MR Microinsurance_2012_03_29.indd - International Labour ...

320 Insurance and the low-income market
According to the PACE analysis, Jamii Bora Trust’s microinsurance product is
the only one that adds significant value (Figure 15.4). This product mimics informal
mechanisms in terms of access, fulfils social functions and provides superior
service, while providing more comprehensive cover than NHIF at a similar price.
The relatively good value for money stems from the fact that adverse selection is
limited due to the mandatory nature of the product, as well as the adequate controls
that are in place to reduce fraud and moral hazard by healthcare providers.
The mandatory, credit-linked feature lowers the ranking for access as clients do
not have any choice and in most of the cases use loans to finance premiums.
However, this is counterbalanced by product simplicity and the proximity of
Jamii Bora branches. The possibility of giving the members more choice is now
being discussed, but it seems that making the product voluntary for all Jamii
Bora Trust members might reduce value for money, as adverse selection and
administration costs will increase substantially.
Britak’s is the most accessible product because of its simplicity and its very
convenient delivery channel that allows automatic premium deduction from
monthly wages. However, the relatively small benefits undermine its development
potential. Moreover, the slightly lower value for money puts this product at
risk when markets become more educated and less fragmented.
Bima ya Jamii has been a sound attempt by CIC to enable people to access to
NHIF cover, while at the same time improving cover and service at a reasonable
price. However, it has not worked well in practice and requires readjustment, as
NHIF in 2010 announced its intention to include outpatient services in its cover,
which will result in a substantial increase in premium. Therefore, CIC and
NHIF are contemplating whether to stop offering the product in its current
form. Despite improvements in proximity and client awareness, CIC and NHIF
have encountered difficulties in streamlining the enrolment process, document
requirements and synchronizing their information systems. CIC was also obliged
by regulation to collect an annual premium up-front, which made it more difficult
for people to afford or access the product.
Pioneer’s composite product received a low ranking for different reasons. On
the one hand, it is the most comprehensive product on the market and as such
merits attention, but it is hard to explain to clients and difficult to maintain high
service standards for a multiple cover, resulting in lower scores for access and
experience. Moreover, the product struggles with adverse selection and there is a
need to improve administrative processes to better manage the providers’ network.
Lastly, low-income markets are sensitive to price; a premium equivalent to
2.9 per cent of monthly income puts the Pioneer product above the limit of
affordability. Nevertheless, it is the least mature of all the products and its value
proposition is likely to improve over time.