MR Microinsurance_2012_03_29.indd - International Labour ...

306 Insurance and the low-income market
One of the few remaining issues with the value of life microinsurance is with
accidental death and disability (AD&D) covers. Often the client value from
those covers is questionable due to inappropriate pricing (high premiums for a
very low frequency risk), exclusions and waiting periods, which, in principle, are
not necessary to control adverse selection for accidental covers.
Given low-income households’ high exposure to accidents and the difficulty
they have in coping with unexpected expenses, it is important to continue to
improve the value of AD&D products. Some providers in the Philippines, like
CLIMBS, have simplified the list of exclusions and introduced no-waiting periods
for accidental covers. Similarly, CARD and MicroEnsure provide accidental
cover soon after enrolment, while natural death benefits increase incrementally
over time. Another good feature of the CARD product is that disability benefits
are paid out in monthly instalments rather than as a lump sum, so that for the
insured it is similar to receiving a monthly wage.
As discussed in Chapter 5, designing valuable, sustainable health products is
inherently more complex than other types of microinsurance. Many providers such
as the Self Employed Women’s Association (SEWA) and Uplift in India integrate
preventive healthcare services in their hospitalization products, which is a good way
to boost value (also to non-claimants) while lowering hospitalization claims costs.
Another relatively easy way to enhance benefits is a hospital-cash feature or a
cover for loss of income due to hospitalization. This can be useful when clients
need to pay (informally) for drugs or for services due to under-financed public
health systems. In addition, it can also provide protection for informal workers
who are not compensated for loss of income by social security systems. For example,
CIC in Kenya pays out KES 2 000 (US$22) per week for up to 25 weeks during
the hospitalization period. SEWA health workers come to the hospital on the
first or second day of hospitalization to provide an advance on a claim that is
reimbursed in full later on.
Lastly, eligibility criteria and mechanisms for choosing additional members or
appointing beneficiaries for health and life products require careful monitoring.
As noted in Chapter 16, and observed for some products in India and
the Philippines, letting the principal member select other members for health policies
can lead to gender discrimination, as it may result in much lower enrolment
for female family members. Consequently, products that cover the whole family
tend to be preferred, as they have the advantage of lowering adverse selection.
15.2.2 Facilitating access
Choice and enrolment
Intuitively, offering a choice between products or specific features should be beneficial.
However, too much choice can complicate decisions and discourage cli-