEALTH SECTOR… • DATA SHOULD BE SHARED • TREND TOWARDS MORE COMPETITION…

15. HEALTH MICRO-INSURANCE:WHAT’S NEW? • A FIRST STAND-ALONE HEALTH INSURANCE COMPANY TO BE OPERATED SOON • POSITIVE TREND BUT… WILL IT HAVE TO COMPLY WITH THE SAME SOCIAL OBLIGATIONS APPLYING TO OTHERS (LIFE & GENERAL)? • FIRST INTERVENTIONS OF PUBLIC HEALTH FACILITIES IN NETWORKS ASSOCIATED TO HEALTH MICRO-INSURANCE SCHEMES • POSITIVE TREND BUT… LEGAL AND FINANCIAL ISSUES STILL TO BE DEALT WITH… • FIRST AGREEMENTS CONCLUDED BETWEEN STATE GOVERNMENTS AND PRIVATE INSURANCE COMPANIES • POSITIVE TREND BUT… WILL IT BE GENERALIZED? • MULTIPLE NEW INITIATIVES TAKEN AT THE CENTRAL AS WELL AS AT THE STATE LEVEL • RURAL HEALTH MISSION… HEALTH INSURANCE SCHEMES INITIATIATED (OR PLANNED) IN KARNATAKA, GUJARAT, WEST BENGAL, ASSAM, PUNJAB, KERALA, ANDHRA PRADESH… • THESE NEW INITIATIVES INCREASINGLY RELY ON NEW PATNERSHIP ARRANGEMENTS WITH COMMUNITY-BASED HEALTH MICRO-INSURANCE SCHEMES…

16. HEALTH MICRO-INSURANCE:WHAT IS NOT NEW? • SCALING UP: A BUMPY ROAD INDEED… • YESHASVINI 700,000 MEMBERSHIP DROP IN YEAR III • INSURANCE EDUCATION FRONT: NOT MUCH TO SEE YET… • URGENT NEED FOR EDUCATION PROGRAMMES AND TOOLS… • HEALTH INSURANCE: MUCH MORE COMPLICATED TO EXPLAIN THAN ANY OTHER INSURANCE PRODUCT… • RENEWAL RATES: STILL VERY LOW… • TOP MARK SEEMS TO BE AROUND 50%? • ADVERSE SELECTION: STILL VERY HIGH • SEWA INCIDENCE RATIO: FROM 3 TO 6 PERCENT • YESHASVINI INCIDENCE RATIO: FROM 1 TO 7 PER THOUSAND • EXCLUSION CLAUSES: STILL PREDOMINENT… • PREGNANCY-RELATED ILLNESSES (A CHOICE ?) • AND WHAT ABOUT THE ULTIMATE GOAL: QUALITY IMPROVEMENT?… • WHERE IS THE EVIDENCE ?

17. THE FINANCING CHALLENGE:EVERYBODY ALREADY SHARES THE BURDEN SOMEHOW… EXTERNALDONORS CENTRAL GOVERNMENT STATEGOVERNMENTS INSURANCECOMPANIES NGOSs HEALTH PROVIDERS MFIs TPAs TRADEUNIONS CORPORATESECTOR EMPLOYERS’ORGANIZATIONS INDIVIDUALS GRASSROOTS ORGANIZATIONS

18. THE FINANCING CHALLENGE:…BUT NOT IN A COORDINATED WAY… EXTERNALDONORS CENTRAL GOVERNMENT STATEGOVERNMENTS INSURANCECOMPANIES NGOSs HEALTH PROVIDERS MFIs TPAs TRADEUNIONS CORPORATESECTOR EMPLOYERS’ORGANIZATIONS INDIVIDUALS GRASSROOTS ORGANIZATIONS

19. THE DISTRIBUTION CHALLENGE:TARGET ORGANIZED GROUPS… RELY ON ORGANIZED GROUPS BASED ON STRONG SOLIDARITY MECHANISMS (COOPERATIVES, SELF-HELP GROUPS, INFORMAL ECONOMY TRADE UNIONS AND LOCAL ASSOCIATIONS…) CONTRIBUTE TO THE FURTHER EMPOWERMENT OF THESE GROUPS

