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.

1. WEBINAR ON
Insights from India’s
Microinsurance Success
Presenter:
Rupalee Ruchismita
Executive Director
Center for Insurance and Risk
Presenter: Management Presenter:
Michal Matul Samrat Nandy
Senior Research Officer Vice President for Client Markets
Microinsurance Innovation Facility Swiss Re Services India
Moderator:
Jasmin Suministrado
Knowledge Officer
Microinsurance Innovation Facility
1

2. 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 Please send chat
presentation is on- TO STAFF
going.
2

3. Profile of participants
More than 500 registered
By Region participants By Type of
Organisation
By Participation in
Microinsurance
3

4. IN THE PANEL
Insights from India’s
Microinsurance Success
Presenter:
Rupalee Ruchismita
Executive Director
Center for Insurance and Risk
Presenter: Management Presenter:
Michal Matul Samrat Nandy
Senior Research Officer Vice President for Client Markets
Microinsurance Innovation Facility Swiss Re Services India
Moderator:
Jasmin Suministrado
Knowledge Officer
Microinsurance Innovation Facility
4

5. Today’s webinar
1. Overview of Compendium II
2. Global microinsurance trends and evidence
3. 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
5

6. Compendium
overview
&
global
microinsurance
trends
6

7. 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
7

8. Microinsurance
Trends
• More low-income households are covered by insurance
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
• 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
8

9. 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
9

10. Insights from
India’s
microinsurance
success
10

11. Business case: Industry
Characteristics
Other Private
5 Largest Private Insurance
Insurance Companies, 6%
Companies, 16%
Public Insurance
Companies
5 Largest Private
Insurance
Companies
Public Insurance Other Private
Companies, 78% Insurance
Companies
5 Public Insurers are larger than all the Private Players!
11

12. Business case: Tracking
impact of Rural and Social
Sector Targets
General Insurance: Rural-Social Premium by Companies for 2008-09 & 2009-10
16
14
Premium Amount in INR (billions)
12
10
8
6
4
2
0
2008-09 2009-10
State and Center supported health Has the insurance industry discovered a
insurance schemes have contributed sustainable business case for the rural and
significantly to the portfolio increase social sector?
12

13. Key drivers
• Government commitment
• Conducive regulation
• Public Private Partnerships
• Specialized market players
• Product and process innovations
13

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
14

15. Evaluating Regulation: Tracking
impact of Rural and Social Sector
Targets
General Insurers: Rural-Social Premium collected from 2005-06 to
2009-10
50 45
Premium Amount in INR
40 33 35
30
27
30
(billions)
20
10
0
2005-06 2006-07 2007-08 2008-09 2009-10
General Insurance without AIC The Surge
• 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!
15

16. Evaluating Regulation: Evaluating
Regulation: Tracking impact of Micro
Insurance Act, 2005
Life Insurance: Rural/Social vs Micro Insurance Premium Collection
70,000 65,221
Amount of Premium Collected in INR (millions)
60,000
50,969
50,000
42,362
40,000
30,000
20,000
10,000
108 386 206
-
2007-08 2008-09 2009-10
Rural Premium MI Premium
• Life Insurers: The rural portfolio has grown steadily exceeding regulatory
targets!
• Whereas, the MI portfolio remains insignificant
Need for revisiting MI Act 2005?
16

17. Swiss Re's India
experience in MI - Life
• 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)
17

18. Mass health Insurance
Chronological map of pro-poor mass health insurance schemes in India
2003 2005 2007 2008 2009
YESHASVINI WEAVERS AAROGYA RSBY TNCM
INSURANCE SRI
3 million 1.6 million 70 million 80 million 35 million
lives families lives lives lives
58% 18% nil 5% nil
TPA- INSURER INSURER INSURER INSURER
Manager IMPLEMENTOR IMPLEMENTOR IMPLEMENTOR IMPLEMENTOR
Hospital- care Hospital-Care Hospital-Care Hospital-Care Hospital-Care
18

19. Swiss Re's India experience in MI –
Govt. sponsored health schemes
• 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
19

20. Agriculture
Insurance: NAIS
Agriculture Insurance: Offered by Agriculture
Insurance corporation (AIC), the public Insurer Growing percentage
insured 19 million farmers of small farmers
in the portfolio
35 is heartening
30
25
Millions of 20
farmers Farmers covered
15
10 Farmers who claimed
5 Area (hectare)
0
20

21. Swiss Re's India experience in MI -
Weather
Weather Insurance in India was able to sustain and scale up from a pilot
project to a market due to:
• 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)
21

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
22

23. Microinsurance Map: Market
Potential: No. of rain gauges state-wise
23

24. Enabling Sector Growth:
Microinsurance Map a Databank
24

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
25

26. Delivery and Products
Bundled Products
- Farm Inputs with
NEW • Rural supply chains crop insurance,
DISTRIBUTION • Rural internet kiosks - Telemedicine with
CHANNELS Health Insurance
• Business correspondents Over The Counter Products
Hospitcash
• Rural MFI (BASIX)
MFI DISTRIBUTION • Urban MFI (EQUITAS) Credit Linked Insurance
MUTUALS & NGO • Risk carriers (DHAN Foundation)
LED MODELS • Insurer partners (SKDRDP, VimoSEWA) Community Based Group
Insurance Schemes
• Agent based
GOVERNMENT • India Post Life Insurance
FACILITATED • Bancassurance (Regional Rural Rural postal life insurance
CHANNELS Banks, Co-operative Banks) Crop Insurance
26

27. Replication
opportunities
27

28. Replication Case 1:
Pioneer to Kilimo Salama in Kenya
("Safe Agriculture")
Syngenta Foundation
main driver of the Kilimo Salama initiative
Swiss Re
Safaricom
• Risk Capacity • Policy registration
• Pricing • Premium payment
Reinsurance
• Settlement
Premium • Insurance policy
Calculation
• Claims payment • Claims payment
Seeds, fertiliz
UAP Insurance er and
chemicals
Stockists
Premium
Farmers
Weather data
Kenya
Meteorological
Department
28

29. Replication Case 2:
IndiaPost to
NIPOST and SONAPOST
• 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
29

30. WEBINAR ON
Insights from India’s
Microinsurance Success
Presenter:
Rupalee Ruchismita
Executive Director
Center for Insurance and Risk
Presenter: Management Presenter:
Michal Matul rupalee.ruchismita@cirm.in Samrat Nandy
Senior Research Officer Vice President for Client Markets
Microinsurance Innovation Facility Swiss Re Services India
matul@ilo.org Samrat_Nandy@swissre.com
Moderator:
Jasmin Suministrado
Knowledge Officer
Microinsurance Innovation Facility
30 suministrado@ilo.org