Greetings to All the Delegates At 3 rd Asia Conference on Micro-Insurance on 23 rd July 2009 at Beijing, China

1. Greetings to All the DelegatesAt 3rd Asia Conference on Micro-Insurance on 23rd July 2009 at Beijing, China From the Government of Andhra Pradesh, India

2. Indira Jeevitha Bima Pathakam(A new era in micro-insurance industry in India)(A new era in mA Self-Managed Community Based Micro-Insurance Intervention Maximization of Quick & Quality Service Delivery through IT (A new era in micro-insurance industry in India) By The Government of Andhra Pradesh The Department of Rural Development, India Society for Elimination of Rural Poverty (SERP) In collaboration with LIC

3. Institutional Arrangement The Government of AP promoted an autonomous entity called “ Society for Elimination of Rural Poverty (SERP)” financially aided by the World Bank with the sole objective of reducing the poverty, harnessing the potential of the people by organizing them into Self Help Groups (SHGs) and their federation so as to make them self-reliant in all aspects. The Govt. through SERP promoted 0.85 Million Self Help Groups with a membership of 10.00 Million rural poor women.

4. ZS Zilla Samakhya District MS 1069 Mandal Samakhya Block VO 34,269 Village Organization Village Self-Help Groups 850,000 SHGs INSTITUTIONAL BUILDING STRUCTURE 10 – 15 members SELF SELECT to form a SHG 10.00 million women members State Level

5. SERP – A Few Important Initiatives • Food Security • NPM • Marketing • Dairy • Education • Jobs • Insurance • Health and Nutrition • Gender • Disability

6. Vision Mission Micro-Insurance The Government of Andhra Pradesh envisions that even the poorest of the poor ought to have access to relevant and affordable insurance and be protected from risks on death / disability. The Government of AP makes every effort to empower the Community to play an active role in insurance operations to reduce people’s vulnerabilities and to protect their income and asset base, by creating an enabling environment for self management by the community itself.

7. Need for Insurance for the poor • The Govt. through SERP promoted 0.85 Millions Self Help Groups with a membership of 10.00 Millions rural poor women. •  Rural women, particularly young women, face enormous problems, if they loose their husbands due to untimely death. •  The family comes under severe stress and shock, both psychological and economic. • They are thrown into irrecoverable and abject poverty. • The severity of the problem can be gauged from the fact in Andhra Pradesh alone about 250 persons face untimely death every day. •  These are men (Spouses of SHG members) and women in the age group of 18 to 59 years, who are the bread winners of the families. • Hence, the micro-insurance for the poor.

8. INSURANCE NEED IS FELT BY SHGs • SHGs are joint liability groups for the loans taken from Bank and financial institutions. • On sudden demise of a member the loan taken by her is the liability of all other members causing huge financial burden on them, leading to disturbances including disintegration of the groups or group becoming defunct. • When a fellow SHG members dies, the plight and struggle of the family for financial needs is debated in during the SHG meetings. Many such incidences are recorded across the State.

9. INSURANCE NEED IS FELT BY SHGs • Pressure for repayment of loans taken by the diseased person resulted in initiating a discussion searching for a solution at SHG, VO and MS levels. • The outcome of these brain storming sessions is to have a social safety net to tie over such unforeseen events. • Community demand of a social security net reached District Federation and discussed resulted in decision to start a PILOT SCHEME in few districts.

10. Critical Gaps & Challenges faced by the CBOs in the process • Low Awareness • Disinterestedness • No uniformity in marketing the products and the payment of premium • Superstitious beliefs – like by insuring the members die • Benefits only after death • Delay in claim settlements • Dilatory process (Prolonged Process for Settlement) different from district to district • Resistance from the spouses

11. Universalization of Insurance Interventions • SERP with the experience in pilot Districts, universalized Micro-Insurance interventions in all the Districts with uniform protocol & and Operational procedures by creating mass awareness, signing MoU with LIC, developing Social Capital like Bima Mithras and establishing Web-Based Call Centres to provide quick and quality insurance services to the poor.

