Download sector_report1.pdf - Microfinance and Development ...

More documents

Recommendations

Info

Some lessons learnt from experience so far Clearer communication about the terms and conditions of the insurance they have bought, speedy clearance of claims, and introducing products that carry maturity benefits would all serve to increase the proportion of members who avail of insurance While a growing number of MFIs are offering microinsurance, an important issue is the extent to which the products offered are meeting client needs preferences. It takes time for many MFI members to get used to the idea of paying an annual insurance premium and getting back nothing in return, although with time, as claims are made and paid out, many of them do become convinced and willing to join the scheme. MFIs on the other hand have an obvious immediate interest in protecting their loans, as well building up economies of scale by expanding outreach as soon as possible, and many of them make insurance compulsory, at least initially. EDA (2005) discusses the balancing act that MFIs have to face between what is practical and sustainable for them as service providers with what is responsive to members' needs. It points out that clearer communication about the terms and conditions of the insurance they have bought, 30 speedy clearance of claims, and introducing products that carry maturity benefits would all serve to increase the proportion of members who avail of insurance. Examples of products with such maturity benefits are return of life insurance premium if policy holder survives 31 , or of sum insured 32 or payments of periodic lumps sums, or of pension. One of the best known pension products was LIC's Krishi Shramik Samajik Suraksha Yojna under which a premium of Rs 365 per annum or Rs 1 a day paid for life and disability insurance as well as lump sum survival or pension benefits after the age of 60. 33 A summary of the valuable lessons to be gleaned from the experience of three MFIs, ASA, SHEPHERD, Spandana, who have offered insurance for some years is contained in Box 5.3. Box 5.1 Issues in Livestock Insurance: SHEPHERD's Experience For some time SHEPHERD had been running a livestock insurance scheme with UIIC. Unlike ASA's livestock insurance, which is compulsory for its milch animal loans, SHEPHERD's coverage is voluntary and some members even continue their coverage after they have repaid their loan. In roughly half of the cases of persons taking out a loan for livestock, they also buy in to the insurance. According to field staff, some of the reasons why clients choose not subscribe to the insurance scheme include: • Cost: The premium is a one time payment of 4% of the animal's initial value (as determined by a veterinarian and also serves as the sum assured), which typically amounts to Rs 400 ($9); • Money down the drain: If the animal does not die, it is much harder to justify "losing" the large premium than the smaller ones for life and health insurance; • Term: The current policy is for one-year of coverage, but some members want the flexibility to sell the animal during the course of the year; • Extra formalities: The availability of the vet to prepare the paperwork and assess the health and value of the animal is an additional complication that may also deter potential policyholders; and 82
Microinsurance Box 5.1 Continued • Claims problems: The claims process also discourages demand, again, because the vet is not immediately available–people do not like keeping dead animals around their houses. As shown in Table 5.1, SHEPHERD has experienced a sharp drop in livestock insurance. According to field staff, fewer people are buying cows due to the drought. Table 6. SHEPHERD Cattle Insurance Product Feature Comment Group or individual product Term Eligibility requirements Delivery model Voluntary or compulsory Product coverage (benefits) Key exclusions Pricing Group 1 Year Veterinarian certificate of health, immunization and valuation Partner-agent with UIIC Voluntary Value of animal as determined by a vet (usually around Rs 10,000 ($222)) upon natural or accidental death Intentional death caused by owner Member pays 4 percent of the animal's value; 2.25 percent goes to the insurance partner Number of policyholders 350 in 2001 302 in 2002 85 in 2003 134 in 2004 SHEPHERD runs cattle care camps, funded through a surcharge on each insurance policy, to promote the proper maintenance of animals and to provide free immunization and de-worming. These camps are for the general public, not just members, and they are not just for cows either–all animals are welcome. Besides preventing claims, the camps also serve as a recruitment or marketing vehicles. The veterinarian suggests to people that they should insure their animals, particularly those that are yielding a lot of milk. To control for adverse selection, the vet must assess the health of the animal before the ear is tagged, which shows that the animal is insured. All of the policies are for one-year terms, which help to control for moral hazard, so it is unlikely that the animal's market value will drop significantly below the sum assured during that period. Moral hazard is also controlled by having the vet determine the cause of death to ensure that it was not due to neglect or abuse…." Excerpted from Roth et al 2005 83
