Sa-Dhan Newsletter Volume 1 Issue 4
Micro-Insurance
investment income as a percentage of the opening balance shown in Table 9. The net, or real, rate of return
on investment, is estimated as the return calculated after allowing for inflation as measured by the Consumer
Price Index. Overall, the average real return over the six years was positive at 3.4 per cent.
Table 10: SEWA IIS- Rates of return on investment 1994-99
Year
1994
1995
1996
1997
1998
1999
Av. 6yrs
Nominal return on investment %
15.4
15.3
13.9
10.0
8.8
10.4
12.3
Estimated inflation rate %
9.8
9.4
10.0
7.2
13.4
2.0
Real return on investment %
5.1
5.4
3.5
2.6
- 4.0
8.2
3.4
Table 11 sets out estimated figures for the claims ratio experienced year by year by each component of the
IIS. The six-year average figures are weighted according to the relative real values of the rupee in each year.
The ratio of claims to premiums paid, which include the subsidy for LIC life insurance premiums, is a measure
of the effectiveness of the insurance scheme from the viewpoint of its members. Over these six years, the
scheme has been very effective indeed for the members, although this largely reflects the very big claims paid
out by LIC and GIC in the early years. The overall claim ratios for the most recent years are more in line
with typical stable insurance patterns, despite wide variations between the different components. As the six
year weighted average claim ratio is over 160 per cent, with claims considerably exceeding the premiums paid,
LIC has increased its premiums from 2000.
Table 11: SEWA IIS- Ratio of claims to Premiums 1994-99
Year Claims ratio (%)
1994
1995
1996
1997
1998
1999
Av. 6 yrs
Life and Accidental
Claims
1161
849
1183
1297
1553 1112
Death(LIC portfolio)
Premiums
360
450
600
750
960
900
Claims/Premiums
322.5
188.7
197.2
172.9
161.8 123.6 184.5
Ratio %
Accidental Death
Claims
10
70
61
30
80
35
(GIC portfolio)
Premiums
70
89
103
140
182
162
Claims/Premiums
14.3
78.7
59.2
21.4
44.0
21.6
39.1
Ratio %
Combined Life &
Ratio %
272.3
170.5
177.0
149.1
143.0 108.0 161.7
Accidental Death
Health Component
Claims
125
124
259
266
393
387
(SEWA portfolio)
Premiums
150
384
450
600
780
696
Claims/Premiums
83.3
32.3
57.6
44.3
50.4
55.6
50.8
Ratio %
Assets Component
Claims
345
7
117
0
3
10
(GIC portfolio to 1997,
Premiums
80
102
120
160
208
186
SEWA portfolio
Claims/Premiums
431.3
6.9
97.5
0
1.4
5.4
69.2
from 1998)
Ratio %
Combined Insurance
Claims/Premiums
248.6
102.4
127.3
96.5
95.3
79.4
113.8
Operations
Ratio %
Admin.Costs %
12.3
10.2
15.7
26.0
18.2
10.8
15.5
12