12. Products /Schemes for the SHG members & their Spouses 1. Aam Aadmi Bima Yojana– for agricultural laborers –mostly men (only for Rural) 2. Janasree Bima Yojanafor Spouses of SHG members and single women (Both Rural & Urban) 3. Other Group Insurancefor all the SHG women (both Rural & Urban)

13. COVERAGE (STATE) • >8 million Women in SHGs and their spouses, predominantly in the rural areas, are insured. • The target is to insure 18.00 million (i.e., all SHG women and their spouses) by end of October 2009

14. Premium & Benefits at a Glance

15. Scholarships for Children • A free add-on scholarship benefit for the children of the members of AABY/JBY is provided under these schemes. A scholarship at the rate of Rs.100/- per month will be given to maximum two children of the insured studying between 9th to 12th Standard. This scholarship, however, is payable half yearly .Total Scholarship is Rs.1200/- per child.

16. Enrolment Process & Community Ownership SHGs SHGs SHGs SHGs SHGs SHGs • Tie up with an Insurance Company • Nodal Agency for the scheme • Maintain data base and Call Centre • Issue Certificate of Insurance/Bonds • MIS • Capacity building of its staff and community • Pay out solatium within 24 hours through • Bima Mithras ZS • Planning and Monitoring • Training of VOs • Claim documentation • Office bearer is member of Area Committee MS • Member education • Enrollment • Collection of premium • Reporting claims • Facilitate documentation of claims VO

17. Enrolment • The entire enrolment including identification, filling up of applications, computerization, uploading the data into web (www.rd.ap.gov.in) is completed in 30 days depicting the capacities of CBOs to reach out faster than any other Insurance Company and with an abysmally low cost of administration ($ 0.22 per policy) .

18. Community Involvement • The entire scheme is owned and run by the community • Institutions of the Poor (CBOs) have taken the responsibilities of creating awareness amongst the members on the benefits of the insurance. (Either to these poor people never knew what insurance is nor insurance companies have reached them as they never looked at this area as a market.) • CBOs take the responsibility of identifying the members who are interested in the scheme, filling up their applications, collection of premium amount, submission application to the Mandal federation for scrutiny and onward transmission to District Federation for enrolment and computerization of the data and filing the data in the web. • CBOs take the responsibility of obtaining the bond from the District Federation and handing over to member. • CBOs also take the responsibility of informing the claim to the call centre, assisting in filling up of claim documents and follow up upto settlement of final claim.

19. Self Management • SERP provided capacity building with regards all the management aspects to about 80,000 CBO leaders and about 6000 CBO-staff who in turn conducted awareness and enrollment at community level. • At each District (ZS) an insurance sub-committee is formed & empowered to monitor the day to day management / operational Systems down to the final claim settlements and payment of scholarships to the children of the insured members. • Sub-Committees are also formed at MS and VO level to facilitate & monitor the entire process and ensure effective/timely/quality service delivery. • ZS Sub-Committees shall review the service delivery system once in fortnight. Bima Mithras are exclusively reviewed by ZS Sub-committee once in month and settle their payment.

20. What made the community comfortable • Ease in claim settlement i.e., less cumbersome documentation process. • Speed of claim settlement process • Intermediation by the CBOs (VO/MS/ZS) on which people have confidence etc., • Call Center concept / Bima Mithras/ immediate payment of solatium of $103 • On line submission and settlement of claims. • Scholarships.

21. Indira Kranthi Patham • CBOs reached out faster and in a more credible manner • Awareness & Enrollment done by the members themselves in all the cases within a short period of 20- 30 days • Low cost of administration Rs.10/- per policy • Use of IT makes claim administration efficient and effective • CBOs retain control over the policy and hence improve the acceptance levels by the poor

22. Ownership Essentially, the entire process of management & service delivery system is totally administered and monitored by the Zilla Samakhyas (CBOs) by collecting a service charge of Rs.10/- from each applicant in addition to the premium to meet the operational expenditure in the process of awareness, enrolment, data entry, administrative cost of call centers, payments to Bima Mithras etc without depending on the external Funds. Ultimately to attain operational and financial self- sufficiency

23. Call Centre Operations Call Center- a hub of all the insurance interventions established in all the 22 Districts of Andhra Pradesh. They are managed by the Zilla Samakhyas. As soon as a member dies, his relatives or VO shall intimate at Call Centre and then the call center sends Bima Mithra to visit the bereaved family with an interim relief. Bima Mithras: a Strong sensitive support social capital trained and positioned from among the SHG members to deliver the insurance services to the community especially Rs.5000/- interim relief to the bereaved families.