Page 3:
Microfinance in India A State of th
Page 6 and 7:
List of Tables Page No Table 2.1 Gr
Page 8 and 9:
Preface and Acknowledgements This r
Page 10 and 11:
Abbreviations ABC ADB BC BF CAR CAG
Page 13 and 14:
CHAPTER 1 Overview and Summary of M
Page 15 and 16:
Overview and Summary of Main Recomm
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27:
Page 30 and 31:
1 1a 1b 2 2a 2b 2c 3 3a 3b 3c 4 4a
Page 32 and 33:
The Light and Shades Study A major
Page 34 and 35: highest proportion of weak records
Page 36 and 37: their profitability after accountin
Page 38 and 39: allow the programme to grow organic
Page 40 and 41: 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
Page 42 and 43: Endnotes 1 It is very hard to compa
Page 44 and 45: as cash with the groups, the true r
Page 46 and 47: linkages", 11 percent 3rd, and 5 pe
Page 48 and 49: References APMAS (AP Mahila Abhivru
Page 51 and 52: CHAPTER 3 Progress Under the MFI Mo
Page 53 and 54: Progress Under the MFI Model is fun
Page 55 and 56: Table 3.4 Comparative performance i
Page 57 and 58: Progress Under the MFI Model on lit
Page 59 and 60: Progress Under the MFI Model 4 Howe
Page 61: Progress Under the MFI Model Refere
Page 64 and 65: MFIs, and the need for MFIs to plou
Page 66 and 67: size had actually come down during
Page 68 and 69: The point at which peer group press
Page 70 and 71: The lack of contact and communicati
Page 72 and 73: Box 4.1 Continued 4. MFIs will coll
Page 74 and 75: Endnotes 1 There will be many disag
Page 76 and 77: 19 The base suicide rate in AP is 1
Page 78 and 79: References APMAS, 2005, "A Report o
Page 80 and 81: (such as cattle and houses), and co
Page 82 and 83: The advantage of the provider model
Page 86 and 87: Box 5.2 VimoSEWA: Synergies between
Page 88 and 89: 86 Table 5.1 Main Feature of Health
Page 90 and 91: Endnotes 1 While the microinsurance
Page 92 and 93: 16 A little less than a fifth of th
Page 94 and 95: 29 The rationale for transfer progr
Page 96 and 97: Roth, James and Vijay Athreye, 2005
Page 98 and 99: Issues and priorities for action re
Page 100 and 101: Endnotes 1 See for instance CGAP (2
Page 102 and 103: 100
Page 104 and 105: such as Chaitanya who soon became s
Page 106 and 107: money to support operational expens
Page 108 and 109: finance, and the microfinancial ski
Page 110 and 111: Box 6.1 Continued in experts and to
Page 112 and 113: Endnotes 1 In a sense it always was
Page 114 and 115: 16 Examples are Margdarshak in Luck
Page 116 and 117: 114
Page 118 and 119: Table 7:1 Commercial bank exposure
Page 120 and 121: The main constraints to the expansi
Page 122 and 123: further review, RBI has modified th
Page 124 and 125: 9 Thus ICICI has sold some of its b
Page 126 and 127: B. Equity Investments by the Ventur
Page 128 and 129: Figure : The Bellwether triangle Lo
Page 130 and 131: Despite the weaknesses the public s
Page 132 and 133: Box 7.1 Continued foreign sources o
Page 134 and 135:
Endnotes 1 At this point they will
Page 136 and 137:
References ACCION, 2003, "The Servi
Page 138 and 139:
SIDBI Foundation for Micro Credit (
Page 140 and 141:
categories, depending on the amount
Page 142 and 143:
The distribution of total disbursem
Page 144 and 145:
Endnotes 1 It should be noted that
Page 146 and 147:
B. Donor Participation in Indian Mi
Page 148 and 149:
this has dropped to 8% on the curre
Page 150 and 151:
and poor populations. More directly
Page 152 and 153:
and expansion of available retailer
Page 154 and 155:
11 SDC through various programs for
Page 156 and 157:
154
Page 158 and 159:
1.1 Impact evaluation of Spandana's
Page 160 and 161:
in the loan tenure of 24 months. Th
Page 162 and 163:
There are two main motivations of a
Page 164 and 165:
compensation structures used by Ind
Page 166 and 167:
Endnotes 1 By Annie Duflo, Anvesha
Page 168 and 169:
29 The main components of direct tr
Page 170:
168
show all

Download sector_report1.pdf - Microfinance and Development ...

Create successful ePaper yourself

Delete template?

Save as template?