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Pricing micro health insurance products, experience from the field

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This is a power point from Healing Fields, an Indian Based NGO working with low income people. For insurance companies to become involved in micro insurance there will need to be innovation - new types of intermediaries, specialized underwriting,...

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Pricing micro health insurance products, experience from the field

  1. 1. Pricing Micro Health Insurance Products Healing Fields Foundation
  2. 2. Introduction <ul><li>Relevance to Health Micro insurance </li></ul><ul><li>Full Service model </li></ul><ul><li>Primarily MFIs as partners </li></ul><ul><ul><li>Limited membership size </li></ul></ul><ul><ul><li>Field level staff of NGO partners </li></ul></ul><ul><li>Activity based costing </li></ul>
  3. 3. Lessons! <ul><li>Full service model for Health Insurance </li></ul><ul><ul><li>More complex than life & accident cover </li></ul></ul><ul><li>Demand creation is a huge expense! </li></ul><ul><li>Research on Pricing: Critical success factor! </li></ul><ul><ul><li>Examine stakeholder linkages, for integration </li></ul></ul><ul><ul><li>Potential innovation </li></ul></ul>
  4. 4. Lessons! <ul><li>Difficulty in finding potential NGO partners </li></ul><ul><ul><li>Lengthy timelines </li></ul></ul><ul><ul><li>Top executive involvement </li></ul></ul><ul><ul><li>Prefer voluntary enrollment </li></ul></ul><ul><ul><li>Competing products with unclear messages leading to confusion </li></ul></ul><ul><li>Education on HI and health needed for better results </li></ul><ul><li>Demand for composite plans </li></ul>
  5. 5. Lessons!
  6. 6. Mapping Costs
  7. 7. Lesson from UMASIDA - Tanzania <ul><li>“ In the beginning the premium was Tshs 600/= (US$1) per month covering my father, mother, my wife and two of my children. This, I think, was fair enough. Suddenly, without much explanation, the premium shot up to 1,000/= (US$1.45). At that point, most members stopped paying and the doctor stopped providing services. Many people later resumed. Then suddenly the premium increased to 2,100/= (US$2.63). This was annoying for it was done without much explanation. I dropped out at that point. I think the premium should be at 1,000/= because we are poor people who the donors are trying to help.” </li></ul>
  8. 8. Lessons <ul><li>Pricing: Way to go! </li></ul><ul><ul><li>Research community </li></ul></ul><ul><ul><li>(willing to pay between 200-300 per year) </li></ul></ul><ul><ul><li>Outline service and product needs </li></ul></ul><ul><ul><li>Integrate and Innovate! </li></ul></ul><ul><ul><li>Map all direct/indirect costs </li></ul></ul><ul><ul><li>Premium financing </li></ul></ul><ul><ul><li>(SHG member monthly savings is < Rs. 30/-) </li></ul></ul>
  9. 9. Healing Fields Foundation’s Experience
  10. 11. Ecosystem <ul><li>Healing Fields Foundation ecosystem </li></ul><ul><ul><li>Insurer: HDFC Chubb </li></ul></ul><ul><ul><li>Health care providers and </li></ul></ul><ul><ul><li>Self Help Groups (SHGs) managed by NGOs </li></ul></ul><ul><li>15 NGO Partners </li></ul><ul><li>18 networked hospitals. </li></ul><ul><li>13,000 lives (2600 families) during pilot </li></ul>
  11. 12. Benefit Package <ul><li>Members pay 363/- per annum to cover a family of five. </li></ul><ul><ul><ul><li>Rs 285 for Health Insurance </li></ul></ul></ul><ul><ul><ul><li>Rs 35 for Personal Accident Benefit </li></ul></ul></ul><ul><ul><ul><li>Rs 33 for Service Tax to GOI </li></ul></ul></ul><ul><ul><ul><li>Rs 10 to Healing Fields as registration fee </li></ul></ul></ul><ul><li>20,000 hospitalization cover for a family of five. </li></ul><ul><ul><ul><li>Includes, Pregnancy cover </li></ul></ul></ul><ul><ul><ul><li>Coverage for listed 43 illnesses only, governed by DRG </li></ul></ul></ul><ul><ul><ul><li>25% co-payment by patient </li></ul></ul></ul><ul><ul><ul><li>Wage compensation for a maximum of 15 days per year at Rs 50/- per day. </li></ul></ul></ul>
  12. 13. Benefit Package <ul><li>Personal Accident Coverage </li></ul><ul><ul><ul><li>25,000 each on insured member & spouse </li></ul></ul></ul><ul><ul><ul><li>On death of member Rs 5000 to each school going child towards education and Rs 5000 to each unmarried girl child towards marriage </li></ul></ul></ul><ul><li>Hospitalization </li></ul><ul><ul><li>With listed, rated network providers </li></ul></ul><ul><ul><li>Cashless admission </li></ul></ul><ul><ul><li>Availability of Healing Fields Hospital Facilitator/ Case Manager </li></ul></ul><ul><ul><li>Second medical opinion by Healing Fields, doctors </li></ul></ul><ul><ul><li>OP discounts (25% - 100%) </li></ul></ul>
  13. 14. Learning <ul><li>Utilization: </li></ul><ul><ul><li>Expected Loss ratio: 56% </li></ul></ul><ul><ul><li>Expected Hospitalization utilization: 3% </li></ul></ul><ul><ul><li>Expected OP utilization: 40% </li></ul></ul><ul><li>Average claim settlement days: 13-15 working days </li></ul>
  14. 15. Conclusions <ul><li>An effective and viable health insurance model is the holistic Full service. </li></ul><ul><li>A great product with poor delivery mechanism is as good as not having a product at all. </li></ul><ul><li>For insurance companies to become involved in micro insurance there will need to be innovation - new types of intermediaries, specialized underwriting, and new products. </li></ul>
  15. 16. Conclusions <ul><li>Startup costs are quite high, mostly into creating demand. </li></ul><ul><li>The cap set on commissions for servicing health insurance must be higher than servicing life policies. </li></ul><ul><li>Integrated composite products will help acheive scales </li></ul>
  16. 17. An Experience… Shobarani - Ibrahimpatnam
  17. 18. Thank You [email_address]

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