Addressing Vulnerability through Micro
Insurance?
Stories of impact and viability
BRAC,
15th July, 2013
By Rupalee Ruchism...
Improving financial protection
for Preserving and Productive activities
Focus on:
- Products and Process
- Life, Health, A...
Defining the Microinsurance Space
1. MiM relies on Industry data reported under IRDA regulation (as under MI Act 2005 and ...
State and Center supported health insurance schemes have
contributed to the portfolio increase
Has the insurance industry ...
• Life Insurers: The rural portfolio has grown steadily exceeding
regulatory targets!
• Whereas, the MI portfolio remains ...
• General Insurance: Sudden growth in overall rural and social
business from 2008-09 to 2009-10 even though number of
insu...
• MI Act,2005: Maximum MI products registered in 2007-08
• Sharp fall in Life MI product registration since then!
Tracking...
Facilitative Infrastructure
Microinsurance Map: Product Comparision Table
Microinsurance Map: NAIS vs WBCIS Schemes
Microinsurance Map: NAIS across States
RSBY Scheme: State-wise outreach
Microinsurance Map: Agriculture Insurance Company of
India
Market Potential: No. of rain gauges state-
wise
Microinsurance Map: MFI Snapshot
Microinsurance Map: MFI (Grameen Koota) across
states
Learning from the States
.
Ruchismita and Churchill,, 2012
Mass health insurance
The Story of scale
Features
Name of the Scheme
Yeshasvini Co-operative
Farmers Health care
Scheme (K...
Mass health insurance
The Story of scale
Management
Name of the
Scheme
Yeshasvini Co-operative
Farmers Scheme
Aarogyasri
R...
Mass health insurance
The Story of scale
Performance
Name of the Scheme
Yeshasvini Co-
operative Farmers
Scheme
Aarogyasri...
RSBY
Key characteristics
• RSBY is the Indian Central Government’s in-patient health insurance
scheme that covers secondar...
RSBY
Key characteristics: Outreach
• As of May 2011, RSBY has reached
• 18 million smart cards covering approximately 47 m...
Spreading the risk through partnership :
Multiple insurance and TPA partners
• Insurers:
• Eight insurers bid on year 1,
w...
Localised pricing:
District specific premiums through bidding
• Insurers:
• Eight insurers bid in Year
1, with three publi...
Examining RSBY
Key Performance Indicators against Social Demographic realities
as on May 2011
CIRM uses:
•RSBY: Year 1 and...
Examining RSBY
Conversion Ratio:
Households enrolled into RSBY against total BPL families per district
• Modest Conversion...
Examining RSBY
Conversion Ratio: What affects it
Correlation with socio demographic and programmatic factors
• Higher Conv...
Examining RSBY
Incidence rate: Recommendations
• Conversion Ratios decrease with the size of the district :
• May be due t...
Examining RSBY
Hospitalisation ratio or Incidence rate
• Hospitalization or Incidence rate is
2.4% in Year 1, implying low...
Examining RSBY
Hospitalisation ratio or Incidence rate: What affects it
Incidence rate is correlated to:
• TPAs matter
• H...
Examining RSBY
Incidence rate: Recommendations
There is an encouraging case for :
•Governments to improve primary care fac...
Examining RSBY
Incentive alignment for insurers
• Year 1 was profitable for insurers:
• Average burn-out ratio of 77% (Cla...
RSBY :
Stakeholder Value: Solutions for Policy
Makers
Use
• Monitor impact of regulation on providers and products
Benefit
• Crea...
Stakeholder Value: Solutions for Insurers
Use
• Disaggregated region specific risk data to develop actuarially sound
produ...
Stakeholder Value: Solutions for
Intermediaries (Co-ops, NGOs, MFI)
Use
• Reports to compare pricing and features of own p...
Centre for Insurance and Risk Management
• Established in 2006 as a specialized design and research centre at the
Institut...
Data Sources
Market Data
• Regulator (IRDA)
• Industry Associations
• Insurers - public and private, life and general
• Mu...
rupalee.ruchismita@cirm.in
Thank You
Next Steps
• Technical Content
•
• Event microsite and Publications
• Event Report
• Photos and Videos
• Video Interviews
...