24. Claim Settlement Process Step.1. • As soon as an insured member dies the Village Organization intimates at Call Centre with 1 hour. • Call Centre directs Bima Mithra to visit the family. Then Bima Mithra along with Mandal Samakhya Sub-Committee member, visits the family with 12 hours and pays Rs.5000/- after inquiry and fills the Claim Application / Discharge forms. Bima Mithra gets the signatures of the bereaved Nominee and informs them to submit the required Certificates with (5- 6 days). • The Village Organization sub-committee member does the follow up for obtaining the Certificates.

25. Claim Settlement Process Step.2. • Bima Mithra with help of Village Organization collects the Certificates and sends the Claim Application forms with all the required Certificates to the Mandal Insurance Point Person (Project Field Functionary) Who will verify the documents with check list within 5-6 days. Step.3. • ZS Sub-committee( Trained Specified Persons) with the support of District Project Manager (Micro-Insurance) verifies the documents and hand over to the Call Centre Operators for uploading (1 day)

26. Claim Settlement Process Step. 4. • Call Centre Operator Scans the documents uploads in the web-portal by on-line (1 day) Step.5. • LIC verifies the claims Documents & remits the Amount depending on the type of death to ZS Account through on line. (10 days) Step.6. • ZS shall prepare a DD and sends it to MS (2 days) Step.7. • And finally MS goes to the bereaved family and hand over the DD (2 days) The total Optimum time taken for final payment is about 20- 30 days.

27. Claims process and settlement mechanism at a glance Phone Call Centre located in ZS Claim village Payment of interim relief to the bereaved nominee/family Phone Rs.5000/- Bima Mithra & One Committee Member Visit ATM • Area Committee member completes claim documentation and sends to Call Center wherein the documents are processed and send then electronically to LIC

28. Bima Mithra • Bima Mithra is a strong sensitive and quality services to the insured families. • She is provided with a cell phone, a Bank Account with ATM Card facility. An advance of Rs.10,000/- is ensured by the Zilla Samakhya (Call Centre) round the clock to pay to the bereaved nominees as soon as she gets a call from the call center. support social capital who is trained to provide quick • When she gets a call, she will inform the respective Mandal Samakhya Sub-committee member to accompany her to the village so as to facilitate the VO representative to obtain the required information. Then she pays Rs.5000/- as an interim relief. • She is paid an amount of Rs.100/- for each claim settlement and actual TA. • Similarly, the (Area) sub-committee members also is paid

29. Technology and Innovation • The entire data of insured persons is available in the web. • Claim settlement process is also web based.

31. Web Based Claim Settlement Process To achieve the transparency, accountability & effectiveness in providing quick and quality insurance services, a web-based MIS system is developed. This web portal is connected to all the Call Centres wherein all the claim particulars and claim documents are uploaded on day to day basis. This is the first time LIC has introduced electronic-claim settlement system for speedy disposal of the claims. It is first of its kind in the entire country a web-site by name ( www.aaby.ap.gov.in) is dedicated for the purpose of landless agricultural labourers (AamAadmees) and SHG members.

32. Indira Jeevitha Bheema Web site The web site, provides all the information , reports, analysis etc with regard to the AABY / JBY / OGI in AP. All the 81.26 lakh enrolled members particulars are available in the site. The web site contains member, village, mandal, district, gender, caste wise details. It projects member’s profiles and generates all types of analytical reports basing on age and other parameters.

