ENSAYO DE COMPRESIÓN TRIAXIAL

A formal product development process is critically important to the success of a new

microinsurance product. CARD has improved its process over time based on lessons from the difficulties of not following such a process. Indeed, with its proposed “dread disease” health insurance product that it tested in 2003, the organisation was wise enough to pull the plug after the pilot testing phase. MBA’s market demand and client satisfaction activities have also become a more important aspect of its product development process.

6.1 Concept Development

Demand research has been based on questionnaires administered by MBA coordinators among CARD members. Word-of-mouth product concepts are also passed on to management by MBA coordinators in regular meetings and day-to-day contacts. In addition, formal

satisfaction studies and demand research have been conducted to identify product concepts and ideas. Additional research was done with the assistance of Freedom from Hunger. On a case-by-case basis, management reviews competitive activities, especially when demand research suggests the development of new products. The MBA has been, and continues to be, at the forefront of the market, with few competitors. Indeed CARD expends significant effort training other institutions in the Philippines and internationally about the CARD MBA methodology.

CARD management now continually assesses its capacities, especially as a result of the problem with the MMF that highlighted the importance of having professionals running technical operations. Previously, managers focused more on members’ needs than on the viability of the institution; now they are conscious to strike a balance between the two.

6.2 Product Design

In the past, product design was based on member demand as communicated to management by field staff. Now product concepts are still derived from members, but those results are analysed and used by insurance professionals. This professionalisation of the product design process helps MBA to ensure that products are designed and priced appropriately for both the insurer and its policyholders. Additionally, new product designs are submitted to the

insurance commission for review.

The product prototype is developed in-house, with benefits and premium calculations supported by an actuarial memoranda. Complete product design is presented to membership in meetings for preliminary approval by vote, with majority vote required for product acceptance by membership.

6.3 Pilot Testing and Rollout

New products are pilot tested through temporary offering in a selected number of branches. For example, CARD MBA had a brief foray into health insurance with its members. Because of very strong demand from members for medical cover, in 2003, the dread disease health

product was offered in 6 branches for 1 year. The product covered clients against severe and likely terminal diseases; if the insured was actually bedridden, funds were available on a reimbursement basis through the provision of a receipt.

Management notes that it was very clear to the clients that the product was being tested on a small group for one year before rollout. However, even before the end of the trial period, it was apparent that implementation would not be possible without a complete revision of the policy. Additionally, it was recognised that most of the required changes were related to controls. MBA decided to abandon it rather than redesign a product that it was not likely to properly control. Two key issues driving that decision were:

(1) Because the benefits were payable upon provision of a receipt, several members became quite skilled at forging medical receipts. This fraud can be very difficult to minimise without significant computer systems, special relationships with providers, and payment directly to the health care provider.

(2) Significant discord developed between members, branch managers, and MBA Coordinators. Numerous members argued that they were deserving of benefits when they were not. Branch Managers wanted to help these members get their benefits because the member’s loan was in arrears and the Branch Manager wanted the funds to cover the loan. The coordinators wanted to follow the rules but were thwarted by the other parties.

Thus, even though there was, and continues to be strong demand for health related products, the dread disease product lasted less than one year before it was closed. MBA management assessed its abilities to offer such a product professionally and responsibly decided not to continue in this product line. The Board of Trustees, based on the recommendation of management, decided not to roll out the product.

6.4 Product Review and Assessment

Product review is based on quantitative analysis through the monthly MBA Operations Update. CARD, MBA management, and the board determine if there is any need for concern based on their assessment of these reports. Usually management suggests any adjustments to the board for their consideration.

6.5 Product Development Cost

Product development activities are conducted in-house as part of the general operating budget; the sole exception is the cost of actuarial consultation that is outsourced but also financed from the operating budget. For frequent actuarial oversight, the Canadian

Cooperative Association has provided a part-time actuary who is also working with CARD MBA management to develop a training and development arm that will work with other MBA’s in the region (see Section 7.1).