Next Steps
Technical Content
• Event microsite
Safety Nets for All
Technical content
Discussions
Email group (till September end) Transitioning to Blog
Pre event
Discussions
• Blog
Discussions: Blog
Discussions: Blog Field visit
Platforms: Linkedin and Facebook
Addressing vulnerability through microinsurance (1)
Addressing vulnerability through microinsurance (1)
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BRAC's Social Innovation Lab Innovation Forum #14: Addressing vulnerability through microinsurance

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  • is this more than the PST? And if so, exceeded by what percentage?
  • This to be ratified by henna
  • This is free programme, so whya re people not enrolling? There is a negative correlation between the number of BPL families in the district and conversion. We see that while the average conversion ratio is 55% for the top 2 quartiles by district size, it comes down to 50% in the bottom half. This may be because it is more difficult for the TPA to manage a larger district operationally, because the wait times may have been higher in more crowded camps or because bigger districts are more spread out and hence more distant for the TPA. There is a case for subdividing larger districts or to put in place other policies to improve conversion rates in larger districts
  • It ranges from 32% in the case of Alankit to 70% with Kyros.
  • Implying lower utilisation.
  • Implying lower utilisation.
  • raRegulation
  • Addressing vulnerability through microinsurance (1)

    1. 1. Addressing Vulnerability through Micro Insurance? Stories of impact and viability BRAC, 15th July, 2013 By Rupalee Ruchismita, Director CIRM-Design and Research Labs
    2. 2. Improving financial protection for Preserving and Productive activities Focus on: - Products and Process - Life, Health, Agriculture and Livestock - Role of Intermediaries - Showcasing Innovation
    3. 3. Defining the Microinsurance Space 1. MiM relies on Industry data reported under IRDA regulation (as under MI Act 2005 and under the Rural and Social Obligations) 2. Under the IRDA regulations, reported data includes products served to RED PLUS GREEN 3. Hence, Microinsurance Maps also presents data for RED PLUS GREEN 4. Ideally it should report for products offered to GREEN * LIG: Low Income Groups * IRDA: Insurance Regulatory and Development Authority 1. MiM relies on Industry data reported under IRDA regulation (as under MI Act 2005 and under the Rural and Social Obligations) 2. Under the IRDA regulations, reported data includes products served to RED PLUS GREEN 3. Hence, Microinsurance Maps also presents data for RED PLUS GREEN 4. Ideally it should report for products offered to GREEN * LIG: Low Income Groups * IRDA: Insurance Regulatory and Development Authority
    4. 4. State and Center supported health insurance schemes have contributed to the portfolio increase Has the insurance industry discovered a sustainable business case for the rural and social sector? Tracking impact of Rural and Social Sector Targets
    5. 5. • Life Insurers: The rural portfolio has grown steadily exceeding regulatory targets! • Whereas, the MI portfolio remains insignificant Need for revisiting MI Act 2005? Tracking impact of Micro Insurance Act, 2005
    6. 6. • General Insurance: Sudden growth in overall rural and social business from 2008-09 to 2009-10 even though number of insurance companies has remained • The rural portfolio has grown steadily exceeding regulatory targets! Tracking impact of Rural and Social Sector Targets
    7. 7. • MI Act,2005: Maximum MI products registered in 2007-08 • Sharp fall in Life MI product registration since then! Tracking impact of Micro Insurance Act, 2005
    8. 8. Facilitative Infrastructure
    9. 9. Microinsurance Map: Product Comparision Table
    10. 10. Microinsurance Map: NAIS vs WBCIS Schemes
    11. 11. Microinsurance Map: NAIS across States
    12. 12. RSBY Scheme: State-wise outreach
    13. 13. Microinsurance Map: Agriculture Insurance Company of India
    14. 14. Market Potential: No. of rain gauges state- wise
    15. 15. Microinsurance Map: MFI Snapshot
    16. 16. Microinsurance Map: MFI (Grameen Koota) across states
    17. 17. Learning from the States . Ruchismita and Churchill,, 2012
