State of Micro-Insurance in

Orissa and Uttarakhand-

Some field observations
Debashis , University of Hyderabad
Shailendra, IBS , Hyderabad
 Motivation
• MRAP small grant initiative
• Familiarizing ourselves with the field
realities
• Develop relationships with practitioners
• Develop research questions which might
interest the practitioners as well and
visit the field again with substantial
research questions
 Objective/research questions of the
first field visit
• To understand the issues concerning supply
and demand of micro insurance products in
Orissa and Uttarakhand.
• Do the rural poor customers understand
microinsurance?
• Are retail micro insurance products sustainable?
• How does introduction of government micro
insurance schemes affect the efforts made by the
insurance companies?
 Sample
• Risk carriers
– Uttarakhand-ICICI Lombard
– Orissa – LIC , Birla Sun Life, Tata AIG , United India Insurance , Bajaj Alliance
• MFIs and other NGOs as delivery channel/ intermediaries
– Uttarakhand –
• IIE, Dehradun
• AAGGAS , Chamoli
– Orissa –
• Adhikar Microfinace Limited, Bhubaneswar
• Gramutthhan, Bhubaneswar
• Swayamshree Micro Credit Services(SMCS), Bhubaneswar
• Microfinance Limited, Bhubaneswar
• Maa Jadua Shakti SHG, Sompur, Cuttack
• Peoples Rural Education Movement, Gajapati and Puri
• Healing field, Rourkela
• Beneficiaries
– Clients of Adhikaar MF in Orissa
– Clients of IIE in Uttarakhand
 Method
• In depth interviews with the MFI functionaries
(CEOs, operational heads and middle
managers) , risk carriers (Mid-level managers)
and clients.
• Interactions with government officials
(Mission Shakti, Orissa)
• Participation in the Sa-Dhan interface in Orissa
Voices from the field
Conflict of interest among stakeholders - 1

• At the moment risk carriers/insurance

companies are not developing products
keeping the poor in mind rather they float
products with exclusion clauses to minimize
claims in general. The kind of products they
develop therefore is not socially sustainable.
The products can be region specific suiting the
beneficiaries
– Amin, Aadhikar Micro Finance, Orissa
 Conflict of interest among
stakeholders - 2
• In the whole business of micro insurance it’s
only the insurance companies that make
money not the MFIs or NGO-MFIs. The poor
don’t benefit since they are forced to buy
products that they don’t require as such. The
MFI is not taken into confidence while
underwriting policies in which case the poor’s
interests are not addressed.
– Mr Govind Das, Secretary of Gramutthan , Orissa
 Conflict of interest among
stakeholders - 3
• MFIs are only interested in products covering
life risk for the loan tenure and are not willing
to collect the premium beyond that tenure.
This is not conducive to providing long term
insurance products to poor people through
the MFIs as a distribution channel. Hence, the
practice of “shallow” micro insurance
products.
– Area Manager, Private life Insurance company in
Orissa
 Conflict of interest among
stakeholders - 4
• Clients misplace their bonds, they take
treatment beyond the risk period, go to non-
network hospitals and at times submit bills for
treatment which was before the policy
commencement date. And then they insist on
claim settlement !!!
– Area manager, Private Insurance company,
Uttarakhand
 Conflict of interest among
stakeholders -5
• I would buy health insurance only if somebody
would come and explain it to me. Now that
you have told me about its advantages, I think
I would take health insurace also. But what
about the claims settlement process there?
– Abdul Gaffoor, Jatni, Orissa
 Conflict of interest among
stakeholders -6
• I got an eye injury and had to travel all the
way to Rishikesh from Dunda for treatment.
Even the network hospital refused and now
the company is saying that the bills from non-
network hospital are fraud and inflated.
– Virendra Singh, Dunda, Uttarakhand
 Conflict of interest among
stakeholders -7
• Yes we had some insurance and paid for the
same. We were told we will be compensated if
one of our cattle dies. But we don’t know the
name of insurance company. The bank
manager knows---Jaddua Shakti SHG
 Key finding-1
Conflicting interests/mindsets
– Risk carriers
• Is it sustainable business ?
• Only social obligation as per IRDA guidelines?
• Should we go alone or with MFIs?
– Intermediaries
• Only protection of loan?
• Cost of bundling in terms of beneficiaries resistance
• Is it value addition for my clients(eg.low claims ratio)?
• Customized products ?
• Clever exclusion clauses?
• Mission adrift?
– Clients/ beneficiaries Objective/research questions
• What is insurance? of the first field visit
• What is claim?
• What type of insurance is priority for me?
 Key Finding-2
Bouquet of micro insurance provision
• Universal insurance schemes like Rashtriya Swasthya
Beema Yojana
• Specific target group schemes like Angan wadi workers
Beema Yojana , Rajiv Gandhi Shilpi Swasthya Bima
Yojana
• Government subsidised microcredit support linked
insurance schemes for various livelihood activities
through lead banks and insurance companies
• MFI product linked insurance schemes
• NGO led micro insurance schemes (Swayam Shree
Credit, PREM)
• SHG Federation led schemes
 Key Finding-3
Entry of government health insurance schemes
• Small MFIs feel they would be crowded out.
• Large MFIs feel safe as of now as they mostly deal
in credit linked schemes but the scenario would
be different for retail health insurance schemes.
• Aarogyashri (Community health insurance) vs
RSBY (Micro health insurance)
• Most of the insurance companies are yet to
assess the extent of impact on their insurance
portfolio.
 Key Finding-4

Clients

Demand

MFI/NGO ≠ Retail Demand

Demand

Insurance
Company
 Classification of product
PRODUCT RISK MFI Minimum SUM Remarks
CARRIER DISTRIBUTI PREMIUM ASSURED
NG
PRODUCT

Janashree LIC/ICICI Adhikar Rs200 per Rs 35,000- Card with

Bima Prudential Microfinanc annum Rs75,000 policy
Yojana(Loan e Orissa details
linked) issued

Reliance jan Reliance Life Gramauttha Rs500 per 5 times Add-ons like
Samridhi Insurance n annum annualized P.A. and
Yojana(Loan premium+ac Disability,
linked) cumulation Policy Bonds
account issued

Group IFFCO Tokio Gramauttha

persoanl na
accident
 Classification of product
PRODUCT RISK CARRIER MFI Minimum SUM Remarks
DISTRIBUTIN PREMIUM ASSURED
G PRODUCT

Jeevan LIC MFI/NGO/CLU Rs15 per 10,000-50,000 P.A.

Mangal BS week benefit/gap
between
deposits
/issue of
receipt
Jeevan LIC MFI/NGO/CLU Rs25 per 5,000-30,000 PA./Disability
Madhur BS week
Micro health HDFC Ergo Healing field Rs350 per Rs25,000 per Many Add-ons
insurance family family
Micro health --- SMCS+Plan Ongoing but
insurance international not sucessful

Micro health PREM+Plan Closed

insurance International
 Issues during research
• Access to MFI and insurance providers
• Access to data
– Policies sold
– Claims etc.
• Access to beneficiaries in a more structured
way.
 Conclusions
• Micro insurance is still supply driven
• Customization –
geographic/Occupation/Community
• Create awareness-People oriented campaign
• MFIs should be consulted while designing
products
• Need for Insurance Advocacy and Lobby Cell
 Future plans
• We aim at second field visit covering more
beneficiaries.
• Deeper understanding of beneficiaries’
perception of insurance and how do they deal
with its effect on their
consumption/saving/investment.
• Interviews with field based agents.
• Interviews with health providers.