insights from india's microinsurance success
DESCRIPTION
India is the global leader in microinsurance. Innovation is blooming and new products and delivery models are being explored. More than 300 million low-income risks are insured. Indeed, more than 60% of microinsurance policyholders are to be found in India! What are the catalysts for the success of microinsurance in India? What role has the government as well as market forces played in the exponential growth of the sector? What can insurers learn from India's experience? The webinar focuses on "Insights from India's Microinsurance Success", one of the chapters of the newly launched "Protecting the Poor: A Microinsurance Compendium, Volume II" published by the Munich Re Foundation and the International Labour Office.TRANSCRIPT
11
WEBINAR ON
Insights from India’s Microinsurance Success
Presenter:Rupalee RuchismitaExecutive Director
Center for Insurance and Risk ManagementPresenter:
Michal MatulSenior Research Officer
Microinsurance Innovation Facility
Presenter:Samrat Nandy
Vice President for Client MarketsSwiss Re Services India
Moderator:Jasmin Suministrado
Knowledge OfficerMicroinsurance Innovation Facility
22
Interfacing with the webinar system
Hides/unhides the control
panel Polls will also be
opened during the webinar – participate by clicking on your answers
Tell us what you think. Type your questions/ comments here even while the presentation is on-going.
Please send chat TO STAFF
33
Profile of participants
More than 500 registered participantsBy Region By Type of
Organisation
By Participation in Microinsurance
44
IN THE PANEL
Insights from India’s Microinsurance Success
Presenter:Rupalee RuchismitaExecutive Director
Center for Insurance and Risk ManagementPresenter:
Michal MatulSenior Research Officer
Microinsurance Innovation Facility
Presenter:Samrat Nandy
Vice President for Client MarketsSwiss Re Services India
Moderator:Jasmin Suministrado
Knowledge OfficerMicroinsurance Innovation Facility
55
Today’s webinar
1. Overview of Compendium II2. Global microinsurance trends and evidence3. Insights from India’s success
Key drivers Impact of regulation Growth of life insurance Mass health insurance powered by PPPs Government-sponsored agriculture insurance New frontiers and enablers
4. Replication opportunities
6
Compendium overview
&global
microinsurance trends
77
Overview of Compendium II
• Part 1 Emerging issues Current trends in microinsurance The potential of microinsurance for social protection What is the impact of microinsurance? Microinsurance and climate change
• Part 2 Health insurance Innovations and barriers in health microinsurance Third-party payment mechanisms in health microinsurance The elusive quest for estimates of willingness to pay for health microinsurance
• Part 3 Life insurance Savings in microinsurance: Lessons from India Improving credit life microinsurance Funeral insurance
• Part 4 General insurance Designed for development impact: Next-generation index insurance for smallholder farmers Livestock insurance: Helping vulnerable livestock keepers manage their risk
• Part 5 Insurance and the low-income market The psychology of microinsurance: Small changes can make a surprising difference Emerging practices in consumer education on risk management and insurance Improving client value: Insights from India, Kenya, and the Philippines Microinsurance that works for women Formalizing the informal insurance inherent in migration: Exploring potential links between migration, remittances and microinsurance
• Part 6 Insurers and microinsurance Is microinsurance a profitable business for insurance companies? Teaching elephants to dance: The experiences of commercial insurers in low-income markets State and market synergies: Insights from India’s microinsurance success Pricing of microinsurance products
• Part 7 Delivery channels and intermediaries New frontiers in microinsurance distribution Microinsurance intermediaries
• Part 8 Infrastructure and environment for microinsurance The technology revolution in microinsurance Access to insurance and financial-sector regulation Protecting consumers while promoting microinsurance
Access the book online at:
www.microinsurancecompendium.org
88
Microinsurance Trends
• More low-income households are covered by insurance
• Stakeholders in microinsurance are becoming more diverse Over 30 international insurers and reinsurers offer MI products The number of delivery channels has increased with new technologies Increasing involvement of governments and other enablers
• Providers are offering more varied range of products From credit life and other automated life covers to health, agriculture, property or savings-
linked products
Asia Latin America Africa Total
2006 66 8 4.5 78
2009 14.7
2011 350 to 400 45 to 50 18 to 24 <500
99
Client Value and Viability:Evidence so far
• Knowledge about microinsurance impact is emerging Evidence on impact of health microinsurance on reduction of out-of-pocket health
expenditures and an increase of utilization of health care services (based on 22 studies)
• Microinsurance offerings improve over time Clear correlation between client value and the maturity of microinsurance markets
• Automated and basic products are viable Credit life and other automated life covers are viable Government involvement makes health insurance feasible More comprehensive health and agriculture products may need smart subsidies or other
