en-factsheet-chic

							             CHIC – Centre of Health Insurance Competence

                            The GTZ initiative to promote
                       community-based health insurance schemes



1. Background and rationale

In developing countries, sickness is one of the most frequent causes of poverty. Almost half
the people in the world do not have adequate and dependable access to health services.
Over and above the shortage of facilities and geographical inequalities of provision, the
affordability of health services is a critical factor. To overcome poverty it is therefore vital to
set up structures for social protection. These give the poorest segments of the population
access to high quality yet affordable health services. The theme of social health insurance is
gaining particular prominence in the field of development policy, and being addressed in the
programmes of multilateral organisations (World Bank, WHO, ILO and the EU). The needs of
developing countries are manifested in their growing demand for innovative approaches and
socio-political advisory competence. To halve extreme poverty worldwide, the German
federal government believes that the strengthening of social protection, especially health
insurance, and control of the major infectious diseases are priority issues. 1

In most developing countries, systems of social protection are limited to the formal sector
(civil servants and private-sector employees). Large sections of the informal economy are
simply not covered. For the majority of the population who are agricultural workers or self-
employed, there is patchy coverage from voluntary community-based insurance systems. In
the health sector, these forms of organisation are called Mutual Health Organisations (MHO)
or Community-based Health Insurance (CBHI) schemes. They are mainly run by institutions
such as cooperatives, churches or self-help groups. These private local support systems
generally play an important part in improving access to health care facilities in the informal
sector. Due to their size, their voluntary character, their members’ minimal financial
resources and their lack of experience with issues of health insurance, MHOs and CBHIs
often face managerial, organisational and administrative problems. Moreover, they are often
prone to severe fluctuations in their finances. In most cases they rely on external subsidies
and can barely afford to extend cover to people in extreme poverty. 2

Better links between private and public insurance and health care structures, and greater
cooperation among the different health insurance institutions in developing countries (state,
private sector, non-governmental organisations, and churches) would help to pool scarce
resources and make health care provision more efficient overall. Against the backdrop of five
years’ experience with community-based health insurance schemes in West Africa, the
Sector Project “Elaboration and Introduction of Social Health Insurance Systems in
Developing Countries” developed the innovative approach of the CHIC – Centre of Health
Insurance Competence. The establishment of competence centres is intended as a
response to the financial, organisational and administrative deficits of private support
systems and state pilot projects.


1
    BMZ (2001): Armutsbekämpfung – Eine globale Aufgabe. Aktionsprogramm 2015 p.27. [English version:
     Federal Ministry for Economic cooperation and Development, Germany (2004): Poverty Reduction – A
     Global Responsibility. Programme of Action 2015]
2
  Huber, Hohmann, Reinhard (2003): Mutual Health Organizations (MHO) – Five Years Experience in West
Africa. Concerns, Controversies and Proposed Solutions. Wiesbaden, GTZ.
2. Objective and structure

The CHIC approach is based on the idea that not every local health insurance scheme can,
or needs to, develop all the financial, technical and managerial capacity of a fully-fledged
insurance company. The necessary know-how to carry on an insurance business can be
made available on a paid-for consultancy basis by a higher-level institution known as a
Centre of Health Insurance Competence (CHIC). A CHIC is part of a network, normally
consisting of smaller private or public health insurers. It can assist its associated micro-
insurance schemes by taking charge of such tasks as management and technical support,
developing insurance products and quality standards, carrying out seminars and training
events, and representing the interests of local initiatives on the political level. By pooling
resources and utilising synergies to accomplish tasks and activities, member health insurers
are better placed to work more professionally and efficiently.
CHIC is an enterprising approach to the promotion of health insurance schemes in
developing countries. The aim of setting up the competence centres is to strengthen health
insurance schemes economically, as a means of ensuring their sustainability. A Centre of
Health Insurance Competence develops franchised products and offers its members services
and consultancy in the areas of organisational development, personnel development, product
marketing, enrolment of members, financial management, risk management, cost analysis,
controlling, quality assurance, contract drafting and statistics. With more technical and
managerial responsibilities delegated to the CHIC, the MHOs and CBHIs can concentrate on
their comparative strengths (e.g. recruiting members and providing direct services to their
clients). This not only raises efficiency but enhances the corporate identity of a community of
health insurance schemes, and their negotiating power in relation to government offices and
service providers.

A successful CHIC must cover at least part of its own costs from the sale of its products and
services. It is an institution run by its associated organisations, which takes on financial
responsibilities on behalf of the MHOs. This may be done via a franchising contract. The
CHIC as a service provider makes (semi-)standardised products or advisory services
available to the franchisees (= health insurance schemes, MHOs) in return for a flat fee. The
products are developed and owned by the competence centre. There are criteria for
membership of the CHIC network: every MHO must present an annual financial and quality
report. The level of franchise fees is set according to an organisation’s performance and
membership structure. Start-up financing will be necessary from international development
cooperation.


3. Impact analysis / Lessons learned

Competence centres for health insurers operate on a regional basis, helping to ensure that
poor segments of the population have better access to high quality, affordable health care.
Special attention is focused on persons in the informal sector in both urban and rural areas.
These groups are exposed to higher risks of ill health and poverty by their low incomes, their
living conditions, and environmental factors. Often, when they are most in need of medical
treatment, they cannot afford to pay for it. In cooperation with local and national
governments, the public health insurance scheme and the private sector, CHICs create the
right basic administrative and legal conditions for expansion of the health insurance sector.
They also promote individual initiative and self-help, and strengthen the self-administrative
capacity of community-based insurance systems.


A CHIC not only provides positive impulses for the health care sector, but also plays a part in
boosting incomes and employment in a region. There are strong links with the German
Federal Ministry for Economic Cooperation and Development (BMZ) priority area "Economic
Reform and Development of the Market System” (WIRAM). For instance, upgrading the
professional competence of health insurers, developing marketable products, and improving
the macro-economic framework conditions for growth all contribute to this theme. The CHIC
approach also aims for better partnership between the state, business and civil society,
including the establishment of strategic cooperation links between local, national and private
insurance initiatives. Similarly, by cooperating with professional training institutions to
develop and implement new curricula in the fields of health care financing and health
insurance, it stimulates employment in the private and non-profit sector.

Experience is currently being gained in setting up the first competence centres in Tanzania
and Nigeria. A CHIC is being established in Tanzania closely attached to the Tanzanian
Network of Community Health Funds (TNCHF), a state-registered non-governmental
organisation representing many community-based health insurers. In Nigeria, the Catholic
Church has founded a Catholic Health Insurance Program (CHIP) on the CHIC model. This
initiative goes back to a CHIC Management Seminar for health insurance schemes held in
Minna, the capital of Niger state in northern Nigeria, in July 2003. It was jointly organised by
the Sector Project “Social Health Insurance” and a German-supported health care project in
the region. The seminar, which is set up as a planning game, has been repeated in March
2004 in Dar es Salaam, Tanzania. The management seminars are part of the CHIC
competence-building strategy. Since 2002, they have been run with great success in various
African countries. The seminar topics and the interactive method have been well received by
participants (health insurance managers, doctors and administrative staff).


Contact:
Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)
Sector Project "Social Health Insurance"
Section for "Sustainable Social Protection"
Project Leader: Dr. Bernd Schramm
Telephone: +49 (0)6196 - 79 1445
E-mail: bernd.schramm@gtz.de