Abstract
The insurance sector has penetrated towards many of the high-income individuals and families but was unable to reach to those poor who do not have the capacity to purchase these insurance products. Thus, it is has created a huge gap between the rich and the poor. Micro health insurance is a new phenomenon in the Indian insurance sector which is specifically designed for the poor. This insurance programme is very essential for the individuals to protect them from various uncertainties and risk. The insurance is normally a product designed for the convenience of the middle- and higher-income groups of people. The lower segments of the people are alienated from taking the insurance policies as the prices of the policies are too high and unaffordable for them. Microfinancial institutions and non-governmental organizations (NGOs) that work with urban and rural poor felt the need for the security of these people. Thus, many such institutions have come forward to offer insurance facilities to the poor. They have kept policy prices low and the premium was priced according to their level of income. The Shri Kshetra Dharmasthala Rural Development Programme (SKDRDP) is one such institution which has focused on medical and hospitalization costs of the poor people. Accordingly, they designed a favourable micro health insurance product named as ‘Sampoorna Suraksha’ health insurance scheme. The scheme was introduced in the year 2004 and has witnessed tremendous progress over the years.
In this article, we have analyzed the concept of micro-insurance, its development in India, its delivery models etc. We have also evaluated the ‘Sampoorna Suraksha’ scheme of SKDRDP and the progress of the insurance scheme in terms of enrolment, claim settlement, premium collection etc. The main objective of this article is to analyze the role of NGOs towards micro health insurance. In order to make an appropriate study, we have used exploratory and descriptive research methodology by taking the SKDRDP as a unit of the case study.
Keywords
Introduction
Micro-insurance has become a needy protection for the poor. Even though insurance sector has reached many high-income individuals and families, it has been unable to reach the poor people who do not have the capacity to purchase these insurance products. Thus, it has created a huge gap between the rich and the poor in possession of insurance. The poor suffered a lot since they could not cover their risk through insurance as it was unaffordable for them. It necessitated the Insurance Regulatory and Development Authority of India (IRDA) to emphasize on promoting the insurance schemes which cover lower amount of premium and also lower sum assured (Shetty & Veerashekharappa, 2009). The concept of micro-insurance emerged because of the regulatory compliances of IRDA. Initially, the insurance companies were reluctant to offer products in this segment as it was not profitable for them. The final initiative was actually taken by the microfinance institutions (MFIs) that also deliver the microcredit to the poor. The IRDA has made mandatory for every insurance company to contribute certain percentage of their insurance products to the rural and micro-insurance segment. As a result, many private companies came forward to offer the micro-insurance services. Today, we have many private players offering the micro-insurance in life, health and other general insurance products. Apart from these private players, there are many MFIs and NGOs that have come forward to offer micro-insurance services to their clients. Their main objective is to protect the poor from the heavy losses and hinder them from being indebted.
Micro-insurance in India
Micro-insurance is the insurance specifically designed for the low-income people with low amount of premium and modest benefit packages to the insured. The micro-insurance in India was actually started by the MFIs and the NGOs that delivered the microfinance services to the poor (Savitha & Kiran, 2013). The micro-insurance is a part of the microfinance product. The MFIs and the NGOs felt that the poor need to be protected against the risk of death, property, health, crop etc. The heavy losses due to the happening of these events made the poor more indebted and vulnerable in repayment of the debt. The regulations passed by the IRDA also opened the door for the micro-insurance segment. The private players in the insurance sector had to compulsorily accumulate the net premium from the rural sector. In order to penetrate into the rural segment, the micro-insurance was the right model. According to IRDA, ‘rural sector shall consist of an area where population is less than five thousand, where density of population is less than four hundred per square kilometer, and where more than twenty five per cent of the male working population is engaged in agricultural activities’ (IRDA, 2009). The categories of workers falling under agricultural activities are as follows: cultivators; agricultural labourers; and workers in livestock, forestry, fishing, hunting and plantations, orchards and allied activities.
The MFIs and NGOs designed the micro-insurance schemes by identifying and analyzing their needs, income level, social security and other socio-economic factors. The insurance products are handy for the low-income group of people and make them easy and comfortable in payment of the premium. Although the reach of such schemes is still very limited to anywhere between 5 and 10 million individuals, their potential is viewed to be considerable. The overall market is estimated to reach ₹ 250 billion (Savitha & Kiran, 2012).
Types of Micro-insurance
The micro-insurance can be delivered to the public in different categories. They can be given in life insurance, health insurance, property insurance, crop insurance etc. There are many such segments through which micro-insurance can be delivered to the public. Some of which are as follows:
Micro life insurance takes care of the client upon his/her death. The micro life insurance can be divided into three types. They are term, whole-life and endowment insurances. In term insurance policy, the insurer pays small amount of premium but he gets the full sum assured upon his death. It can be taken for long years. In whole-life insurance, the coverage is given up to the death of the person. In other words, the coverage is given throughout the whole life of the insured. The endowment life insurance pays the face value of insurance if the policyholder dies within a specified period.