    18. 18. Mass health insurance The Story of scale Features Name of the Scheme Yeshasvini Co-operative Farmers Health care Scheme (Karnataka) 2003 Aarogyasri Community Health Insurance scheme (AP) 2007 Rashtriya Swasthya Bima Yojana (RSBY) 2008 Kalaignar's Insurance Scheme for Life saving Treatments (TN) 2009 Unit of enrolment (families, individuals, etc.) Individuals Families Sources of Funds Contribution: Beneficiary 58% + Government 42% (in 2009-10) by State $0.6 by beneficiary +75% by Centre and 25% by State government by State Premium Rate in 2009-10 $3.3 per person $6 per family Avg. $12 per family $10 per family Maximum insurance cover $4444 per person $3333 per family with additional buffer of $1111 $666 per family $2222 over 4 years, per family Commonest procedures Cardiac, ENT, General Surgery, Paediatric, Obstetric, Ophthalmic procedures. Oncology, CVS, Polytrauma, Genitourinary surgeries, General surgeries Medical Treatment, Ophthalmic procedures, Neurology, Infectious Diseases, Gynae & Obstetric procedures. Orthopaedic, Oncology, urology, ENT, Cardiology, Hysterectomy and Ophthalmology
    19. 19. Mass health insurance The Story of scale Management Name of the Scheme Yeshasvini Co-operative Farmers Scheme Aarogyasri Rashtriya Swasthya Bima Yogna (RSBY) Kalaignar's for Life saving Treatments (TN) IT tools used Electronic claims submission software in all network hospitals, linked to TPA's systems. Comprehensive MIS,, electronic operation and payments, Digital signature for all users, electronic claims process including requirement for patient photographs pre and post procedure et Photos and biometric data of families collected on smart chip at enrolment, Smart cards enable offline authorization and batch transfer of data Web based pre authorization and claim submission Digital smart card to identify the beneficiary. Web cams for co- ordination and monitoring of Liaison Officers in network hospitals Cost containment measures Scrutiny and second opinion are obtained before giving Preauthorization. Verification of High-end surgeries, Scrutiny by TPA as well CA of Trust Prior authorization, package rates, MIS, monitoring Surveillance and medical vigilance teams, Aarogyamithras in hospitals Smart card for identity verification and prior authorisation closed ended package rates for common procedures. In-depth analysis of claim experience Pre-authorization, screening through health camps, package cost, In-depth analysis of claims, discharge planning with LO's Utilization rate Avg Claims ration is 157% Claims frequency is about 1.6% perfamily, claim ratio is between 69.6% to 128.3% (89%) Avg Claim ratio was about 80% in 2009-10 80% Claims Ratio
    20. 20. Mass health insurance The Story of scale Performance Name of the Scheme Yeshasvini Co- operative Farmers Scheme Aarogyasri Rashtriya Swasthya Bima Yogna (RSBY) Kalaignar's for Life saving Treatments (TN) Avg. Cost per Hospitalization 8240 27848 4262 33720 Number of Hospitalization per 1000 person 22 5 25 4 Utilization rate Avg Claims ratio is 157% Claims frequency is about 1.6% perfamily, claim ratio is between 69.6% to 128.3% (89%) Avg Claim ratio was about 80% in 2009-10 80% Claims Ratio
    21. 21. RSBY Key characteristics • RSBY is the Indian Central Government’s in-patient health insurance scheme that covers secondary care for Below Poverty Line families launched in 2008 • Premiums range from USD 7-15 for a sum assured of USD 666 per family • Enrolment occurs in camps, where beneficiaries are issued a smart card and a policy. Customers pay Rs30 for the policy • Premium of USD 222 million has been paid by the Government, with insurers paying out close to USD 200 million for 1.5 Million hospitalization cases • Phased roll out of RSBY's impact on KPIs • Conversion ratio, Hospitalisation ratio,Total Expense Ratio • Followed it with a out-of pocket health expenditure with difference in difference approach with matching-Used NSSO data. 3
    22. 22. RSBY Key characteristics: Outreach • As of May 2011, RSBY has reached • 18 million smart cards covering approximately 47 million individuals • Since inception in 2008, • The scheme has been launched in 229 districts in 22 states, • With 47 districts having completed two years of operation • Average amount claimed per year the hospitalized: USD 100 • By Feb , 2012,RSBY reached 27 million households in 24 states (396 districts) and 32 million
    23. 23. Spreading the risk through partnership : Multiple insurance and TPA partners • Insurers: • Eight insurers bid on year 1, with three public insurers. • Out of 8 insurers operating, ICICI Lombard, New India and Oriental account for over 75% of the districts covered. • TPAs: • Sixteen TPAs with FINO having the largest followed by E-Meditek and MD India. 1 17 91 58 31 3 10 18 Apollo Munich Cholamandalam MS GIC ICICI Lombard New India Assurance Co. Ltd. Oriental Insurance Company Ltd. Royal Sundaram Tata AIG United India Insurance