government interventions in value chain
10
Insights from India’s
microinsurance success
11
Business case: Industry Characteristics
Public Insurance Companies; 78%
5 Largest Pri-vate In-
surance Compa-
nies; 16%
Other Private In-surance Compa-
nies; 6%
Public Insurance Companies
5 Largest Private Insurance Com-panies
Other Private Insurance Com-panies
5 Public Insurers are larger than all the Private Players!
1212
Business case: Tracking impact of Rural and Social
Sector Targets
0
2
4
6
8
10
12
14
16
Prem
ium
Am
ount
in IN
R (b
illio
ns)
General Insurance: Rural-Social Premium by Companies for 2008-09 & 2009-10
2008-09 2009-10
State and Center supported health insurance schemes have contributed significantly to the portfolio increase
Has the insurance industry discovered a sustainable business case for the rural and
social sector?
1313
Key drivers
• Government commitment
• Conducive regulation
• Public Private Partnerships
• Specialized market players
• Product and process innovations
14
Key driver: Conducive Regulation
• Forced Familiarity through Rural and Social Sector
Obligations
• Facilitative regulation such as Micro Insurance Act, 2005
• Encouraging regulation allowing Standalone Health
Insurance Companies
• Supportive Regulation in Allied sectors – Banking, IT
1515
2005-06 2006-07 2007-08 2008-09 2009-100
10
20
30
40
50
2730
33 35
45
General Insurers: Rural-Social Premium collected from 2005-06 to 2009-10
General Insurance without AIC
Pre
miu
m A
mo
un
t in
INR
(b
il-lio
ns
)
• General Insurance: Sudden growth in overall rural and social business from 2008-09 to 2009-10 even though number of insurance companies has remained
Evaluating Regulation: Tracking impact of Rural and Social Sector
Targets
The Surge
• The rural portfolio has grown steadily exceeding regulatory targets!
16
• Life Insurers: The rural portfolio has grown steadily exceeding regulatory targets!
• Whereas, the MI portfolio remains insignificantNeed for revisiting MI Act 2005?
2007-08 2008-09 2009-10 -
10,000
20,000
30,000
40,000
50,000
60,000
70,000
42,362
50,969
65,221
108 386 206
Life Insurance: Rural/Social vs Micro Insurance Premium Collection
Rural Premium MI Premium
Am
ou
nt
of
Pre
miu
m C
oll
ecte
d i
n I
NR
(m
illi
on
s)Evaluating Regulation: Evaluating
Regulation: Tracking impact of Micro Insurance Act, 2005
17
• Sourcing of Retail products is expensive (localised advertising, bare-foot agents, high-lapsation, averse to risk products)
• Unhealthy price pressure on credit life (insurers under pressure to fulfil quota, big MFIs in superior bargaining position)
• Exciting new channels (Looking to reduce the dependence on MFIs -Common Service Centres, Cooperatives, Rural banks, Rural Postal Life)
• Potential for savings-linked product (flexible surrenders, transparent maturity benefits, fair incentives to the intermediary)
Swiss Re's India experience in MI - Life
18
Mass health Insurance
Chronological map of pro-poor mass health insurance schemes in India
2003 2005 2007 2008 2009
YESHASVINI WEAVERS INSURANCE
AAROGYA SRI
RSBY TNCM
3 million lives
58%
TPA- Manager
Hospital- care
1.6 million families
18%
INSURER IMPLEMENTOR
Hospital-Care
70 million lives
nil
INSURER IMPLEMENTOR
Hospital-Care
80 million lives
5%
INSURER IMPLEMENTOR
Hospital-Care
35 millionlives
nil
INSURER IMPLEMENTOR
Hospital-Care
Outreac
h
as of 2
010
Premium
contri
bution of
household
Role of p
rivat
e
player
19
• Successful PPP model that’s scalable and fair to all stakeholders• Open to misuse. The Government is aware and in conjunction with
insurance companies are working to plug the drain• Least cost wins. Price sanity evolving cycle by cycle• More detailed guidelines required for common surgeries,
hysterectomy, hernia, cataract etc• Has contributed immensely in the creation of medical care
infrastructure• Stakeholders still a long way to go in terms of investing for better
resources, both human and material. Partly linked to the timely release of premiums by the Government.
