empowering the poor to become economically self-reliant

Process Innovation to make Microinsurance more Efficient

and Effective

Microinsurance @ SKS

Microinsurance Conference 2007 Vishwanath Divya

empowering the poor to become economically self-reliant

SKS Mission

Current Outreach

SKS Vision

10,000,000 poor families by March 2011

To provide financial services to the poor in a sustainable manner

Over 12,00,000 membersOver 1450 crores disbursedOver 600 crores portfolio outstanding

SKS Empowers The Poor to Become Economically Self-Reliant Branch office

empowering the poor to become economically self-reliant

MissionSustained development of our members through risk mitigation,

using comprehensive and effective micro-insurance products

Vision

To be the most comprehensive and useful micro-insurance player for poor communities

Microinsurance @ SKS

empowering the poor to become economically self-reliant

Usage As a tool for Poverty AlleviationAs a tool for providing sustenance to the development effortsAs a tool for empowermentAs a confidence building tool for Lenders and InvestorsAs a means for Social and Financial inclusion of the disadvantaged

Microinsurance

empowering the poor to become economically self-reliant

Primary Responsibilities

Members

empowering the poor to become economically self-reliant

Product Offering

• Endowment Scheme

• Health Insurance

• Composite Insurance

empowering the poor to become economically self-reliant

ABHAYA (Loan Cover Insurance)

Features & Benefits:1. Policy Holder : SKS is the Master Policyholder for its

members2. Insured Event : Death due to any reason is covered under this

policy3. Insurance Coverage : Member & her Husband (if eligible)4. Age Limit : 18-59 years5. Coverage period : 50 weeks6. Sum Assured : Equal to Loan amount for each life

Benefit:– The outstanding amount is written-off– Immediate relief to the family through Funeral assistance of Rs. 1000– Final pay-out of an amount equal to Principal repaid by the member

after adjusting it against the Funeral Assistance

empowering the poor to become economically self-reliant

SWAYAM SHAKTI (Health Insurance)

ProductOffered to : The members of SKS and their familiesType : Group Health and Personal Accident insuranceFeatures : 1. Cashless treatment or reimbursement up to the

maximum sum insured2. 24 Hrs. hospitalization or Day care Procedures3. Maternity (Institutional Delivery) expense covered4. Pre-existing Illness Covered

Payable Charges : 1. General ward - bed charges 2. Surgeon, Anesthetist, Medical Practitioner, Consultant,

Specialist fees, Nursing expenses3. Investigation charges4. lCU, Oxygen, Ventilator Charges5. Medical Consumables and Medicines

empowering the poor to become economically self-reliant

Need Assessment: Felt Vs. Latent

Product Design & Pricing: Requirement Vs. Capability to pay

Partner Selection

Implementation

Awareness Creation

Premium collection

Claims Processing

Event Validation/ Claim Authorization

Documentation

Benchmarking

Service Delivery Channel

Sustainability – Incentive

Product/Process Improvisation through member feedback

Challenges

empowering the poor to become economically self-reliant815.261031.8144%1847.07Total

43.6129.0860%Electronic Claim Submission and Batch Processing using Insurance Module72.69Financing charges per claim raiseda

Estimation of financing costs for time between payout to member and receipt of claim from insurance company8

505.89758.8340%Training of Field Staff, Insurance module for better tracking of Insurance Claims1264.72Cost per claim raisedb

0.003.963.96Cost per member covereda

Allocation of Branch overhead costs7

0.003.523.52Cost per insurance cover createda

Allocation of HO overhead costs6

170.25170.2550%Insurance Module for claim processing and data handling340.51Cost per claim raisedb

0.170.6720%Insurance Module for claim processing and data handling0.84Cost per member covereda

Allocation of total HO staff costs5

71.0530.4570%

Automated Claim registration and intimation, Self attestation at Area Level, sending Scanned document101.50

Estimation of stationary / admin costs per insurance claim4

1.62Cost per member insureda

Allocation of admin staff costs at Area Office3

21.4432.1640%

Training of Field Staff, Pre-design Format for Declaration, Automated Claim registration and intimation53.60FA costs for claim processinga

Estimation of FA costs for each claim raised2

1.232.8830%Training of Field Staff, Documented Manuals, Script for CGT4.11Cost per client for loan cover insurancea

Estimation of FA costs for each loan cover processed1

Possible scope of improvement (Rs.)

