A healthy dose of micro-insurance

Miranda Kennedy Mar 22, 2007

A healthy dose of micro-insurance

Miranda Kennedy Mar 22, 2007


MARK AUSTIN THOMAS: Growth doesn’t always mean prosperity. Take India. That nation is growing at over 9 percent a year, but basic conditions for many of its citizens are substandard. For example almost half of Indian children under the age of 3 are malnourished. And only 10 percent of the population has insurance. The problem is so serious, some groups have decided to take the problem into their own hands. Miranda Kennedy explains in this report.

MIRANDA KENNEDY: Sonia Kohli is squatting on the concrete floor with a few friends.

They’re members of the Self Employed Women’s Association, or SEWA, an economic support group for poor women.

Sonia works as a tailor in this slum village outside Delhi. She and her husband together earn less than a dollar a day. Today she’s trying to explain to her friends why she spends her precious income on health insurance.

SONIA KOHLI [translator]: Life is so uncertain and especially when you’re living in the slums, there is disease. And it’s a very, very good plan because it just means that we can breathe a little bit easier.

Insurance is an alien concept in India — especially among the poor. But Sonia only pays about $7 a year to insure her whole family. They each get life and asset insurance and up to $45 in hospital expenses.

That doesn’t sound like much, but it made things a lot easier when Sonia’s father had a heart attack a couple years back.

She brought him to the Guru Tej Bahadur Hospital near her house. It’s a massive, government-run facility. Patients lie on sagging cots, and medical waste is piled up in the hallways.

The insurance money goes a lot further at subsidized hospitals like this one.

Rebecca Black, an economist with the U.S. government’s aid program, says before micro-insurance programs started, cost prevented millions of Indians from seeking health care.

REBECCA BLACK: People make a lot of decisions about what they can afford to pay, so a lot of people not getting the kind of health care. Now it’s become a more of a focus, but this is all in the last three years that they’ve really started.

The Indian government now requires all Indian insurance companies to deliver 20 percent of their plans to rural and low-income patients.

In the last two years, about 7.5 million people have signed up for the micro-insurance plans. Of course, that’s still just a fraction of India’s population of 1.1 billion.

Bindu Pal, who works with SEWA, hopes that micro-insurance will gradually bring about a cultural shift for women.

BINDU PAL [translator]: They just don’t care about their own health. And so we explain to them that if you fall sick, who will look after your children, who will look after the house? So that’s how we make them aware of how important their health is in the scheme of things.

Micro-insurance actually only covers emergency care, so Pal admits that insured women aren’t more likely to have regular checkups. Indian insurance companies haven’t yet bought into the idea that if they cover preventative care, they’ll save on claims in the long run.

But that may change. To their surprise, many firms are finding that they turn a profit when they insure the poor.

In New Delhi, I’m Miranda Kennedy for Marketplace.

Photos: SEWA members working in a slum neighborhood and attending training sessions in Delhi. (Miranda Kennedy, Marketplace)

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