20. FROM MICRO TO MACRO:THE WAY FORWARD… • START WITH HEALTH MICRO-INSURANCE AS A STAND-ALONE PRODUCT • THE PRESSING NEED OF THE DAY – MORE COMPLICATED • ADDRESS THE SPECIFIC PROTECTION NEEDS OF ORGANIZED GROUPS • COMPREHENSIVE ADAPTED BENEFIT PACKAGE – EASY PAYMENT MECHANISMS… • SET UP A NETWORK OF HEALTH PROVIDERS (PRIVATE/PUBLIC) • CONCESSIONAL TARIFFS AND INTERVENTION REGULATIONS… • ORGANIZE ACCREDITATION/ MANAGEMENT/MONITORING SYSTEMS • ENSURE THE PROVISION OF QUALITY SERVICES… • ENSURE SUSTAINABLE FINANCIAL SUPPORT • LONG-TERM PUBLIC/PRIVATE PARTNERSHIP ARRANGEMENTS AND FINANCIAL SUPPORT… • ENHANCE EMPOWERMENT AND SOCIAL INCLUSION • MEMBERS SHOULD BE ABLE TO «VOTE WITH THEIR FEET» - NEW COLLECTIVE RESPONSIBILITIES…

21. FROM MICRO TO MACRO:TOWARDS THE ULTIMATE MODEL… STABLE FINANCIAL CORPUS INSURANCE MANAGEMENT EMPOWERMENT CASHLESS SERVICES HEALTHPROVIDERS’ NETWORK LOCAL SUPPORT ORGANIZATIONS ORGANIZEDGROUPS COMPULSORY WHOLE CARE WHOLE BPL POPULATION UNIVERSAL COVERAGE ALL-INCLUSIVE WHOLE POPULATION

22. FROM MICRO TO MACRO: MORE ADVOCACY IS NEEDED… «THERE IS NO ADVOCACY WITHOUT EVIDENCE, HENCE, THE NEED TO DEVELOP MORE KNOWLEDGE AMONG ALL ACTORS THROUGH ACTIVE NETWORKS» NEED TO INCREASE THE ACTIVE SUPPORT OF POLICY MAKERS UNDER THE NATIONAL SOLIDARITY PRINCIPLE ADVOCACY NEED TO ENHANCE THE TECHNICAL CAPACITIES OF THE VARIOUS ACTORS INVOLVED IN THE MANAGEMENT OF HEALTH MICRO-INSURANCE SCHEMES CAPACITY BUILDING NEED TO DEVELOP STRONGER EVIDENCE ON HEALTH MICRO-INSURANCE BEST PRACTICES AT THE GRASSROOTS LEVEL… KNOWLEDGE DEVELOPMENT

23. THE ASIAN MICRO-INSURANCE NETWORK(AMIN) 230 SCHEMES… SO FAR… OBJECTIVES: SET UP AN EFFICIENT MECHANISM ALLOWING FOR THE REGULAR SHARING OF INFORMATION AND EXPERIENCE AMONG MICRO-INSURANCE PRACTITIONERSDEVELOP THE DOCUMENTATION PROCESS ON MICRO-INSURANCE INITIATIVES, INNOVATIONS AND ACHIEVEMENTSBUILD UP TECHNICAL CAPACITIES OF MICRO-INSURANCE ACTORS STRENGTHEN COLLABORATION AND PATNERSHIP AMONG MICRO-INSURANCE SCHEMES HIGHLIGHT AND CLARIFY ISSUES, CHALLENGES AND OPPORTUNITIES RELATED TO THE CONTRIBUTION OF MICRO-INSURANCE TO SOCIAL PROTECTION EXTENSION

24. THE INTERNATIONAL ALLIANCE FOR THE EXTENSION OF SOCIAL PROTECTION ILO, ISSA, AIM, IHCO, WIEGO, ICA, ICMIF OBJECTIVES: ACT AS A GLOBAL CLEARING HOUSE FOR ALL ISSUES RELATED TO SOCIAL PROTECTION IDENTIFY, DOCUMENT AND SUPPORT ORIGINAL AND INNOVATIVE EXTENSION APPROACHES DEVELOP OVERALL CONSENSUS ON KEY EXTENSION ISSUES AND BEST PRACTICES BRING TRASFERABLE INNOVATIONS AND REGIONAL EXPERIENCES TO THE INTERNATIONAL LEVEL PLAY AN ADVOCACY ROLE TO ENCOURAGE NEW EXTENSION INITIATIVES AT THE INTERNATIONAL LEVEL