17

Theme- Micro-Finance & Technology

as premiums are generally collected in

technology were not available. The

cash.

reduction in time to between two-three

weeks is significant and it can perhaps

Claims Management:

be further reduced if and when digital

signatures are accepted as a norm.

Apart from time and the associated

Claims management is one of the key

costs, the greatest impact of using the

features in insurance and is an aspect

electronic filling, transfer and vetting of

that has potential to enhance customer

Megatop (India)

insurance proposals from remote rural

satisfaction  (in  case  of  good

uses an innovative

areas is that of being able to respond

management of this function) or cause

strategy with

to the needs of the clients, in a quick

dissatisfaction, in case it is handled

regard to

and timely fashion. Discrepancies can

poorly. Here again, technology has

premium

be corrected quickly and also, in case

been

used

by

insurers

and

remainders

of complete insurance proposals,

intermediaries alike, to enhance the

covers can be provided almost

effectiveness of claims management.

immediately - a feature that more and

more

low-income

clients

are

The web platform is used by CRIGs to

demanding.

track claims and inform anxious

customers, who otherwise would have

Premium Collections:

to wait long to know about the status

of their proposal, especially given the

Like in traditional microfinance,

remoteness of some areas. This has

premiums in microinsurance tend to be

enabled Tata-AIG to regularly inform its

small and are often collected on a

low-income clients with regard to their

weekly/monthly basis. This entails a large

claims. Megatop also use the Choupal

number of repetitive transactions. Some

platform to track claims of its clients and

insurers and intermediaries have used

Sanchalaks  and  keep  anxious

electronic  transfer  of  premium

customers, waiting for the claim

payments as a strategy to reduce

payouts, regularly informed of the

transaction  costs.  Two  notable

status. This has indeed generated

examples2 are CARD (Philippines) and

significant goodwill for Megatop and

TUW SKOK (Poland), which transfer

Sanchalaks among its low-income

premium payments electronically.

clients.  CARD  (Philippines)  has

Megatop (India) uses an innovative

innovated and makes payment of

strategy with regard to premium

claims electronically into CARD bank

remainders. Through the use of a special

accounts of clients - the unique

software  (being  piloted),  the

advantage to CARD being that it is part

Sanchalaks are provided remainders on

of a group of institutions that deliver a

forthcoming premium payments from

range  of  microfinance  services

their respective clients, at least two

including credit, savings and insurance

weeks in advance. This then offers the

to the same low-income clients.

Sanchalaks the opportunity to remind

To

summarise,

insurers

and

their respective clients in villages about

intermediaries  have  integrated

forthcoming premium payments to be

technology into the front-end insurance

made. In many ways, this has helped

processes that are close to the

avoid/reduce delinquency on premium

customer. Apart from impact on cost

payments and also prevented/reduced

lapsation of policies. Tata-AIG is now

reduction, the use of technology has

piloting a PDA-based solution that will

helped insurers and intermediaries alike

facilitate on-site receipt printing by

to  overcome  disadvantages  of

CRIGs (Tata-AIG's rural community

distance,  remoteness  and  high

insurance groups) with regard to

transactions time/effort. In the future, as

premiums collected and also on-line

segmentation and decentralisation of

transmission of the same data to their

insurance claims management, based

branch/headquarters. Here again,

on value and complexity of the claims

technology has helped in ensuring

occur, technology is expected to play

quicker cover for the low-income clients

a far greater role in enhancing service,

as also enabled tighter internal controls,

reducing costs, and expanding access

to hitherto un-reached customers.

2

Source: CGAP Good Bad Case Studies on Micro-insurance: One on CARD and another on TUW SKOK. See

references at end of section.

Ramesh S Arunachalam

Independent Microfinance Practitioner and Country Manager of the DFID Enterplan

Financial Deepening Challenge Fund in India.