Sa-Dhan Newsletter Volume 1 Issue 4
Micro-Insurance
The year-on-year experience under the assets component of the IIS has been highly variable. The overall claims
ratio has been low, at just over 55 per cent, an apparent reflection of the very low levels of claims paid since
the IIS itself took over management of the scheme from GIC. As this type of cover is inherently subject to
considerable fluctuations from year to year, the need to maintain substantial reserves, ring- fenced for the
purpose, and shown separately in the accounts is underscored. The ratio of administrative costs to overall
income measures the efficiency of the scheme's administration in financial terms, is satisfactory.
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SEWA'S LESSONS AND CHALLENGES IN INSURANCE
Over the years SEWA's experience in insurance has shown that:
1. Willingness to pay
The poor are willing to pay and can pay premiums for insurance if the service is suitable and prompt. The
growing number of SEWA members buying the scheme clearly demonstrates that the poor are capable of and
willing to pay (See Table 12). The challenge lies in designing and providing the appropriate insurance services
and products and establishing the necessary systems.
Table 12: Members and Beneficiaries of IIS
Total beneficiaries
Members without
Members with
Year
Growth rate of
Total IIS
of life component
husbands included
husbands included
total IIS
members
(IIS memers +
in life component
in life component
membership
husbands, i.e.
(annul
(annual payment
(based on
columns 2+4)
paymentRs.60/
Rs. 75/ fixed
column 2) (%)
fixed deposit
deposit Rs.700)
Rs.500)
Insurance not
199192
46076
available for
husbands
Insurance not
199293
38136
available for
husbands
1993-94
7000
4000
3000
10000
-82
1994-95
10000
8000
2000
12000
43
1995-96
12784
10569
2215
14999
28
1996-97
15846
10846
5000
20846
24
1997-98
19515
14515
5000
24515
23
1998-99
26000
20000
6000
32000
33
1999-2000 23214
16428
6786
30000
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them and establishing the necessary systems.
2. Need for an integrated insurance scheme
The poor (women) need an integrated insurance
4. Poor need suitable delivery mechanisms
scheme which covers personal risks like sickness,
Experience with providing insurance has highlighted
death, widowhood, accident, maternity and loss of
certain mechanisms for service delivery which are
assets (trade equipments, material, livestock and
suitable for the poor and which need to be provided
housing) in fire, flood, cyclone, riots and accidents.
to them:
Integrated insurance service helps poor women
workers to withstand financial shocks and protect
(a)
Door-to-door services: Since majority of the work
their existing assets.
done by the women is labour- intensive and
they are paid at piece-rate, the presence of the
3. A product designed exclusively for the clients
worker is required at her place of business as
Women in the informal sector need an insurance
she is unable to deposit her premium. It is very
product sensitively designed for their needs. The
uneconomical for the women to spend money
procedure should be simple, transparent, flexible, and
on transportation because of the small amount
the service efficient (preferably at their door step).
of their transactions.
They need capacity building to understand the concept
(b)
Simple procedure: As majority of the poor are
of insurance, risk pool and planning for the future.
illiterate and do not understand complicated
The challenge is in providing products appropriate for
procedures, they need simple procedures.
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