Small favour

Micro insurance works well for the poor8211;if accessed through NGOs or SHGs

In March this year, 45-year-old Prabhakar Khadagale, a vegetable vendor in Pune, woke up to a nightmare: his speech was gone. A doctor asked him to get a CT scan, which cost Rs 12,000. 8220;We couldn8217;t afford it,8221; recollects Anusaya Gaikwad, Khadagale8217;s sister-in-law. What came to their rescue, partially, was the health insurance policy that Khadagale8217;s wife, Vijaya, had been buying for three years.

Run by Uplift India Association, a grouping of seven NGOs, and bought through the NGO Annapurna Parivar Vikas Samvardhan, the policy gave each of the four Khadagales health cover worth Rs 5,000 and concessional treatment at 90 hospitals and healthcare centres8212;for a modest annual premium of Rs 60 per person. So the CT scan cost the Khadagales Rs 1,200.

When Khadagale was diagnosed with cancer, the policy came in handy again. Says Gaikwad: 8220;At the Deenanath Mangeshkar hospital, a biopsy costs Rs 69,000. We paid Rs 20,000, including a 15-day hospital stay. The policy and discounts have been a big help.8221; Though even Rs 20,000 is a hefty sum for the Khadagales, the policy helped them cut their losses.

The poor, everywhere, are looking to cut their losses. That8217;s the basic objective of insurance. Insurers have micro-insurance plans in health, personal accident, life and crop insurance, with a Rs 5,000-50,000 cover, but unfavourable economics and logistics are holding them back from going significantly beyond meeting their modest micro-insurance regulatory targets8212;2 per cent of premiums in the second year of operation and 5 per cent of premiums after the third year.

The Royal Sundaram General Insurance, for instance, has eight micro-insurance policies, which comprised 8 per cent of its total premium in 2006-07. ICICI Lombard General Insurance got 5 per cent of its premiums from micro-insurance plans. Says Pranav Prashad, rural and agriculture head, ICICI Lombard: 8220;In Karnataka, we have tie-ups with communities and also provide customised health policies to handloom weavers.8221; Adds M. Ramadoss, chairman, Oriental Insurance Company: 8220;Micro insurance is best done mutually or with self-help groups and NGOs as agents. To get into micro insurance directly could be unfeasible.8221;

As a result, pooling of risk has emerged as an important alternative for families like the Khadagales to access insurance. Helping them pool risks are organisations like Uplift. In Pune, Uplift offers its standard, low-cost health plan in 80 slums through various NGOs. The mutual fund model works on the concept of sharing risk instead of transferring risk to an insurer. The corpus, which is the sum total of the Rs 60 per person per year premium, is managed by Uplift, and claims are paid from it.

Uplift has done the numbers at the back end, and the Rs 5,000 cap per person ensures claims don8217;t exceed its corpus. As of now, Uplift has 27,937 members and has settled 225 health claims worth Rs 3,54,246. In addition, there are savings in hospitals for members by way of concessional treatment. Says Kumar Shailabh, administrator, Uplift: 8220;We have negotiated concessions from hospitals of 40-50 per cent.8221;

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The low cover ceiling aside, the Uplift policy offers more than what regular health insurance policies do, taking into consideration the needs of the poor. Unlike a regular policy, which covers hospitalisation only after the policyholder has spent 24 hours in a hospital, the Uplift policy starts from the day of hospitalisation. There8217;s also an income benefit plan that compensates for the wage loss during hospitalisation. Says Shailabh: 8220;Even if they have been advised rest, they want to resume working the minute they are discharged. That8217;s why our policy offers a daily compensation of Rs 50 from day three to day 15 of hospitalisation.8221;

Micro-insurance experts say the health plans offered by insurers are not well-tailored. Says Iddo H. Dror, director of operations, Micro Insurance Academy: 8220;Not one insurer has policies to benefit the poor. Their covers don8217;t insure kids below five, people above 50 or maternity emergencies.8221;

The Khadagales are struggling to make ends meet, but with more access to insurance, families like theirs will be able to manage their risks better.