Success story of SANASA - FAIR International Seminar on Agriculture and Microinsurance


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Success story of SANASA - FAIR International Seminar on Agriculture and Microinsurance

  1. 1. Success Story Of Sanasa in Micro Insurance. Presentation to the FAIR International Seminar, Bangladesh on Agriculture and Micro insurance : Experience in Afro- Asian Region by Dr. P.A. KiriwandeniyaSANASA INSURANCE COMPANY LIMITED - SRI LANKA -
  2. 2. Introducing - Sanasa Insurance Company Ltd (SICL) SICL is an insurance company established to serve members of Sanasa societies and clients of Sanasa subsidiary companies and also members of other CBOs such as Funeral Aid Societies established to serve low income households. The term “Sanasa” is an acronym for a Thrift, Credit & Cooperative Society. It also signifies the entire movement of Sanasa societies along with the group of Sanasa subsidiary
  3. 3. Milestones of SICL SICL is an insurance provider emerged from a long and outstanding experience in microinsurance activities conducted by an organization called “All Lanka Mutual Assurance Organization”(Almao) which was the insurance arm of SANASA prior to its incorporation under Companies Act. 2005 SICL begins operations in General Insurance as well. 2002 Establishment of Sanasa Insurance Company Ltd. (SICL) and ALMAO becomes the major shareholder 1996 Amalgamation with Micro-Insurance Unit of Sanasa Federation 1993 Declared as a Specially Authorized Society in the government gazette by the Ministry of Trade and Commerce 1991 Formation of ALMAO with Society Leaders of Funeral Aid Societies. Pioneer in introducing Life Cover with Maturity Benefits , Accident and Health Cover Community Development survey by Forum of Development established by Dr. P.A. Kiriwandeniya.1989 Starting point of the formation of the SICL
  4. 4. Vision of SICL To establish a new society based on Co-operative principles.Mission of SICL To strengthen the society through adequate Risk coverage and developing the community Through comprehensive risk cover.
  5. 5. Objectives of SICL01. To popularize insurance among the low incomehouseholders.02. To introduce simple and affordable insuranceproducts for benefit of the poor .03. To design less expensive insurance schemes whichprovide benefits promptly.04. To increase learning and dissemination of best practice for delivering micro insurance services to the low income families. 05. To explore ways and means to strengthen capitalreserves so as to ensure solvency and sustainability. SANASA Insurance Company Limited
  6. 6. Target Market of SICLCustomers of SICL are mostly from the BPO marketconsisting of: • Members and customers of Sanasa Primary societies & non members.• Members of Funeral Aid societies and other Community Based Organizations. • Customers of Sanasa Development Bank and other Sanasa subsidiary organizations. SANASA Insurance Company Limited
  7. 7. BOP Market in Sri Lanka(As per survey conducted in 2006 under the sponsorship of ADB As Monthly income in Rupees Non poor 20% over 9000 BOP Not so poor 44% between 6001-9000 Market Poor 25% between 3001-6000 Extremely 11% Less than 3000 poor SANASA Insurance Company Limited
  8. 8. Strategies adopted to serve customers at different income levels of BoP Market  Insurance for Funeral Expenses: This insurance has been designed mainly for the “extremely poor” with provisions to cover other income sectors as well. It is an insurance product for the whole family of a society member for a premium of Rs.360 (equivalent to about 3 US Dollars). Cover is provided to all society members under a group policy issued to the society.  Life Insurance: SICL offers life insurance product of various types including Pension policy to suit needs of low income groups with premiums affordable to them. # Insurance for Life Credit: To enhance borrowing capacity of Sanasa society members and account holders of MFIs & Development Banks. We have developed this product to cover loans of high values and also to ensure obtaining reinsurance support from “Hannover Re.”Dr. Kiri’s Presentation -3- SANASA Insurance Company Limited
