2. Risks faced by the rural poor in India
are largely unmanaged
• Usually they face two types of Risk
• Idiosyncratic ‐ such as lower yield, disease in the family, theft
• Covariate – drought or flood in the area; epidemic disease
• Prevalent forms of risk management, though not efficient enough, cannot be
ignored. They do proactive risk management
• Grain storage, savings, and assets accumulation specially livestock, loan to and from
friends and relatives at no interest etc.
• Thus the poor are rational when they eschew buying insurance
• Their vulnerability to shocks is high, their income is low and variable, so they cannot invest
much in securing it
• The pay‐out of premium is for sure, but the “benefit” of claim settlement is uncertain.
8. Examples of Micro Insurance –
Health ‐ Rashtriya Swasthya Bima Yojana (RSBY)
• Launched by Ministry of Labour and Employment of Govt of India in 2008
• Objective ‐ shielding low‐income households from major health expenses.
• Provides hospitalization cover of up to INR 30,000 (USD 500) per family pa
• A network of 8,686 private and public empanelled hospitals.
• Millions of poor families have been insured by nine insurers, which
includes five private and four public sector companies.
• The annual premium per family ranges from INR 331 (USD 7), to INR 697
(USD 16), with the beneficiary paying a nominal fee of INR 30 (USD 0.67).
• Source: RSBY Working Paper, September, 2011. Performance Trends and Policy Recommendations ‐ An
Evaluation of the Mass Health Insurance Scheme of Government of India
• http://www.rsby.gov.in/Documents.aspx?ID=14
9. RSBY ‐ Health
Insurance for the Poor
Total Active Smart Cards Issued
37,191,843
Total Hospitalisation Cases
7,163,935
as on 30th Apr 2014
A 2013 evaluation by GiZ shows
94% awareness levels
90% travelled less than 2 kms to
get smart card
Those without coverage spent
Rs 17,000 pa (USD 283)
http://www.rsby.gov.in/
14. Areas needing improvement
1. Pre‐insurance risk mitigation – for health, crop and livestock
2. Improving data gathering and analytics, to reduce premiums
3. Service levels – lowering mis‐selling and lapsation rates (policies
requiring premium payment over multiple years lapse if premium
payment is stopped)
4. Claim settlement – increasing awareness, lowering delays and
repudiation rates (when an insurance co declares claim invalid).
5. More judicious use of subsidies – such as in crop insurance
6. Consumer protection – overhaul of Ombudsman system
18. Basix Consulting’s Partners in Insurance Work
• Aviva Life Insurance Co Ltd, India
• Royal Sundram General Insurance Co Ltd, India
• ICICI Lombard General Insurance Co Ltd, India
• Agricultural Insurance Co of India Ltd.
• Weather‐Risk Management Services Pvt Ltd, India www.weather‐risk.com/
• MicroEnsure, UK and worldwide www.microensure.com
• Micro Insurance Academy, India https://www.microinsuranceacademy.org/
• Basix Consulting
• http://www.basix‐consulting.com/index.php/practice‐areas/microinsurance‐services