Sa-Dhan Newsletter Volume 1 Issue 4

Micro-Insurance

With UIIC, a package of four insurance schemes was

insurance coverage for SEWA members. Only natural

launched with the premium of Rs. 30/- for the

death was covered and the premium was Rs 6/- per

package- health insurance (Rs. 15/-); coverage of

annum. SEWA Bank also began a deposit linked

assets such as work tools, houses in case of damage

scheme where women put Rs.100/- in a fixed deposit

by flood, fire, cyclone and communal riots (Rs. 8/-

in their own names, with the annual interest accrued

), and death (natural and accidental), and disablement

being the payment of the annual premium. In this

of -the woman (Rs.3.50/-) member and her husband

way, the SEWA member was covered for life and did

(Rs. 3.50/-). Despite the critical and initial support

not have to worry about paying the annual premium

from UIIC (especially a woman officer) to start the

on time.

first integrated insurance scheme (IIS), the partnership

with UIIC lasted for only two years. SEWA broke with

In the 1980s, SEWA found that programmes

UIIC due to the high rate of claim rejection, extremely

implemented by the SEWA Bank and health

lengthy and complicated procedures, considerable

cooperatives, were working overtime trying to help

paper work, restricted coverage etc.

women deal with perpetual health problems and loss

of assets. Further, SEWA Bank's findings revealed that

The Fixed Deposit Scheme was introduced in 1993

the main reason for defaults and irregular loan

and maternity benefit for fixed deposit was started

repayments was the member's own or a family

in 1994. A deposit linked option (for Rs 500/-) was

member's ill health. Loans intended mainly for

introduced with the benefit of increasing the savings

productive purposes, were actually used to pay the

while paying premium through the accrued interest.

high medical bills of the members and repay loans

to moneylenders.

Women often borrowed large

In order to provide cover to all risks with simplified

sums of money to cover health-related losses, in turn,

procedure SEWA undertook administration of its own

affected the amount of money and the quality of care

health insurance with additional coverage of

that women members invest for their own well-being.

gynaecological problems and occupational health.

The cycle of indebtedness continued due to economic

Along with UIIC's asset insurance, the premium for

hardships suffered as a result of ill health, death,

the package was Rs. 60/-, with an additional Rs.5/

disability and loss of assets. This was the context in

- paid by the members for administration charges.

which SEWA developed its integrated approach to

SEWA  members  were  unhappy  with  the

reimbursements from UIIC after natural calamities

insurance for its members. In 1991, the Government

such as floods, fire, cyclones, and man made disasters

of India created Social Security Fund (SSF) a special

such as riots. At their request, SEWA discontinued

core fund of Rs 100/- crore for the poor, engaged

its link with the UIIC on asset insurance too in 1998

in certain occupations. The subsidy was intended to

and developed its own systems and procedures.

provide an incentive for the insurance companies to

SEWA also decided to change the agency from UIIC

move into this area. SEWA decided to join and in

to New India Assurance (NIA) for insurance against

1992 launched integrated insurance services in

accidental death of the member and her spouse. The

partnership with LIC and United India Insurance

scheme also facilitated decentralization of operations

Company (UIIC). The insurance services offered by

and branch offices were opened in Kheda and

each company were offered as a complete package

Banaskantha in 1998. Support for cataract surgery

by SEWA Bank to its members, who had to take the

and dentures was introduced for those opting for the

entire package. The total premium of the package

fixed deposit linked scheme and in 1999, coverage

covering all the schemes amounted to Rs. 60/-. The

for hearing aid was introduced. In 1995, members

members paid Rs. 45/-, while the SSF contributed Rs.

were given the option of insuring their husbands by

15/- by to the LIC.

paying an additional premium amount.

With the LIC, a group insurance policy covering both

In 2000, when LIC increased its premium amount,

natural and accidental death of the member was

SEWA raised the yearly premium to Rs 72.50 (fixed

launched. Initially, the premium was Rs.30/-. The

deposit of Rs 700/-). Subsequently, the scheme was

interest from the core fund subsidized 50 percent of

revised and the present scheme- IIS (Vimo SEWA)

the premium- the women made a contribution of Rs

was introduced from the insurance year 2001-2002.

15/- each, while the subsidy from SSF was used to

Learning from the claim experience of 2000-2001,

pay the balance Rs 15/-. SEWA was an intermediary

where about 3,000 claims were reported due to

between LIC and its clients, collecting premiums;

floods and earthquake, a need for transferring the risk

receiving and disbursing claims, and where necessary

was felt. As a result, all the risks barring life insurance

negotiating in cases of claim dispute. LIC retained the

were transferred to National Insurance Company (NIC).

financial ownership and managed the overall

Table 1 gives the development over the years of the

administration of the scheme.

IIS's insurance cover and the linkages.

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