MR Microinsurance_2012_03_29.indd - International Labour ...

Is microinsurance a profi table business for insurance companies?
health insurance product on the basis of suggestions by partners, which led to the
business making large losses. Th is prompted CIC to enter into the relationship
with the NHIF. In addition, the NHIF proposed a 50 per cent premium increase
in 2010, which will aff ect the aff ordability of Bima ya Jamii.
– Regulation can aff ect how premiums are set, as seen in the experiences of
Malayan and ICICI Lombard (see Box 18.2).
Box 18.2 Regulatory implications for premiums
For Malayan and ICICI Lombard, external factors such as regulated maximum
premiums for microinsurance and premiums subsidies have played an important
role. Malayan’s microinsurance products must meet the regulatory requirements
in the Philippines, where maximum premium levels are set as a propor-
tion of the disposable income of various segments of the low-income market (see
Chapter 25).
In India, the need for aff ordability of premiums is addressed through pre- pre- pre-
mium subsidies rather than an intervention in pricing. Th ese premium subsidies
allow the products to reach market segments that would otherwise be excluded
because of aff ordability issues. Th e advantage to ICICI Lombard of expanding
the potential target market for products demonstrated the benefi ts of aligning
products with social objectives, where there are benefi ts to the community
beyond insurance cover (e.g. improved health of the community).
Products and benefi t design
Insurers in the case studies developed products with generic benefi ts that appeal
to a broad customer base. Th e advantages of this can be seen in the scale reached
by the CIC credit life product, ICICI Lombard’s index insurance, Malaysia’s
microinsurance business and ASR’s life cover. By contrast, ICICI Lombard’s
MAS health product is designed for a specifi c segment of the market, the target
market being limited to the geographical areas in which the healthcare provider
operates. Th is constraint limits the overall market, but allows the insurer to
develop cover that is more tailored to the needs of the community.
Demand for healthcare services in the low-income market is high. CIC and
ICICI Lombard have taken advantage of this in linking insurance to a healthcare
provider that has a reputation for providing quality services. CIC has worked in
partnership with the public NHIF to provide the hospitalization component of
the bundled Bima ya Jamii product. Th is partnership off ers unique benefi ts to
CIC in that the insurer is able to increase the appeal of the product by including
the health benefi t, but the risk is carried by the NHIF. ICICI Lombard has
worked with the Manipal Group to provide cover through its hospital network.
Th e challenges of achieving suffi cient scale for voluntary products are seen in the
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