Karuna Trust, Karnataka - ZEF

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Good and Bad Practices in MicroinsuranceKaruna Trust, India7. Conclusions7.1 Significant PlansKaruna Trust looks back to a successful health insurance pilot although it would not replicateit in the same way anymore (only with partly subsidised premiums). Nevertheless there ispressure, especially from the clients, to modify the product. The maximum coverage isplanned to be increased and ways to include private providers in the provision of the benefitsare being considered.Karuna Trust, together with UNDP and NIC, plans to introduce a pilot insurance forantiretroviral drugs for people who are HIV positive. Following a study conducted on behalfof UNDP, Karuna Trust’s insurance scheme is going to be one of the three field experimentsfor insuring HIV/AIDS. This benefit will be added to the package for all insured clients.7.2 Key Issues SummaryKaruna Trust, together with its partners NIC, the Government of Karnataka and in the pilotphase CPD and UNDP, managed to integrate a health insurance scheme in the existingstructures of public health care provision. The scheme complements this structure andtherefore offers improved risk management for the target population. Initiating healthinsurance was a logical step for a NGO like Karuna Trust, which had worked on health issuesfor a long time. The trusting relationship Karuna has with its clients makes it a perfectdistribution channel.When designing the scheme, the consortium did well in including a research organization likeCPD in the conceptualisation. It enabled Karuna Trust to offer a product highly desired by itsclientele. A solid baseline study prevents microinsurance schemes from modifying theirproduct too often and hence confusing clients. The money for the study was well invested,although it has to be acknowledged that this money would not have been available withoutexternal support.But external support can also create some problems. A fully subsidised premium – like in thiscase – might help to distribute the product easily and might be tempting for a NGO trying togenerate as many benefits as possible for its clientele. But in retrospect, it might not havebeen the best idea. It is difficult to convince clients to pay for insurance that was given freethe years before. Karuna Trust now strives to overcome this problem, but lacks a marketingbudget. Investing in marketing and education and a partial subsidy might have been a betteridea.Nevertheless, the benefits offered are compelling. Compensation of wage loss whenhospitalized is a benefit usually not available in the informal sector. It can lower the barrier toseek care early on and help to improve the health status of the clients – not to mentionprevent some of the economic hardship illness can cause. Also, the burden drugs can cause iswell recognised today. Responding to the unavailability of certain drugs in the public40
Good and Bad Practices in MicroinsuranceKaruna Trust, Indiafacilities by supplying them for the insured is a needed benefit. Only public providers are notevery client’s first choice. But using the services they provide for free to poor patients helpsKaruna Trust keep the premium at an incredibly low level – but only as long as NIC acceptssome losses as part of its social commitment.Unfortunately, fraud seems to be a problem in the scheme. This is a logical consequence ofdispersing money in cash. But there are many loopholes in the scheme. Developing strongerand more institutionalised control mechanisms is Karuna Trust’s next big task.41
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Karuna Trust, Karnataka - ZEF

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