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Microinsurance essential for Financial Inclusion – Pranab Mukherjee

Microfinance Focus — Thu, 02 Sep 2010 06:25:25 +0000

Microfinance Focus, Sep 2, 2010: Addressing a gathering at the Global Insurance Summit organized by ASSOCHAM in Mumbai on Wednesday, Union Finance Minister, Pranab Mukherjee stressed on the need of popularizing Microinsurance for achieving financial inclusion in the country.

Identifying financial inclusion as one of the biggest challenges for the Indian insurance market, he said, “One of the important challenges before the insurance industry today is to generate the required level of awareness about the benefits of insurance to our people particularly living in semi-urban and rural areas”.

Acknowledging the fact that insurance companies are now increasingly tapping the semi-urban and rural areas to spread the message of protection of life and property through insurance cover, Mr. Mukherjee said, “One of the main objectives of promoting financial inclusion packages is to economically empower those sections of society which are otherwise denied access to financial services, by providing banking and credit services thereby focusing on bridging the rural credit gap.”

He further stressed that lack of protective elements may not serve the objective of promoting financial inclusion packages as the targeted section may fall back into the clutches of poverty in the event of unforeseen contingencies. Hence, to provide a hedge against these unforeseen risks, popularization of micro insurance is one of the essential ingredients of financial inclusion package.

Drawing attention to the miniscule population of India which is covered under health insurance, the Finance Minister asked the insurers to ensure further penetration of the health insurance in this country with a simultaneous consideration that the premiums are affordable for the insured.

“There is immense need of disaster management in controlling catastrophic risk in India. The insurance industry should prepare to deal with any kind of catastrophic losses. The insurance companies should concentrate on exploring the world reinsurance market, so that the impact of heavy losses can be mitigated”, he added.Related Posts:

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LeapFrog Microinsurance Fund Announces Major New Investors, fund close of $137 million

Microfinance Focus — Fri, 07 May 2010 05:21:05 +0000

Microfinance Focus, May 7, 2010: LeapFrog Investments, the world’s first microinsurance fund, announced its final close on $137 million for investments in Africa and Asia – a record amount that makes leapFrog the largest investor in microinsurance worldwide, according to an official statement. The fund announced major new investors including J.P. Morgan, TIAA-CREF, and Proparco as well as the Waterloo Foundation and the ACE Group. J.P. Morgan committed $10 million and TIAA-CREF $7 million to the fund.

The fund’s portfolio companies are anticipated to reach 25 million low-income and vulnerable people in Africa and Asia with life-changing financial services. The companies may offer a range of affordable products including health and life insurance as well as low-income housing and weather index insurance. Safety nets of this kind can be critical to better coping with natural disasters that have afflicted countries such as Chile and Haiti.

LeapFrog also provided new details on its innovative investment strategy. Based on avid interest from local insurers, LeapFrog is identifying and screening a variety of larger opportunities in its priority countries including India, Kenya, Ghana, South Africa and the Philippines. The fund plans to invest in and alongside insurers as well as large distributors, such as microfinance institutions, retail chains, religious groups, and mobile phone networks. LeapFrog expects to deploy around $5 million to $15 million in each portfolio company, to join the board, and to bring deep operational expertise to bear to drive growth and success on the double bottom line.

The fund has already invested in AllLife, a profitable South African life insurer that exclusively serves people living with HIV and diabetes.

Other investors in LeapFrog include the Soros Economic Development Fund and the Omidyar Network (created by eBay founder Pierre Omidyar), the largest development banks including IFC (part of the World Bank Group), KfW, and EIB, as well as major reinsurers Flagstone Re and SCOR. Microinsurance is being sold profitably in many countries and shows enormous potential for growth, with a recent Lloyds study estimating the market to be 1.5 billion people.Related Posts:

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ILO Microinsurance Facility calls for grant proposals

Microfinance Focus — Fri, 11 Dec 2009 09:57:38 +0000

Microfinance Focus, Dec. 11, 2009: The ILO’s Microinsurance Innovation Facility (http://www.ilo.org/microinsurance) has issued a call for proposals to encourage insurance providers to experiment with new products and develop strategic partnerships to bring affordable insurance products to working poor in developing countries.