Micro health insurance provides coverage against illness and accidents resulting in physical injuries. There are many NGOs, MFIs and even government that have developed their own health insurance products for the poor. The poor people are unable to meet the sudden health expenditure and as a result they are prompted to take multiple loans which make them indebted. The real examples for this can be Sanjivini, Sampoorna Suraksha etc.
The main purpose of property insurance is to provide for the losses against the damage of assets. It helps in recovering huge loss from the property damage which otherwise has to be borne by the owner. The micro property insurance is a feasible type of protection for those who have a huge valuable worth.
Disability can be by birth or through accidents. A person who becomes disabled cannot earn any income. The policies are designed specifically for the disabled so that he/she may not be a burden for the family. There are policies which also provide the monthly pension on certain amount of premium and also the sum assured on the event of death.
The crop insurance is very familiar in Haryana. It provides protection for the farmers who lose their crops in the event of natural calamities, such as, floods, droughts, in the event fire etc. The crop insurance is an effective mechanism for the farmers to get relief from the huge losses which may make them indebted.
Under this type of insurance, the cash relief is given to the individuals who become unemployed without their consent (Doyle & Panda, 2014).
Micro-insurance Providers in India
Today there are more than 24 insurance companies that provide micro-insurance products to the low-income group people. All these companies are registered under the IRDA Act 1999. Table 1 lists some important insurance companies which provide micro-insurance products.
Micro-insurance Companies and Their Products
IRDA on Micro-insurance
The IRDA has encouraged the promotion of development of micro-insurance. The following are some initiatives taken by the IRDA on micro-insurance:
Delivery Models of Micro-insurance
The greatest challenge of micro-insurance is the outreach. The delivery of the microfinance product to the clients is not an easy task. The company has to come up with an effective model which can deliver the products to most of the people. However, selecting the best model for the delivery is a big question. There are four models for the delivery of the micro-insurance products to the public. They are as follows:
Objectives of the Study
The following objectives are designed for the purpose of the study:
To explore the brief history and types of micro-insurance offered in India. To explore various delivery models of micro-insurance products in India. To analyze the performance of health insurance programme ‘Sampoorna Suraksha’ offered by Shri Kshetra Dharmasthala Rural Development Programme (SKDRDP).
Research Methodology
The researcher had adopted the descriptive and exploratory research method for carrying out the research. The descriptive method was adopted to analyze the health insurance programme of the SKDRDP. The exploratory method was used to explore the brief history of the micro-insurance and also to know the delivery models of micro-insurance.
Nature of the Data
The data collected for the study are purely based on the secondary information. Research articles were referred to know the conceptual background of micro-insurance. The performance of micro health insurance scheme of SKDRDP was analyzed by collecting the annual reports from 2004 to 2013. The information is taken from the annual report of 2013–2014. The others sources used are the broachers and the progress reports. In order to have better understanding of the scheme, the unstructured interviews were held with the staff who handle health insurance product.
Statistical Tool Used
The trend analysis was used to know the performance in various areas, viz., claim settlement, enrolment to the insurance programme and disbursement of the amount. The analysis has given the clear picture of growth of health insurance scheme.
Shree Kshetra Dharmasthala Rural Development Project: A Profile
SKDRDP is registered under the charitable trust act of 1920 in the office of sub-registrar, government of Karnataka, Belthangady taluk, Dakshina Kannada district in the year 1991. Dr D. Veerendra Heggade set up this charitable institution in the year 1982. To reach the benefits of the programme one worker in each village would work with 500 families and motivate them to develop their assets wherever required with grant assistance from SKDRDP. In 1992, the organization realized that charity coupled with self-help would accelerate the process of empowerment. As a result the self-help group (SHG) concept was evolved. The men’s group was called as ‘pragathi bandhu’ and the women’s group was named as ‘jnanavikasa mahila’ group. In the year 1996, SKDRDP initiated microfinance programme which has success for the organization. It concentrates on the empowerment of rural women by organizing SHG on the lines of joint liability groups (JLB) of Bangladesh and provides infrastructure and finance through microcredit to the rural people. It currently operates in 16 districts and 20,000 villages covering more than 1,992,000 families. It also linked with government Karnataka in community development programmes (SKDRDP, 2013).
Sampoorna Suraksha: A Health Insurance Programme by SKDRDP
Insurance gives the protection to the individuals against unknown events which may cause laborious loss. With this purpose in mind, SKDRDP has introduced insurance products to protect the stakeholders against hospitalization, death, permanent disability, maternity expenses, calamities etc. The organization has lakhs of SHGs and there was no protection for them in the events of diseases, hospitalization etc. Thus, it developed a comprehensive micro-insurance product termed as Sampoorna Suraksha. Under this programme the insurance service providers are contracted to provide hospitalization cover. The local hospitals are engaged as network hospitals to provide cash-free treatment to the policyholders upon pre-authorization. Many major ailments are packaged to give support to the insurance companies and hospitals. The SKDRDP also provides compensation for other requirements by charging small amount of additional premium. This particular programme has achieved greater success and there was tremendous increase in the takers of this policy. At times, the SKDRDP has incurred losses; however, due to its service-minded objective, it has continued the scheme with additional monitoring. The scheme has benefited to many of the SHG members and also availed cash-free treatment from the hospitals (SKDRDP, 2013).