  9. 9. Strategies adopted to serve customers at different income levels of BoP Market Contd…  Non-life Insurance: Under this portfolio SICL offers following insurances at minimum premium rates, affordable to the low income groups and MFIs: - Personal Accident & Health Insurance: To provide benefits mainly to directors, office staff members & society members. - Property Insurance: Mainly to provide fire & other perils including cover for natural disasters to Sanasa buildings and also to private properties of Sanasa members. - Motor Insurance: Exclusively to provide insurance cover at concessionary rates for poor men’s vehicles such as Three Wheelers & Motorcycles. - Agricultural Insurance: To provide all risk benefits of crop insurance as required by banks for crops such as maize, onions, sugar canes, and various other food crops so as to enhance borrowing capacity of farmers.Dr. Kiri’s Presentation -4- SANASA Insurance Company Limited
  10. 10. Innovative Insurance Products Introduced Recently by SICL- Weather Index Based Crop Insurance For Paddy (Rice) Farmers.- Weather Index Based Crop Insurance for Tea growers.- Livestock Insurance For Low Income earners. SANASA Insurance Company Limited
  11. 11. Weather Index Insurance (WII) for Paddy(Rice) farmers  WII came into operation for the first time in Sri Lanka by Sanasa Insurance company in collaboration with following partners; -International Labour Organization (ILO) -Canadian International Development Agency (CIDA) -Développement international Desjardins (DID) -Basix (India) -Financiere Agricole du Quebec – Developpement international (FADQDI)  WII for Paddy commenced on experimental basis in 2010 and the number of insurance policies increased from 570 in Yala season 2010 to 4815 policies in Maha season 2012/2013.  Modifications to the WII product for Paddy is in progress with the objective of expanding further to reach a new target of 10,000 farmers.Dr. Kiri’s Presentation -07- SANASA Insurance Company Limited
  12. 12. Weather Index Insurance (WII) for Tea Growers Commencement  WII for Tea came into operation under the sponsorship of International Finance Cooperation (IFC), the private sector arm of the World Bank Group to advance economic development by investing in strictly for profit and commercial projects which reduce poverty and promote development. Objectives  To develop weather index –based insurance products that are climate responsive and cater to diverse food crops in Sri Lanka.  To promote institutional capacities of SANASA Insurance Company Ltd (SICL) in order to make it possible to develop weather index- based insurance products and do under-writing efficiently.  Raise awareness amongst 50,000 Sri Lankan farmers on the availability of the developed weather index-based insurance products and their benefits. Current Status  Business of WII for Tea commenced in 2012 and is progressing well.Dr. Kiri’s Presentation -08- SANASA Insurance Company Limited
  13. 13. Livestock Insurance for low income farmers.  Livestock Insurance is a protection mechanism available to livestock farmers against any eventual losses due to theft and burglary and also losses due to death and permanent disability of cattle.  In the field of Livestock Insurance too, Sanasa Insurance Company is the first organization to introduce a micro chip having Radio Frequency Identification Device (RFID) technology to be implanted under the cattle’s ear so as to trace and identify the insured animal and to pay claims in the event of happening an insured peril.  SICL is planning to solve many challenges faced by milk farmers by adopting various strategies under its “Insurance Plus” program.Dr. Kiri’s Presentation -06- SANASA Insurance Company Limited
  14. 14. Challenges in developing Weather Index Insurance. Scaling up weather index insurance depends on : -Availability of reliable meteorological data. -Availability of weather stations in close proximity to cultivating areas. -Awareness in weather index insurance among potential farmers. -Farmers, willingness to pay insurance premium.Dr. Kiri’s Presentation -10- SANASA Insurance Company Limited
  15. 15. Lessons learned in operating Weather Index Insurance.  Weather index insurance is not a sole solution for all risks faced by the farmer . It can not be operated in all areas. Yet, it shows great promise as a tool to reduce the sever effects from weather related phenomena.  It is an easily-operated strategy, free from defects of delays, lack of transparency, presence of human error, bureaucracy and complexity in claims settlement procedures.  Weather insurance seems more effective when it is linked to a large package of risk management strategies and services.  Unwillingness of farmers to pay premium may be overcome by premium subsidy support program overcome by introducing premium subsidy scheme. ( at least for the initial period to get them familiarized with Weather Index Insurance )Dr. Kiri’s Presentation -11- SANASA Insurance Company Limited
  16. 16. SANASA Insurance Company Limited