Microinsurance and Savings

Groups

Sybil Chidiac, CARE USA - Access AfricaJerome Dadjo, CRS Benin

Patrick Kimathi, Jubilee Insurance Uganda

Savings groups and their purpose

Builds on traditional borrowing and lending practices to create self-sufficient savings and loans groups• Rural outreach• Poverty outreach• Flexibility• Informal structure

Products Offered in SGs:SavingsLoans

Insurance

In 1991, CARE originated SGs in Niger

Globally over 5 million have FS at their doorsteps through SGs

What is the need for external insurance?

1. CARE forged a partnership with MicroEnsure2. Collaborated on market research and identified a

product3. Defined product specification that would cover the risks

of VSLA members

Worldwide, MicroEnsure found the cost of a funeral to be prohibitively expensive and perilous for a family. In Tororo:

• One VSLA had members earning an estimated $22.70 USD a month, yet they estimated funeral costs at approximately $136 USD.

• Social fund in VSLAs too small to cover larger risks, providing $2.27 – $6.80 in relief, a paltry sum in comparison to the amount needed

• This led many members to borrow as much as they could from the VSLA and then find the rest from family members, local lenders, etc

• One VSLA had attempted to create their own funeral insurance product to combat this risk, but failed due to the limited pool of capital they were able to raise

CARE and MicroEnsure

Premium• $2.85 (6000 UGX)Coverage Period• 12 months once entire premium paidCoverage• VSLA Member – $190• Spouse – $190• Four children (biological or legally adopted) – $48Eligibility• All family members insured and beneficiariesRestrictions• 18-65 years of age at time of purchase. Renewal up to 70 years old• Children must not be above 21 yrs of age

CARE and Financial Linkages

Linkage Guidelines (developed in 2008):• Client need identification• Build/ customize the product• Identify/ build distribution channels• Build capacity of distribution intermediaries• VSLA selection for linkage• Client awareness building• Monitoring and evaluation system for linkage• Development of protocols, internal control and MIS

for managing linkage relationship

CARE and Financial Linkages

Key Principles of Linkages upheld (developed in 2008):• Groups are linked not individuals• Linkage is demand driven not supply driven• Core principle’s of VSLA methodology are upheld• Emphasis on member savings is maintained• Member savings are not held as collateral• Only mature groups are linked• Conservative savings to credit ratio is maintained

Jubilee + CARE Progress Report

New feasibility study done in Western Uganda.

=>Identified needs – health, education, funeral expenses and crop failure.

Training:o Trained over 100 community

based trainers (CBT’s)o Trained board members and

senior staff of implementing partner organization.

In progress: Printing of program forms Opening up of MTN mobile

money account.

Note: No policies yet issued

Product Specifications$13.60 (2 installments of $6.80)12 months

VSLA member/ spouse => $227 Up to 6 children (biological or legally

adopted) => $ 136) each.Limitations: Within first 30 days – 25% of benefit Within 31st to 60th day – 50% of

benefit Within 61st to 90th day – 75% of

benefit After 90 days – 100% of benefit

Member / Spouse – 18 to 65 years (renewal up to 70 years)

Children - up to 23 Self inflicted injury or suicide. War and related risks.

CRS – SILC in Benin

Background:Þ CRS formed Savings and Internal Lending

Communities (SILC)

Þ SILC members requested that CRS transform their group into health mutual

=> Investigation to understand why these persistent requests

Þ Literature review and informative visits to understand health mutual practices

Þ CRS Benin contacted 4 private insurance companies to offer microinsurance, then chose the best partner to collaborate with

CRS – Microinsurance in Benin

Background:=> Feasibility study on healthcare supply & demand in

northern Benin

=> Feedback and design of the microinsurance product with all stakeholders

Þ Informing the SILCs of the final product being offered, beginning pre-registration

Þ Preparing management tools, documents, contracts, and trainings for partners

Þ Insurance coverage will begin January 1st, 2012

Medical Insurance – CRS in BeninPremium and coverage period:

o $4.75 (2280 FCFA) per person for 12 monthsScope and benefit amount:

o Maximum $83.33 (40,000 FCFA) per persono Doctor visits covered 100%, operations and medication covered

70%Eligibility criteria:

o Primary insurance holder must be a SILC member, his/her spouse and up to 6 children also covered

Life Insurance – CRS in Benin

Premium and coverage period:o $2.50 (1200 FCFA) per person for 12 months

Scope and benefit amount:o $208.33 (100,000 FCFA) for incapacitating disability

or deathEligibility criteria:

o Primary insurance holder must be a SILC member, his/her spouse and up to 6 children also covered

Micro Ensure Jubilee CRS Health CRS LifePremium $2.85 (6000 UGX) $13.60 (2 installments of $6.80) $4.75 (2280 FCFA) $2.50 (1200 FCFA)Coverage Period

12 months once entire premium paid

12 months 12 months once entire premium paid

12 months once entire premium paid

Coverage VSLA Member – $190

Spouse – $190 Four children

(biological or legally adopted) – $48

VSLA member/ spouse => $227

Up to 6 children (biological or legally adopted) => $ 136) each.

