Table 4.7 - Summary of successful features and challenges of the CARE-Bajaj Allianz mutual scheme.
Successful features Challenges
Good distribution network through CARE & NGOs;
Competition of governmental programs;
Technical know-how and experience of Bajaj-Allianz;
Low renewal rates;
Low outreach;
Good organizational structure, governance and monitoring;
Management commitment (partner insurer);
Good educational and communicational strategies;
Financial sustainability;
Replicating the scheme in new settings.
Customized product;
Voluntary enrolment;
Good health care infrastructure in the region;
Contracting with health care providers (reduced costs of claims).
Reaching scale is the guarantee needed for the company´s management to justify investments in MI, since low-premium contracts can only bring returns when a large number of policies are issued. Many external factors can also influence the success of such schemes. For example, subsidized governmental schemes represent a big challenge for the uptake of fee-based MI schemes. It is therefore necessary to create alternative insurance plans, complementing the state-run subsidized schemes.
Furthermore, an adequate health infrastructure is a fundamental issue for guaranteeing the attractiveness and effective utilization of a health insurance policy.
4.3.4 Micro health insurance products offered by commercial insurers Though the low number of officially registered MI products at IRDA (only 23 products filed by insurance companies since the MI regulations in 200548), there are a lot of non-registered MI products offered by commercial insurers in India. The 23 products currently registered are offered by life insurers. Most of these policies are sold through MFIs as compulsory policies in combination with credit services. None of these policies includes health insurance coverage. Mukherjee (2012) estimates that as of 2012 approximately 64 products were offered by private life and general insurers which were not registered as MI products at IRDA. Furthermore, 40 schemes (mostly concentrated in southern India), offered MI products in collaboration with local NGOs or MFIs. However, these estimates do not allow to infer the prevalence of health insurance schemes and products. Several other studies have attempted to track record
48 The list of MI products registered at IRDA is available at:
http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo271&mid=26.2 (accessed 16.10.2013).
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on the distribution of MI products in India but, given the fast and continuous changes taking place within the sector, they are not up-to-date with the current sector developments and most of the products indicated in these studies are not offered anymore. A study conducted by ILO (2005a) identified 83 MI products filed by 19 insurance companies in India as of 2005. Of these products, 42 were life insurance products and 41 were general insurance products, of which 14 were health insurance products (10 covering hospitalization costs and 4 covering critical illnesses - mostly excluding coverage of costs related to maternity and HIV/AIDS). Another study by ILO (2005b) reported that other 51 products were sold by MFIs, cooperatives, health mutuals and health care providers in partnership with insurance companies.
This section presents an up-to-date overview of the micro health insurance products currently offered by private insurers doing business in India. Table 4.8 lists all micro health insurance products currently available. Details are obtained from insurers´
websites and reports, public disclosures, as well as scientific references. The table reports the name of the product and the insurer (a link to the website with information on the product is provided), the risk insured, whether it is an individual or group policy, the premium (when available) and policy exclusions. The last column shows the classification of the product as reported by the insurer (distinguishing between products which explicitly target the rural and social sector and those that are classified as micro insurance products) and the distribution channels used to market the products (when reported).
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Table 4.8 - Micro health insurance products offered by commercial insurers as of March 2014 Product name & insurer Risk insured
and benefits
Type of policy Premium (year) Exclusions and
49 Information about the MI segment at HDFC ERGO are partly obtained from the Munich Re website:
http://www.munichre.com/corporate-responsibility/en/solutions/primary-insurance/microinsurance/default.aspx.
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Product name & insurer Risk insured and benefits
Type of policy Premium (year) Exclusions and
hospital cash benefit (max 30 days) for
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Product name & insurer Risk insured and benefits
Type of policy Premium (year) Exclusions and
Bajaj Allianz General insurance
Available at:
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Product name & insurer Risk insured and benefits
Type of policy Premium (year) Exclusions and
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The IRDA offers no clear information concerning the differences between the micro insurance products defined by the IRDA regulations (2005) and the social and rural insurance products required by the 2002 obligations for the rural and social sector.
Therefore, there´s no clear distinction between micro insurance and social and rural insurance. None of the products presented in Table 4.8 has been officially registered at IRDA. Few insurers classify their products under MI. Most of the reported insurers classified the products as “rural products“, probably because they are especially meant to comply with the rural obligations. However, no reference is made to the social sector. Thus, MI and rural products are generally considered distinct entities, with rural products being the most prevalent kind of product. Insurers have not embraced the concept of micro insurance as defined by the IRDA through the MI regulations and the number of MI products registered per year at IRDA is even declined in the last years. Only one product of the 23 registered products has been registered in 2009-10 and no new product has been registered ever since.Apparently, offering such MI products as defined in the IRDA regulations is not a priority for insurers, when compared to the necessity of fulfilling the rural and social sector obligations. This might be due to the difficulty for insurers to distribute products with features fitting with the parameters defined by the IRDA. Many insurers claim, in fact, that the restrictions on the level of coverage within MI products (see Table 4.3) are inadequate and that products with such features would be even unattractive for low-income clients (Rajalakshmi & Indira, 2013).
Analyzing the features of the products listed in Table 4.8, another tendency can be identified among the products. The majority of the products offer coverage limited to hospitalization costs. Most commercial insurers opt for a one-fits-all product, indifferentiated and mostly limited to the coverage of high-cost and low-frequency risks such as hospitalizations. In Chapter 2, findings from three rural sites show that the main ill-realated financial burden for HHs in rural areas is represented by low-cost but highly frequent medical costs, such as those connected to chronic illnesses. These figures are also confirmed by other authors in other regions in India (Dror et al., 2008;
Binnendijk et al., 2011) and nationally by IRDA50 national analyses. The burden
50 (Now ex-) IRDA-chairman Hari Narayan held a presentation on „Health and Health Insurance in India “within the Session „Health Insurance Regulation and Health System Performance: The
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created by these frequent medical costs is further increased by the continuous inflation of medical expenditures (IRDA, 2011). Private insurers should enter the MI market by creating an added value, thus offering other products than those offered by the government or by other organizations. The RSBY subsidized scheme is a huge competitor for private insurers offering MI products covering hospitalization costs only. Private insurers should therefore create a complementary market, for example by focusing on preventive and outpatient care.
In general, I found that little information on MI products was made available by insurers. Premiums are often not reported, as well as the delivery channels. An exception is Alliance SE, which was the only company publishing detailed information on the MI activities and on the way the company develops new business models and extends its spectrum to new countries51. It was very difficult to get information concerning insurers´ costs, investments and revenues/losses derived from the MI segment. The only information publicly available are the “short term and long term investment in social sector“, included in some companies´ financial disclosure, and (rarely) the number of policies sold within the rural and social sector and the total premium collected. It was not possible to isolate information on micro health insurance products. Without a clear definition of MI products and with only disaggregated data available for micro insurance businesses, it is difficult to compare performances among providers and different schemes.