Revised Costing

Possible scope of improvement (%)Possible Intervention

Cost (Rs.)Cost LeversS. No.

Cost Levers vis-à-vis possible intervention

empowering the poor to become economically self-reliant

Potential Improvement

8155310232

31

341

~1.00

1265

759

73 29

18471032

Cost Levers

Interest loss due to high turn around time

HO staff cost per claim raised

Stationary / admin costs per insurance claim

Branch overhead cost per claim raised

Total cost for claim processing

Possible scope of improvement

FA cost for each loan cover claim processed

Possible scope of improvement

Possible scope of improvement

Possible scope of improvement

Possible scope of improvement

Possible scope of improvement

Total possible savings due to different intervention

empowering the poor to become economically self-reliant

Key Features of the SoftwareIntegrated Module

1. Insurance Management System2. Financial Accounting System3. Management Information System4. Customer Information System

Web based applicationSQL databaseHardware got updatedOS selected was XP ProVSAT & Dialup as mode of communication & data transferUser Role Defined Access Screen-Module-Role-User

empowering the poor to become economically self-reliant

Message Escalation system based on defined Turn-around period for a specific task (Task Pane for individual User)

Flexible system to provide backend support for other InsuranceProducts

Receipts generation in Vernacular languageEfficient Reporting (semi-dynamic) – Branch RatingExport feature to different applications like Excel, PDF, Word etc.

Key Features of the Software contd…

empowering the poor to become economically self-reliant

Lag Time Analysis

20 27 35 32

78

923 30 22

60

0 0 8 2 8

89 89 97 86

175

0

50

100

150

200

Lag Indicators

Old Average 20 27 35 32 78

New Average 9 23 30 22 60

M in. No. of Days taken 0 0 8 2 8

M ax. No. of Days taken 89 89 97 86 175

Time lag between Deate of Death & Date

of FIR

Time lag between Date of FIR and DC Receipt

Time taken in benefit delivery

Time taken in Claim set t lement Total t ime taken

Turn-Around Time Analysis

empowering the poor to become economically self-reliant

1.Loan size 2.Loan purpose 3.Timeliness of loans

1.Loan size 2.Timeliness of loans 3.Group responsibility

1.Interest rate 2.Timeliness of loans 3.Loan insurance

1.Timeliness of loans 2.Loan size 3.Interest rate

Urban areasSemi-urban areas

Rural areasOverallTop three attributes – by area type

Attribute Ranking

Source: Market Research Study done by EDA Rural Systems, New Delhi

empowering the poor to become economically self-reliant

Evolutionary stages…

1. All inclusive product with differential coverage2. Advance Premium Payment3. Automated Data Consolidation4. Monthly Policy to Fortnightly Policy5. Individual Insurance Certificate6. Introduction of Funeral Assistance7. Electronic Claim Submission8. Batch processing of claims9. Attestation authority to SKS10. Standalone Claim processing to Real time settlement

empowering the poor to become economically self-reliant

The Road Ahead….

Exploring possibilities withMobile Banking for

First/ Renewal Premium CollectionDue Premium ReminderNew Product Information/ MarketingClaim Registration Claim Processing/ Tracking SupportClaim Settlement

From Standardization to CustomizationCreating Best Practices in Microinsurance SpaceImpacting lives through comprehensive productsGenerating Livelihood using Microinsurance as a toolBecoming a World Class Insurance SBU (Small Business Unit)

empowering the poor to become economically self-reliant

SKS Microfinance Pvt. Ltd.8-2-608/1/1, Karama Enclave, Road No. 10Banjara Hills, Hyderabad 500 034, India

www.sksindia.com

Empowering the Poor to Become Economically Self-Reliant