    24. 24. Localised pricing: District specific premiums through bidding • Insurers: • Eight insurers bid in Year 1, with three public insurers. • Out of 8 insurers operating, ICICI Lombard, New India and Oriental account for over 75% of the districts covered. • TPAs: • Sixteen TPAs with FINO having the largest followed by E-Meditek and MD India. 516 623 554 626 596 537 0 200 400 600 Premium(Rs.) RoyalSundaram OrientalInsuranceCompanyLtd. NewIndiaAssuranceCo. Ltd. ICICILombard Cholamandalam MS GeneralIns.Co. Ltd. ApolloMunich 5
    25. 25. Examining RSBY Key Performance Indicators against Social Demographic realities as on May 2011 CIRM uses: •RSBY: Year 1 and Year 2 (as of May, 2011) • District level administrative data • Client level utilisation data •Secondary Socio Demographic: • National Sample Survey and • District Level Household Survey 25
    26. 26. Examining RSBY Conversion Ratio: Households enrolled into RSBY against total BPL families per district • Modest Conversion ratio at 51.2% in Year 1 • Significant variation across states and districts • Ranges from over 80% in Tripura and Himachal Pradesh to less than 35% in Assam, Jharkhand, and Tamil Nadu Factors like poor habitation to road ratio in rural regions and high commuter and seasonal migrants could be the cause in urban regions 68 46 53 87 33 39 56 79 54 47 44 47 35 60 83 56 50 53 68 56 11 0 20 40 60 80 Average Conversion Ratio (%) West Bengal Uttarakhand U.P. Tripura Tamil Nadu Punjab Orissa Nagaland Meghalaya Maharashtra Kerala Karnataka Jharkhand Haryana HP Gujarat Goa Chhattisgarh Chandigarh Bihar Assam
    27. 27. Examining RSBY Conversion Ratio: What affects it Correlation with socio demographic and programmatic factors • Higher Conversion correlated to: • Literacy and education rates in the district: While the ratio is 45% amongst districts in the lower percentile by literacy, this rises to 56% amongst the more educated districts • More males than females • Year 1 male to female conversion is 169% not correlated to district sex ratio • Choice of TPA matters more than insurer: Management not capital • Significant variation in conversion rates, implying “Ability and effort of TPA accounts for part of the variation in conversion ratios” 16 3 7 11 13 4 3 17 2 1 91 1 10 34 1 7 0 20 40 60 80 100 TPAs in Round 1 Vipul Med TTK Smartchip Safeway Medsave Medicare Mediassist MD India Kyros Genins India Fino Family Health Plan Eagle E-Meditek Dedicated Health Service Alankit
    28. 28. Examining RSBY Incidence rate: Recommendations • Conversion Ratios decrease with the size of the district : • May be due to increased difficulty for the TPA to manage a larger district • Wait times may have been higher in more crowded camps • Bigger districts are most often geographically more spread out There is a case for : • Subdividing larger districts • Allowing more enrolment time and • Greater incentives to TPAs and Insurers to increase conversion rates
    29. 29. Examining RSBY Hospitalisation ratio or Incidence rate • Hospitalization or Incidence rate is 2.4% in Year 1, implying low utilisation: • Opposed to 2.3% historically for all income groups and without insurance • Significant variation across states and districts: Ranging from 5.2% in Kerala to less than 0.1% in Assam and Chandigarh • Variation high between insurers: • Not statistically significant, Suggesting other socio demographic factors driving variation in Incidence Rate 1.2 1.4 3.5 2.7 2.6 .99 .69 2.8 .63 1.8 5.2 .93 1.1 2.8 1.4 4.3 .11 3.6 .92 .077 1.4 .094 0 1 2 3 4 5 Hospitalization Ratio - Year 1 (%) West Bengal Uttarakhand U.P. Tripura Tamil Nadu Punjab Orissa Nagaland Meghalaya Maharashtra Kerala Karnataka Jharkhand Haryana HP Gujarat Goa Delhi Chhattisgarh Chandigarh Bihar Assam
    30. 30. Examining RSBY Hospitalisation ratio or Incidence rate: What affects it Incidence rate is correlated to: • TPAs matter • Higher Literacy levels in a district imply greater incidence rate • Greater percentage of private hospitals imply higher Incidence rate: This may be due to: • The perceived better quality as well as actual availability of doctors and consumables in private facilities •Gender: • A greater percentage of enrolled women are using RSBY services •Use of good primary care appears to reduce hospitalization rate • There is a 0.02% decrease in hospitalization in a district if there is a 1% increase in per capita Primary Care usage 2.3 4.9 1.4 1.9 2.5 .93 1.3 3.4 1.6 1 3.2 .63 2 1.3 6.5 2.4 0 2 4 6 Hospitalization Ratio - Year 1 (%) VipulMed TTK Smartchip Safeway Medsave Medicare Mediassist MD India Kyros Genins India Fino Family Health Plan Eagle E-Meditek Dedicated HealthService Alankit
