Tie-ups with general insurers help families that lack access to formal credit or costly health care
Mumbai: Microfinance institutions (MFIs) such as SKS Microfinance, Basix—both Hyderabad-based—and the Kath-ir Foundation of Tamil Nadu are gearing up to provide health insurance products to the rural and urban poor.
These MFIs are entering into partnerships with private sector insurers to offer micro health insurance to families which do not have access to formal credit and cannot afford expensive treatment at private hospitals.
Take the case of women such as Sharanamma, who goes by one name and lives in Sultanpur, a village in the Gulbarga district of Karnataka. When her son Sidilinga, a rickshaw driver, was detected with a hernia and had to be operated, the family’s only option would have been to go to a moneylender for the Rs7,000 it would take.
Reluctant to get trapped in high interest rates, Sharanamma kept postponing the operation, jeopardizing her son’s health.
But, during a routine field visit, the loan officer of SKS spoke to Sharanamma and her peers about Swayam Shakti—a health insurance programme for the MFI’s clients through which they could insure an entire family for an annual premium of Rs525. Sharanamma signed up and Sidilanga was operated at a private hospital in Gulbarga. The entire hospital expense of Rs6,570 was covered by the SKS health insurance scheme.
SKS tied up with ICICI Lombard General Insurance Co. Ltd to offer the insurance and other MFIs, such as Awareness and Biswa, both based in Orissa, are also providing health insurance products in association with ICICI Lombard.
For an annual premium ranging from Rs200 to Rs500, private insurers are providing a medical cover of Rs20,000-50,000.
They are also willing to take alternative proofs from customers, such as declaration of age by community members or self-help groups. Policy conditions have been simplified in micro health insurance to enable policyholders to get admitted and treated at any registered hospital in a rural area. According to the regulator, normal health insurance policies recognize only those hospitals that have at least 10 beds.
A survey conducted among 248 urban and rural below poverty line families by SKS before it began offering health insurance showed that 67% of the respondents had used private medical facilities. On average, they spent Rs2,340 per family per annum on consultation, diagnosis, treatment and transportation. Some 45% of the families surveyed borrowed money to meet health emergencies. Nearly 94% of the families had borrowed less than Rs5,000 and only 3% had a health insurance cover.
For private insurers trying to get a foothold in rural areas, this kind of arrangement works out well, especially in rural areas.
Pranav Prashad, head-rural and agriculture business at ICICI Lombard, said working with MFIs also gives insurance companies “a wealth of data” (as) there is very little data about the bulk of the families living in poverty. We do have to tailor-make products for every different MFIs or NGO that we work with and we use these experiences and replicate them in other geographies across the country,” he said.
S.K. Alaghusundaramani, a senior manager at the Kathir Foundation, that has been offering health insurance in partnership with Reliance General Insurance Co. Ltd for the past six months, says his loan officers go on field visits and speak to pregnant women to convince them to enroll for their health insurance scheme.
Under the plan, a woman could get herself and her entire family a Rs20,000 insurance cover for an annual premium of Rs325. She would get an extra cover of Rs10,000 for normal childbirth and Rs15,000 for a Cesarean section operation. Out of the 10 claims that the foundation has received so far, three have been maternity claims, Mani said.