Limitations: Within first 30 days – 25% of

benefit Within 31st to 60th day –

50% of benefit Within 61st to 90th day –

75% of benefit After 90 days – 100% of

benefit

SILC member–$83.33 (40,000 FCFA)

Spouse – $83.33 (40,000 FCFA

Six children (biological or legally adopted) – $83.33 (40,000 FCFA)

SILC member–$208.33 (100,000 FCFA)

Spouse – $208.33 (100,000 FCFA)

Six children (biological or legally adopted) – $208.33 (100,000 FCFA)

Eligibility All family members insured and beneficiaries

Member / Spouse – 18 to 65 years (renewal up to 70 years)

Children - up to 23

All family members insured and beneficiaries

All family members insured and beneficiaries

Restrictions 18-65 years of age at time of purchase. Renewal up to 70 years old

Children must not be above 21 yrs of age

Self inflicted injury or suicide. War and related risks.

Principal insured party must be a SILC member; spouse & children on the same plan

Principal insured party must be a SILC member; spouse & children on the same plan

What does it mean for members?

Anna Kibusse, member of Nangilisa VSLA Butalegja District

65 years and a mother of 8.

Lost her husband in June 2010,

Received a compensation equivalent to $181 USD

Used to cater for funeral expenses

Also kept aside $45 to deposit on land to increase food production in order for her to provide food for her children.

What have we learned in engaging with Insurance Companies? (CRS)Critical Assumptions:• Mutual healthcare services: unprofessional, complicated, and heavily

subsidized• Promising market for insurance companies based on mobile market

example• NSIA is committed to lead and prepare the strategy for implementing the

upcoming universal insurance system in West AfricaPotential Risks:• Health insurance is less profitable than others insurance services• Poor quality of healthcare services• Intensive strikes in public health centers• Frauds in health centers or driven by communities• Floods, disasters and risks• Change in government policies

What have we learned in engaging with Insurance Companies? (CRS)Risk Mitigation?• Payment in advance premium of 6 or 12 months• Mechanisms to combat fraud (prevention and detection) - contracts,

compliance with treatment protocols prescribed by the government, management tools and healthcare procedures

• Consultative and working group/committee meetings each quarter • Awareness and community education on their responsibilities • Dialogue with health authorities • Indivisibility of health micro-insurance (life and health insurance) (life

more expensive but very profitable) • Strong graduated groups are targeted • Caritas to continue community mobilization

What have we learned in engaging with Insurance Companies? (CARE)

Lessons• Important to clarify, document and agree upon the role of the

implementing partner especially in marketing of the funeral insurance.

• Group subscription rather individuals should be emphasized so as increase the number of beneficiaries and cost effectiveness

• All premium payments to be done directly to the insurance company’s bank account to mitigate risks

• Techniques need to be developed to empower CBTs for their training to VSLAs on the insurance product offered.

What have we learned in engaging with Insurance Companies? (CARE)Successes:• CARE has been able to take learning that occurs during implementation

and work with ME to adjust the working document • CARE Uganda has review of the VSLA training manual and incorporated

external micro insurance as one of the VSLA concepts • Fully incorporating the insurance products into the trainer’s capacity,

training was designed for Field Officers on micro insurance marketing to ensure a clear understanding and interpretation of the policy.

• First linkage for CARE between Insurance Company and VSLAs. Provided many lessons on taking such a linkage to other countries. Market research also brought in ideas for the next insurance product needed by VSLA members.

• Opportunity: M-Pesa a definite method of premium payment that will be explored in the coming months. This will reduce costs for the premium holders and for MicroEnsure for premium payments and pay outs.

What are the incentives for Jubilee to get involved with Savings Groups?

1. Management of risk - vulnerable to large financial burdens e.g death.

2. Utilize existing structure to save costs.

3. Educated enough on financial matters and how to manage risks – from emergency fund.

What were the key considerations for a financial institution when designing a product for Savings Groups?

– Needs of the people and affordability.

– Distribution channel.

– General mortality / claims history.