7th Global Conference of Actuaries

»February 15-16, 2005; Delhi«

David Dror addresses 7th Global Conference of Actuaries

Dr. David Dror, lead expert of the project “Strengthening Micro Health Insurance Units for the Poor in India” addressed the plenary of the 7th Global Actuarial Conference in Delhi on February 15th, 2005. In his speech Dr. Dror developed the need for more action in health insurance for the poor on the background of today’s health financing scenario in India.

Health insurance in India

A Worldbank study shows that on average, every fourth Indian hospitalized falls into poverty due to the costs connected. Public subsidies are biased towards the rich: for every Rupee spent for the poorest quintile of the population three Rupees are spent for the richest quintile. A large majority of poor people are exposed to severe financial risk due to healthcare and health insurance is not only a relatively new concept to large parts of the population but also usually unavailable at affordable cost. Micro Health Insurance Units are already in place in some parts of India. They can offer a solution to insure the poor.

Micro Health Insurance Units

Micro Health Insurance Units (MIUs) offer low cost insurance to the poor. Their advantage is their proximity to the client. They can do what no formal insurance company can do alone: sell and service insurance at low transaction costs. Many MIUs are linked to formal insurance companies. Sometimes local communities set up their own scheme without linking back to any company in order to tailor the benefit package to their needs. These schemes only have small risk pools. Fluctuations in claims endanger the schemes’ viability.

Stabilizing Micro Health Insurance Units

The need to stabilize these schemes exists as many communities prefer to run their own scheme. In order to stabilize their scheme communities can try to set up sufficient contingency reserves. But it is nearly impossible for a single scheme to build up sufficient reserves. Reinsurance can be a more effective and cheaper solution. Setting up a reinsurance entity to serve small community based schemes is necessary to develop microinsurance for the poor. The name of the proposed Reinsurance for community health schemes: Social Re. Social Re can offer more than “only” securing long term stability of schemes. As reinsurance is cheaper than capitalizing each single community insurance scheme the premium for community health insurance can be lower. This will enable more people to join. Further, Social Re can give technical advice to schemes to develop. In the Indian health insurance market today Social Re is the institution missing to develop health insurance for the poor. Fast and effectively.

For more information on the 7th Global Conference of Actuaries please visit the conference's website.