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L’Institut
Assemblée générale 2007
Canadian
2007 General Meeting
Institute canadien
of des
Actuaries actuaires
2007 General Meeting
30/11/2007am Assemblée générale 2007 Montréal, Québec
Actuaries without Borders
Assemblée générale 2007
2007 General Meeting
A Canadian Experience for Group
Actuaries
By
Denis Garand and Firozali Hirji
30/11/2007am
2007 General Meeting
30/11/2007am
Assemblée générale 2007
2007 General Meeting
30/11/2007am
Assemblée générale 2007
“Micro credit has helped millions of poor people in
developing countries, but they remain at the
mercy of a death or serious injury of a family
member, the loss of a crop or livestock, or a
natural disaster such as the recent tsunami. The
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assets of borrowers, accumulated through great
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effort over many years, can be destroyed
overnight. Families are then forced to make the
same difficult climb out of poverty a second or
even a third time. By creating a wider range of
better targeted products such as micro-
insurance, the poor will have the ability to
protect their assets."
His Highness the Aga Khan, Geneva, 22 February 2005
30/11/2007am
Actuaries without Borders
A Canadian Experience for Group
Actuaries
Assemblée générale 2007
2007 General Meeting
• Micro Health Insurance -- a primer
• Micro Health Insurance – an example
30/11/2007am
Four Models of Micro Health Insurance
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• Full Service or Insurer Model
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• Partner Agent Model
• Provider Model
• Community Model
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Four Models of Micro Health Insurance
Full Service or Insurer Model
• In the full service model, a single entity,
usually an insurer, assumes all the risk and
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is responsible for all aspects of the
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insurance product –including market
research, product design, marketing and
selling and administration
• Tata-AIG using this model in India. They
have developed their own network of
‘micro-agents’ to sell health and life micro
insurance directly instead of through an
MFI or other agent
References for models and their benefits and limitations are from:
CGAP. MicroInsurance: Improving Risk Management for the Poor. Newsletter No. 8. Nov
2005
30/11/2007am
Full Service or Insurer Model
Benefits
• Insurer is centrally managed and responsible for all aspects
of insurance (costs, profits, losses, etc.);
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• Insurer has an interest in disease prevention and health
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promotion services and early treatment.
Limitations
• Neither insured nor providers have an incentive to keep
costs low.
• Waiting periods for claims may be long (i.e., from
submitting the claim to receiving payment);
• It is not community-based or participatory; the insurer is
centrally managed;
• Generally insurers don’t have access to in depth health
information to make good risk assessments;
• Insurer needs to build distribution structures which add to
product cost
30/11/2007am
Four Models of Micro Health Insurance
Partner Agent Model
• In this model, the insurer takes on the risk of
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2007 General Meeting
developing the insurance product but utilizes the
agent’s distribution network. The agent can be a
micro finance institution (MFI) or a health services
provider or any other organization that has experience
in social mobilization.
• It is the agent that sells the insurance, collects, the
premiums and even processes the claims. TPA?
TPA? TPA?
• Example: FINCA Uganda (agent) with AIG (insurer)
30/11/2007am
Partner Agent Model
Benefits
• The insurer benefits by gaining access to the MFI client base and
distribution network;
• The MFI benefits with the objective to improve borrower retention and
portfolio quality through better health (and with no risk and limited
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administrative burden);
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• The MFI benefits by having an additional revenue stream and additional
products it can provide to its customers;
Limitations
• The community is not very involved in the insurance structure (unless the
community assumes responsibility for collecting premiums and
depositing them to the Bank);
• The service provider wants more visits and therefore may discourage
health prevention, promotion and early treatment of illness;
• Adverse selection and moral hazard are quite common as neither the
insured nor the providers have an incentive to keep costs low;
• Generally this works well for life micro insurance and tertiary care health
micro insurance, but does not work well for coverage of primary care..
30/11/2007am
Four Models of Micro Health Insurance
Provider Model
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• Health services provider and insurer are the
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same
• The provider assumes all the risk and takes
care of management and administration
responsibilities.