Analysis and Interpretation
Enrolment of Families to the Scheme
The main objective of the Sampoorna Suraksha programme was to include the entire family of the individual. The scheme has obtained greater response from many of the SHG families. Table 2 shows the trend and growth in enrolment of the families in different years.
Table 2 depicts the number of families enrolled to the Sampoorna Suraksha programme and the percentage of increase. At the end of the 2013, there were 1,888,386 families enrolled for the Sampoorna Suraksha programme. The trend analysis shows that in the year 2007–2008 the enrollment of families increased tremendously that is to 90 per cent. However, the growth was not consistent enough since there was downward trend in the enrolment for the year 2009–2010 and 2012–2013. However, the overall picture shows that the Sampoorna Suraksha programme has achieved tremendous progress in enrolment of families.
Enrolment of Individual Members
The growth of the individual members is explicated in Table 3.
Number of Families Enrolled
Table 3 reveals the number of individuals from the families being enrolled for the Sampoorna Suraksha programme. As per the table, in the initial year (2006–2007) the growth was nominal but in the immediate next year the enrolment of individuals increased to 106 per cent which is considered to be phenomenal growth. The consistency of growth can be seen in each year. Only in the year of 2012–2013, there is negative growth. The reason identified from the study revealed that less growth in enrolment was due to loss in the scheme and considerable increase in the claims.
The Enrolment of Individual Members
Premium Collection
The collection of premium is a cumbersome task for SKDRDP staff. Most of the clients are poor and they do not maintain their consistency in payment of premium. Table 4 shows the growth of premium collection over the years.
Table 4 shows the amount of premium collected over the years. The trend analysis reveals the percentage of growth in the premium collection. Highest growth was achieved in the year 2007–2008 and 2008–2009. There was no negative growth in any years. The sudden fall in the growth of premium collection was due to same reason as stated in the previous table. The overall picture conveys that the premium collection by the organization is good and consistent growth is maintained in all years except in the year 2010–2011.
Growth of Premium Collection
Claim towards Hospitalization
The growth in disbursement of claim can be explained through Table 5. The trend analysis shows the percentage of growth over the years.
Table 5 manifests the growth in the number of claims towards hospitalization and also the amount of claim paid by the organization. The numbers of claims went on increasing year after year as there was also growth in number of families being enrolled. However, only in the year 2012–2013 there was a negative growth in the number of claims. The growth in the amount paid towards the claims shows an inconsistent picture. But the growth is phenomenal in all the years except for the initial and last year. The overall picture indicates that as there was increase in number of clients, there was also corresponding increase in claim settlement. By this, we can infer that the organization has given much benefit for their people.
Special Claims
SKDRP has given special claims in certain unusual circumstances. The details can be explained in Table 6.
Table 6 displays the growth picture of the special claims apart from the regular claims, such as, medication and hospitalization. The number of claims kept on increasing throughout all the years except in the year 2009 and 2011. There was highest claim settlement in the year 2008–2009. The compensation paid towards claim settlement has been increased over 100 per cent in the year 2007–2008 and 2012–2013. Even though there were negative growths in the settlement of claims, the overall picture shows that SKDRDP has done utmost justice in disbursing amount towards claim.
Number of Claims towards Hospitalization
Number of Special Claims
Findings of the Study
Suggestions
The following suggestions are incorporated from the study:
The SKDRDP has adopted a full-service model to deliver the micro health insurance service. There is a great opportunity to tie up with insurance company in delivering the products to a large number of people. They can also think of tie-up with government. The SKDRDP can also introduce other products along with micro health insurance. They have already introduced micro life insurance and can also think of other products, such as, crop insurance, property insurance, disability and retirement benefit insurance. Involvement of professionals is required in the field of managing the insurance, determining the premium, calculation of claim, designing the other products, redesigning the existing product is required. The SKDRP can market their products in large scale. They can also increase their market share through expanding in all districts of the Karnataka and can plan to adopt in neighbouring states.
Conclusion
Micro health insurance is a new phenomenon in the Indian insurance sector. The insurance programme is essential for the individual to protect from various uncertainties and risk. The insurance was normally a product designed for middle and higher income group of people. The lower segments of the people were alienated from taking the insurance policies as the price of the policies are too high and which is unaffordable to them. The MFIs and NGO that work with urban and rural poor felt the need for the security for these people. Therefore, many such institutions came forward to offer the insurance facilities to the poor. They kept price of the policy low and the premium was priced according their level of income. The SKDRDP is one such institution which focused on the medical and hospitalization costs of the poor people. Accordingly, they designed a favourable micro health insurance name as Sampoorna Suraksha health insurance scheme. The scheme was introduced in the year 2004, and from its inception till now, it has seen tremendous progress in terms number of enrolment, number of claims, payment towards claim settlement etc. The scheme has become sustenance for many of the families and individuals.