33. Policy Holder Details in the Web portal

34. District wise Policies - AABY

35. District Wise Status of Claims - AABY

36. AABY – Detailed Stage Wise Claims

37. AABY – Detailed Stage Wise Claims

38. Photos • Bima Mithra Drawing Cash to distribute Solatium to bereaved family Distribution of Solatium to the bereaved family

39. Leverage for Product Matrix • Management of risk on Death & Disability through Call Centres gives way for various product matrixes. • Insurance on death and disability is meant for the women between the age groups of 18 to 59. It is observed that above 59 years of age women are about 5% in all the SHGs • The contention of the above aged women is a debate • In addition, the contention of the women between the age group of 18 to 59 years is; the benefits are only after the death- ‘no death no benefit is making the women very anxious’. They evince interest in Return of Premium

40. Leverage for Product Matrix • Quick & Quality Service delivery system calls for development & utilization of social capital, gross root works for various purposes related to social security nets. • Web Based Call Centre leverages for optimum utilization of the SHG infrastructure like Village Organizations, Mandal Samakhyas and Zilla Samakhyas for diversification of safety nets from insurance to pensions. • The resource base at call centers & management skills obtained by the CBOs leverages for the emergence of a new product i.e Abhya Hastham

41. Abhaya Hastham Dignity for women in old age A Co-contributory Pension and Insurance Scheme for SHG women Long term partnership between poor women and Government

42. The Scheme • SHG women who are above 18 years are eligible to join • SHG woman contributes Rs. 30 per month • Govt Co-contributes Rs. 30 per month • LIC manages the fund to secure better returns

43. Benefits Pension to women on crossing 60 years of age, till death • Death and Disability Insurance coverage up to 59 years Nominee is entitled to receive the corpus on the death of woman Scholarships to children

44. Monthly Pension* Depends on the age of joining into the scheme * estimates

45. Subscriber’s interest first • Individual Pass Book • Annual Statement showing member contribution, co-contribution by the Govt. and interest accrued • Monthly pension adjusted to the bank accounts • Legislative support- Enactment of AP SHGs Women Co-contribution Pension Act (Act 1) of 2009

46. Salient features of the Act • Society for Elimination of Rural Poverty (SERP) is appointed as Nodal Implementing Agency. • Advisory Board • 10 members from subscribers • 10 experts from various fields • Protecting interests of the subscribers • Fund managers • Information dissemination and transperancy • Grievance and dispute mechanism • Auditors

47. SERP • Dedicated Project Management Unit (PMU) would be setup • MOU with Implementing support agencies • Scheme formalisation and implementation • Monitoring and Evaluation • Fund Manager (LIC) • Invest accordingly in the best interest of the subscribers • Disseminate regularly standard information to the subscribers • Monthly pension payments to the retired members and pay to nominee in case of any eventuality • I T support (TCS) • IT consultancy, development of application and portal • Data Center support and Web Hosting • Operational support and maintenance Implementation Process

48. Expanding the Product Matrix • LIVESTOCK‘s are the primary livelihood activity as well as asset for resource poor households in rural AP. • Also, more than 40 percent of rural credit flow is towards supporting the livestock sector and hence managing the risks within the sector is very critical. • The livestock insurance leverages on the capacities built in the community to manage insurance schemes. Call Center concept is attractive in Quick & Quality Service Delivery for the Community even for livestock insurance . • Livestock insurance is protecting the loans of the poor; it stretches the ability of the poor for enhanced asset creation for continuous livelihoods through livestock insurance.

49. Hence , Cattle Insurance • Now it is implemented in a few District without tie up with external insurance providers. • The Govt. AP wishes to universalize Cattle insurance across the state, entrusting the responsibility of operations to the SHG –Federations like Zilla Samakhyas with a tie up with United India Insurance Company. • It is planned to coverer 1.00 CroreMilch animal during the year 2009-10 @ 50000 animal per District. • MoU is being signed with United India Insurance Company for tie up. • 2.00 % on the value of the animal is the premium to be paid to United India Insurance Company per annum • Rs.20/- shall be charged each beneficiary for providing insurance services like enrolment, documentation, claim settlement through Call Centres and Bima Mithras at their door steps.

50. Corporate Agency –Rural Insurance BPOs • Leveraging the experience of low cost model developed in serving the low-income markets to cater to larger rural markets whereby the Community Based Organizations( VOs/ MS/ ZS) have become a CORPORATE AGENTs. • Similarly, the low cost model (i.e., call center concept) is being leveraged to generate RURAL INSURANCE BPOs business for the Community Based Organization. • All 22 Zilla Samakhyas are now Corporate Agents for LIC marketing LIC products for rural poor as well as rich. Bima Mithra are trained to market the products; an alterative business opportunity for the community. • Quick & Quality Service Delivery through Call Centre is the crux