MICRO INSURANCE EXPERIENCES OF DHAN FOUNDATION GAYATHRIGAYATHRI SAKTHIRAJANSAKTHIRAJANCEO, PEOPLE CEO, PEOPLE MUTUALSMUTUALS

About DHAN Foundation

DHAN

• Development of Humane ActioN• A Non Governmental Development Organisation• Registered under Trust Act

Mission• “Building people and institutions for development innovations and up scaling for

impacting the livelihoods to enable poor communities”

Reach• About 1.5 million marginal and vulnerable families • Working in 14 states of India• About 750 professionals and 4000 community workers

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Our constituency

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Small farmers Dry land farmers

Fisher folk Native tribe communities

Our constituency

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Small traders Coastal Labourers

Small entrepreneurs Small entrepreneurs

DHAN’s Approach to Development

Community Organization

Facilitating Environment

Scale down Technology

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DHAN Collective5

SUPRA PEOPLEINSTITUTIONSe.g. CLUSTER &FEDERATION

REGIONAL RESOURCECENTRES

INTEGRATING THEMATICPROGRAMS

CENTRES FOR INTEGRATIONHRD, FINANCE

STRATEGIC PLANNING, RESEARCHDEVELOPMENT

COMMUNICATION

NEW THEMESRAINFED FARMING/ICT/TATA – DHAN

ACADEMY

SUPPORT INSTITUTIONSFOR PEOPLEINSTITUTION

e.g. KDFS/KTPL/PEOPLE MUTUALS

PRIMARYPEOPLE

INSTITUTIONSe.g. KALANJIAM &

VAYALAGAM

THEMATICINSTITUTIONS

e.g. KALANJIAM FOUNDATIION &

VAYALAGAM PROGRAM

DHAN COLLECTIVE

Poverty Eradication

Development

Institutional linkages

Providing services to

support livelihoods

Risk Management

Risk control (Avoidance, prevention, reduction)

Risk Mitigation

Risk Retention

Savings & Credit

Risk Sharing & Transfer

Insurance

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Development Strategy of DHAN

Community Institutions – The basic units of development

Promoted by low income households, small/marginal farmers, farm labourers, fishers, small traders, and so on

Members selected through a participatory process involving several tools like resource mapping, perception mapping, wealth ranking and household survey.

The community institutions are owned and governed by the local communities

Technical support and human resources provided by DHAN

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Federation Clinic

Federation Mutual

Community College

Producer Company

Federation

SHG / Kalanjiam / AFG/ Vayalagam/UzhavarKuzhu

Cluster / Cascade

Primary Producer Groups

Women/ Farmers

Structure and Principles of Community Organisations

•Mutuality and self help•Member control and professional management•Primary institutions control the secondary institutions like cluster development association and federation•Collaboration with stakeholders to ensure sustainability

Risk Management in DHAN9

Risk Control

Risk Mitigati

on

Risk Management

Micro Insurance in DHAN

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DHAN’s Approach to Micro Insurance

Approach I

• Linking mainstream insurance providers with poor

Approach II

• Facilitating community based mutual solutions at federations and ensuring viability and sustainability of them

Approach III

• Hybrid of both the above approaches - Accessing mainstream insurance products and mutual solutions for the gaps in the product.

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Premises for Mutual Solutions

• When the risks are insurable• When solutions are not available in the market- whole life policy• When sufficiently large number of members have the need and

willing to have a mutual solution• When risk could be shared across the insurance pool from

different geographical areas• When it is possible to have a reinsurance facility

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Micro Insurance Schemes and Strategies

S. No

Risk Strategy Scheme Insurer

1 Life Insurance Collaboration Aam Adhmi Bima Yojana LIC

Group Insurance Schemes LIC, HDFC, BSL, Tata- AIA

Mutual Life Old age Insurance Federation Mutuals

2 Health Insurance

Collaboration UHIS NIC

Mutual Mutual primary health care insurance SUHAM Hospitals, Federation Clinics

3 Livestock Insurance

Mutual Mutual Livestock Insurance Programme Federation Mutuals, People Mutuals

4 Crop Insurance

Collaboration PMFBY AIC & other private insurers

Mutual Yield indemnification scheme Federation Mutuals, People Mutuals

5 Micro Pension Collaboration Atal Pension Yojana &DHAN-LIC Micro Pension Scheme

PFRDALIC

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DHAN Foundation

Member

Kalanjiam

Federation Mutuals(Mutual Insurer &

Nodal Agency)