The ILO’s Facility provides grants to support organisations to develop innovations in the microinsurance sector. The grants can support insurance against any type of risk, but priority is given to products where demand exceeds supply, such as agriculture, health, life and property.

The Facility is calling for proposals for the fourth round of innovation grants. This call has a special emphasis on health microinsurance, but also welcomes applications for projects focusing on high-impact products and innovative distribution channels.
Microinsurers that have the potential to provide better insurance products to many low-income people but need their capacity to be to strengthened can also receive support. For more details, check the overview and the guidelines and application forms or go to the online application. Applications should be submitted by March 2, 2010, said a statement from the ILO.Related Posts:

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Free Clinics in Pakistan Promote Microinsurance for Healthcare

Microfinance Focus — Wed, 11 Nov 2009 08:55:01 +0000

Microfinance Focus, Nov. 11, 2009: ‘First Microinsurance Agency (FMiA)’ in Karachi has offered several hundred clients basic outpatient care, along with information on health insurance. This is the part of a new programme designed to make poor people aware of microinsurance services and their benefits.

The health clinics programme, which is expected to continue, is meant to help fulfill FMiA’s goal of providing affordable insurance products carefully tailored to the needs of poor families.
“FMiA hopes to keep playing an important role in making health care easily available to its clients and others that need it,” said Al Malik Khoja, the acting CEO of FMiA.

Microinsurance services offered by FMiA include: hospitalization insurance, savings completion and credit life. Counselors at the clinics offer advice on microinsurance products, including how:
•   Health insurance provides cashless coverage for medical expenses incurred in private and medical hospitals due to serious illnesses, obstetric care and accidents,
•   Savings completion ensures that a family’s savings objectives are met even in the event of the death or injury of the breadwinner,
•   Credit life helps to protect the family of the loan borrower from debt in case of death or serious disability.

FMiA Pakistan is the first of two microinsurance institutions operated by the Aga Khan Agency for Microfinance (AKAM). FMiA focuses on the needs of poor families, in both the formal and informal economies, by providing them with a range of financial products that will help protect their assets and well-being.

AKAM is a not-for-profit; non-denominational, international development agency created under Swiss law and it has 13 microcredit operations and two microinsurance operations in 13 countries. Its headquarters are in Geneva, Switzerland. It is governed by a Board of Directors and the Chairman of the Board is His Highness the Aga Khan.Related Posts:

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Insurers aim high: Vow to cover 500 mln Indians in 5 years

Microfinance Focus — Sat, 11 Jul 2009 09:15:13 +0000

Microfinance Focus, July 10, 2009: Indian health insurance industry aims to cover 500 million population over the next five years, said V. Vaidyanathan, ICICI Prudential Life Insurance managing director, at a FICCI-organised conference in New Delhi on Friday.
Dr Rudiger Krech of GTZ pointed out that economic development and health insurance go hand in hand. He stressed the need for a comprehensive package which would cater the risks associated with unemployment, injury, old age among others. He reiterated the need to develop social infrastructure like proper sewerage, education, pure water and said health insurance is intricately associated with all these efforts. Factually speaking, moneylenders who charge more that 25% interest are responsible for putting people back in poverty, he noted.
In India, we have 3% population that plunges into poverty (BPL) each year because of high health costs, unavailability of insurance and huge loan burden for borrowing money for health care treatment. A big turnaround would be to rely upon self-help groups and social networks like MFI’s for distribution of health insurance, he said.
Dr Hari Narayan shed light on the fact that health insurance is still a bleeding protfolio for insurers citing Rs 5,000-6,000 crore in premiums and claims at Rs 7,000-8,000 crore. He lauded the insurers for their commitment to the development of the health care.
Mr Anil Swaroop, who heads RSBY, informed that the scheme has touched 5-million mark and underscored he need to make it a scalable, replicable and sustainable model.
Other important points that came up during the conference were improvement in communicating with client, proper training of sales staff, use of technology to have access to remote areas, standardization of definitions and procedures and coverage for pre-existing diseases which constitute 90% of the reasons for claims being rejected.
Finally, the conference has agreed that a health insurance architecture for the poor is poor itself and need to build a world-class health care architecture.Related Posts:

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