• Selection of medical network, tariff structure and the TPA choice play a vital role in the success of a scheme
Swiss Re's India experience in MI – Govt. sponsored health schemes
20
Agriculture Insurance: NAIS
05
101520253035
Millions of farmers Farmers covered
Farmers who claimed
Area (hectare)
Growing percentageof small farmers in the portfolio
is heartening
Agriculture Insurance: Offered by Agriculture Insurance corporation (AIC), the public Insurer
insured 19 million farmers
21
Swiss Re's India experience in MI - Weather
•Transparent index that is clearly understood by all parties•Commitment of local insurer to understand index, interest for commercialization and willingness to assume part of the risk
•Use of effective distribution channels e.g., insurers, governmental institutions, MFI/NGO/SHG, input suppliers, banks, post office
•Legal framework that recognizes index products•End-customer awareness of the benefits of the product•Support from government of India via premium subsidies and standardization of products (transparency and affordability)
•Support from international reinsurers (technical inputs and risk capacity)
Weather Insurance in India was able to sustain and scale up from a pilot project to a market due to:
22
New Frontiers and Enablers
Catalytic Infrastructure :
• Micro Insurance Data Bank
• Enabling accreditation and standardization in allied sectors
(weather data, health care)
• Public good like identification cost to be borne by state and
methodologies to standardize brought in
2323
Microinsurance Map: Market Potential: No. of rain gauges state-wise
2424
Enabling Sector Growth: Microinsurance Map a Databank
25
New Frontiers and Enablers
Industry Directions:
• New Distribution channels:
Banking Correspondents,
Internet kiosks,
Rural supply chains (dairies, fertilizer and seed companies etc.)
• Specialized actors
• Products:
Cover risk reduction and tangible services,
Portfolio covers
26
Delivery and Products
• Rural supply chains
• Rural internet kiosks
• Business correspondents
NEW DISTRIBUTION
CHANNELS
• Rural MFI (BASIX)• Urban MFI (EQUITAS)
MFI DISTRIBUTION
• Risk carriers (DHAN Foundation)
• Insurer partners (SKDRDP, VimoSEWA)
MUTUALS & NGO LED MODELS
• Agent based
• India Post
• Bancassurance (Regional Rural
Banks, Co-operative Banks)
GOVERNMENT FACILITATED CHANNELS
Bundled Products- Farm Inputs with crop insurance, - Telemedicine with Health InsuranceOver The Counter Products
Hospitcash
Credit Linked Insurance
Community Based Group Insurance Schemes
Life InsuranceRural postal life insurance
Crop Insurance
27
Replication opportunities
28
Farmers
UAP Insurance
Swiss Re
Safaricom
Stockists
• Risk Capacity• Pricing• Settlement
Calculation• Claims payment
Reinsurance Premium
Kenya Meteorological
Department
Seeds, fertilizer and chemicals
Weather data
• Insurance policy• Claims payment
• Policy registration
• Premium payment
Premium
Syngenta Foundationmain driver of the Kilimo Salama initiative
Replication Case 1:Pioneer to Kilimo Salama in Kenya
("Safe Agriculture")
29
• INDIAPOST has 150,000 post offices!• Rural Postal Life Insurance (RPLI in 2009-10) had
9.9 million life policies
Burkina Faso: SONAPOST in collaboration with local life insurer provides life insurance for 10USD annual premium.
Nigeria: NIPOST in collaboration with ONE Network is building a network of 50,000 agents to distribute many financial services
Replication Case 2:IndiaPost to
NIPOST and SONAPOST
3030
WEBINAR ON
Insights from India’s Microinsurance Success
Presenter:Rupalee RuchismitaExecutive Director
Center for Insurance and Risk Management
Michal MatulSenior Research Officer
Microinsurance Innovation [email protected]
Presenter:Samrat Nandy
Vice President for Client MarketsSwiss Re Services India
Moderator:Jasmin Suministrado
Knowledge OfficerMicroinsurance Innovation Facility
ON Q&A