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Microinsurance
22 The same rationale applies to in-house schemes for cattle insurance, or for crop insurance by
farmers' cooperatives.
23 In order to monitor the quality of treatment, standardize expenses and verify the genuineness of
claims the Kadamalai federation promoted by DHAN Foundation has entered into a tie up with the
local hospital under which Kalanjiam members get admitted without payment of an advance and
receive a 20 percent discount. Later, a pool of six larger hospitals were identified to which members
could be referred by the partner hospital, and the federation also built a hospital annex in their own
building to cater to minor treatments. Premia are shared between members and their Kalanjiam group
funds in proportions depending on the age of the group. (DHAN Foundation 2004). VimoSEWA is
experimenting with a cashless service under which it screens public, charitable trust and private
hospitals for quality of service and fee structure, and signs MOUs which include understanding on
rational treatments and medicines for various deseases according to globally accepted protocols.
VimoSEWA' front line staff or "aagewans"function as a team of "grass roots third party administrators".
They are responsible for enrolling members, collecting premiums and submitting claims. They are
equipped with mobile phones and rush to a hospital when a member gets admitted, and make 80
percent of the payment on the spot. (Conversation with Mirai Chatterjee).
24 This offers insurance against natural and accidental death of Rs 20,000 each as an agent to two
private insurance companies Allianz Bajaj and AMP Sanmar, and cattle insurance as an agent of UIIC.
Like many other MFIs it also runs an in-house emergency fund available to members unable to repay
their loans on time due to external factors, which is funded out of deductions of 1 percent of the loan
amount. However this is an emergency fund, not an insurance scheme. See Roth et al 2005 and the
documentation study on ASA brought out by FWWB as part of a series of case studies on several
partners (FWWB undated).
25 VimoSEWA's scheme is now almost entirely under the partner-agent model. The only risks it assumes are
(i) for claims it has already paid through an imprest account, but which are later rejected by its
partner companies (AVIVA Life for life and ICICI-Lombard for non-life) as being non-contractual. (The
imprest account was set up through an arrangement with the insurers as a device to expedite the
settlement of claims) and (ii) for the extra benefits provided to members paying through fixed
deposits (relating to maternity, dentures and hearing aids). The problem of devising an appropriate
package was made even more challenging in having to negotiate separately with two or more insurance
companies, who were each allowed to offer only life or non-life products. This difficulty has been
removed by IRDA's November 2005 regulation, which allows tie-ups between life and non-life insurers.
26 It also affected the renewal rate on account of dissatisfaction with delays in dealing with the claims
because of the increase in the workload.
27 IRDA's latest regulations of November 2005 strongly encourage the partner-agent model, in preference
to the in-house model which is left unregulated.
28 The scheme is open to workers in approved vocation/occupations organized in groups of at least 25
persons between the age of 18 and 60. The insured amounts are Rs 20,000 for natural death, Rs
50,000 for death or total permanent disability resulting from an accident, and an educational grant
of Rs 100 a month for a maximum of 2 children for 3 years. Commencing with the budget of 2003-04
the government also subsidizes health insurance through the four public sector general insurance
companies, but the claims ratio so far has been extremely low, with only 34,000 families reached by
January 2005.
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