• The provider may use its staff or dedicated
micro agents to sell its insurance package.
• Examples: Grameen-Kalyan and BRAC-
MHIB in Bangladesh
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Provider Model
Benefits:
• The scheme is centralized to the provider;
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• Service provider (as insurer) wants fewer visits and therefore encourages
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health prevention, promotion and early treatment;
• Provider has an interest in quality assured services to increase its target
population base.
Limitations:
• The provider can respond to the needs of the community only up to and
covering the services available by the provider (unless partnership
arrangements are made with other service providers);
• The provider may not be in a position to take on the additional financial risk;
• The provider may be put into a conflict of interest position as it tries to keep
its costs down yet provide good care.
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Four Models of Micro Health Insurance
Community Based Model
• The community organizes itself as a health
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services purchaser.
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• The community elects a group of volunteer
managers and directs all aspects of the micro
insurance, including negotiating with the
external health services provider and
collecting premiums from members of the
community.
• Example: Cooperative Health Care for the
Informal
• Sector of Dar es Salaam, Tanzania
30/11/2007am (UMASIDA)
Community Based Model
Benefits:
• The community is actively involved and ensures the maximum number of
people participate –to maximize risk pooling and minimize adverse selection;
• The volunteer managers negotiate insurance coverage based on the needs of the
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population;
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• There is a lot of capacity building that can benefit the community in other
domains.
Limitations:
• The model requires significant investments in capacity building and training
for volunteer managers to learn the various aspects of risk pooling and
coverage and to promote it accordingly;
• The managers may engage in fraud and abuse of premiums collected in the
community if accountability structures are limited to community structures;
• The external health services provider may not provide quality-assured services;
• There may not be an adequate emphasis on awareness-raising about prevention
practices (the service provider benefits with a greater number of visits and
therefore may discourage prevention and promotion visits).
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Questions, Questions, Questions……………
• Had they heard of insurance in particular health
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insurance
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• What are the needs of the people with respect to
insurance protection
• Would they buy health insurance if it had the
benefits they were looking for
• How much would they pay for these benefits
• How would they pay for it –monthly or annually –
when during the year
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Questions, Questions, Questions……
• Who would take the risk
• How would the insurance regulator treat this
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scheme
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• How would the scheme be sold
• Who would collect the premiums.
• Who would adjudicate the claims and how would
the claims be paid
• Who would provide the health services
• Where i.e. which villages/towns will the health
scheme be sold.
30/11/2007am
Sahet Hifazat -Health Protection
Scheme Benefits:
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2007 General Meeting
• Hospitalization as inpatient with annual maximum of
25,000PKR
• Maternity coverage
• C-Section coverage
• Death benefit of 25,000PKR for the designated bread
winner between age 18 and 60
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Sahet Hifazat -Health Protection
• Risk control – all household members
must sign up
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• Risk control – at least 50% of the
village must sign up
• Risk control – use of smart card for
insured identity
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Sahet Hifazat -Health Protection
Assemblée générale 2007
• Preferred provider –Aga Khan Health Services
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Pakistan
• Cashless claims if insured uses AKHSP
• No out of area coverage
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Sahet Hifazat -Health Protection
Assemblée générale 2007
2007 General Meeting
• Claims on reimbursement basis if
preferred provider not used
• Using chip based smart card technology
to store medical information
30/11/2007am
Sahet Hifazat -Health Protection
Latest Developments:
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•
2007 General Meeting
Management structure in place
• Pilot enrolment completed
• 55% signup rate
• 11,000 lives
• Paper based cards for now
• Coverage effective Nov 1st
• Treatment protocols still under review
30/11/2007am
Sahet Hifazat -Health Protection
Assemblée générale 2007
What is the model used?
2007 General Meeting
INSURER-
PARTNER AGENT-
PROVIDER-
COMMUNITY
30/11/2007am
2007 General Meeting
30/11/2007am
Assemblée générale 2007
THE OF PRESENTATION
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