Premium&Claim

application

Premium&Claim

application

Claimpay out

Insurance Companies

Back up insurance premium

People Mutuals(Mutual Reinsurer)

Collaboration and Mutual

Collaboration

Mutual

Life Insurance Administration14

Insurance coverage: March 2017 15

Risk No. of personsa) Lifeb) Pensionc) Healthd) Livestocke) Crop

10,14,82938,000

1,72,5396,405

38,074

Total 12,69,847

Risk Reduction Measures

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Risk Reduction and Control

1. Weather advisaries through community radio and news letters to take appropriate sowing/ planting decisions

2. Summer ploughing, Field bunding, tank silt application/ soil breeding

3. Farm ponds/ village ponds

4. Diversification of crops (inter/ mixed cropping, agroforestry)

5. Complementary livelihoods (livestock rearing, skill training for non farm employment during off seasons),

6. Less input requiring crops (advocating organic farming, seed banks)

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Risk Reduction: Prevent Crop Loss by Improving Water Resources

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Farm Pond

Check dam construction Field bunding avoid surface run off

Village pond renovation for Irrigation

Risk Reduction: Minimising crop loss by promotion of natural farming

Demo on preparation of natural pesticide

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Disaster Risk Reduction (DRR)Vulnerability Mapping and Mapping of Critical Facilities

Vulnerability mapping at Khorji village

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DRR: Basic Search and Rescue Training

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DRR: Mock Drills in Schools and Colleges

DRR education in Marg high school DRR orientation in Jaleswar college

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Health Risk Management and Health Care Initiatives23

Anaemia

Health Care

Initiatives

Primary & Secondary

Care hospitals

Sanitation & safe water

Mother & Child

Nutrition

Cancer awareness & referrals

Early Diagnosis

Working with Govt & Entitlements

Prevent Health Risks by Safe Drinking Water Facilities

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Treated water connection at householdSeepage well in pond Treating water: Bio Sand Filter

Insurance Education: The basic prerequisite

1. Members (Before and after selection of a particular solution)

As consumers As owners

2. Governing Board of Federation Mutuals3. Management staff of Federation Mutuals4. Field level staff5. Insurance Company Officials

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Before selecting a solution/product

Risks and vulnerabilities faced by the members Current coping mechanisms- their pros and cons Need for a special strategy for managing uncertainties- importance of

insurance Difference between banking and insurance Group and personal insurance schemes- Pros and cons from the

perspective of consumer Various group insurance schemes and their benefits and limitations Selection of a particular programme from existing schemes or devising

mutual solutions or a combination of both

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After selecting a solution/product

Features/components of the chosen solution and reasons Insurable and non insurable risks Selection and anti selection Moral hazard Entry procedures Claim procedures Financial management

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Member Literacy - Street play28

Member Literacy - Mobile Theatre show29

Member Literacy – Flip Charts30

Partners

Insurance Companies – LIC, NIC, Tata AIA, Birla SunLIFE, HDFC Regulator (IRDA) Academic and research institutions - III, NIDM NGOs & Community organisations Service providers – Hospitals, veterinary care centers Central and State government departments Philanthropic institutions for resource support Technical organisations Experts and consultants

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Lessons learnt

Social capital for the marginal and vulnerable is the foundation for making insurance inclusive

Insurance need to be an integrated and graduated service in addition to savings and credit; financial counseling and insurance education are essential

Collaboration with stakeholders is important – having a cheap product alone would not do.

Social insurance programmes with Government co-funding for premium/claim helps to create a momentum

State has to play an active role in targetting the otherwise excluded sections to participate in insurance

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Way forward

Scaling up of micro insurance to new geographies Technological interventions for a hazel free insurance administration Product innovation based on the research based findings Policy advocacy with the regulator to have facilitating policies that

recognizes mutual insurance

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dhanfoundation@dhan.org www.dhan.org

Discussion…