    31. 31. Examining RSBY Incidence rate: Recommendations There is an encouraging case for : •Governments to improve primary care facilities as it contributes to longer term sustainability of inpatient insurance programmes •Insurance programme seems to address household level neglect of women health needs •Greater incentives to public hospitals to improve perceived perception among users
    32. 32. Examining RSBY Incentive alignment for insurers • Year 1 was profitable for insurers: • Average burn-out ratio of 77% (Claims of 49%, smart card costs of 17%, service tax of 11%) • 23% of the total premium remained with the insurer 32 78 50 85 65 47 57 37 136 39 64 100 56 64 82 78 128 28 116 48 33 70 28 0 50 100 150 Burn Out Ratio - Year 1 (%) West Bengal Uttarakhand U.P. Tripura Tamil Nadu Punjab Orissa Nagaland Meghalaya Maharashtra Kerala Karnataka Jharkhand Haryana HP Gujarat Goa Delhi Chhattisgarh Chandigarh Bihar Assam • There is however large variations between state and districts and between insurers • Districts with burn-out ratio of more than 100% have marginally lower premium (USD 12vsUSD 13) but considerably higher hospitalization rates (5.6% compared to 1.6%)
    33. 33. RSBY :
    34. 34. Stakeholder Value: Solutions for Policy Makers Use • Monitor impact of regulation on providers and products Benefit • Create industry benchmarks on product, process and service quality • Identify early trends (sectors trends and also for specific providers and risk categories) to respond accordingly • Make proactive regulation and policy for underserved regions and track its impact on the market
    35. 35. Stakeholder Value: Solutions for Insurers Use • Disaggregated region specific risk data to develop actuarially sound product pricing • Market insight for development of outreach strategies – competitor and profitability analysis, exposure to innovative product and processes Benefit • Public platform to market products, find potential intermediaries, new relations (IT providers, TPAs) • Plan market entry based on a range of factors- geographical, distribution models, risk specific and competitor based analysis • Market assessment – Updated about ‘sector news’; Trend analyses (over years, regions, risk type and market players) • Own portfolio monitoring, analysis and tracking
    36. 36. Stakeholder Value: Solutions for Intermediaries (Co-ops, NGOs, MFI) Use • Reports to compare pricing and features of own product by various criteria (region, risk type and insurer, premium and claims) Benefit • Use sector best practices to measure own and partner’s (insurer) service quality • Improve own visibility to find partners • Assess insurers based on products and performance
    37. 37. Centre for Insurance and Risk Management • Established in 2006 as a specialized design and research centre at the Institute of Financial Management and Research (IFMR) • Committed to undertaking product design and action research to facilitate greater market outreach of risk management solutions among vulnerable households Focus areas • Product Innovation  Action Research Product Development • Market Making Data Warehousing Training Policy Advocacy Verticals • Agriculture • Livestock • Health • Catastrophe • Life • Life term Savings/Annuities Safety Nets for All
    38. 38. Data Sources Market Data • Regulator (IRDA) • Industry Associations • Insurers - public and private, life and general • Mutual and intermediaries - MFIs, Cooperatives, NGOs, input and output suppliers (on going) Risk data on regional basis • Indian Meteorological Department, Central Water Commission, Actuaries Association of India, Govt. Dept. of Agriculture, National Remote Sensing Centre, Agriculture Universities • Veterinary Universities
    39. 39. rupalee.ruchismita@cirm.in Thank You
    40. 40. Next Steps • Technical Content • • Event microsite and Publications • Event Report • Photos and Videos • Video Interviews Keeping the discussion going: • Group mail • Blog, Linkedin, Facebook Safety Nets for All
    41. 41. Next Steps Technical Content • Event microsite Safety Nets for All
    42. 42. Technical content
    43. 43. Discussions Email group (till September end) Transitioning to Blog Pre event
    44. 44. Discussions • Blog
    45. 45. Discussions: Blog
    46. 46. Discussions: Blog Field visit
    47. 47. Platforms: Linkedin and Facebook
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