The Micro Insurance Academy
Helping Communities Manage Risks from the Ground Up
Project Street Address
Project City
Project Province/State
Project Postal/Zip Code
Project Country
Year initiative/program began:
2007
Field of work
Banking/Financial Services
If Field of Work is "Other" please define in 1-2 words below (and explain in detail in the entry form):
Service / Activity focus (If "other" please explain in entry form)
Delivery Method
Year organization founded (yyyy)
2007
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Project URL
Which of these barriers is the primary focus of your work?
Non-affluent are not valued customers
Which of the principles is the primary focus of your work?
Leverage the stake individuals have in financial success of the group
If you believe some other barrier or principle should be included in the mosaic, please describe it and how it would affect the positioning of your initiative in the mosaic
This field has not been completed. (333 words or less)
Name Your Project
The Micro Insurance Academy: Helping Communities Manage Risks from the Ground Up
Describe Your Idea
What is your signature innovation, your new idea, in one sentence?
The MIA is offering unique step-by-step stewardship to understand the benefits of insurance, to design context-relevant solutions, to act as “barefoot insurers” of own risks.
Describe what makes your idea unique—different from all others in the field.
A key component of our intervention involves helping resource-poor communities create and design microinsurance products that meet local needs, priorities, and willingness to pay. This is accomplished through a comprehensive series of studies and workshops to train, coach, and assist communities in developing relevant and cost-effective micro insurance systems and processes.
Our project explains the value proposition of insurance. Based on field data, we design tools which demystify insurance for resource-poor communities. One example is CHAT, a game-like tool allowing members to jointly define the benefit package that covers their needs. Unlike most microinsurance products, it is neither mandatory, nor linked to a savings product.
Our project gives clients the ability to cover items that are typically excluded from microinsurance products (such as maternity, drugs etc.).
Our project uses local management and ownership, along with “en-bloc” group affiliation (all household members) to combat the challenges posed by moral hazard and adverse selection.
This combination of elements is innovative, and to our knowledge never before implemented elsewhere.
How do you implement your innovation and apply it to the challenge/problem you are addressing?
We provide poor communities with the knowledge to promote an insurance package that combines access to healthcare services with underwriting healthcare risks; a package unavailable to the poor today. The MIA focuses on an integrated approach for that encompasses tools and training to:
1. Mobilize people to create MIUs
2. Empower communities to govern MIUs
3. Empower MIUs to develop sustainable operations
By providing communities with the knowledge to develop affordable healthcare, the MIA minimizes the financial vulnerability they face when illnesses arise.
Do you have any existing partnerships, and if so, how did you create them?
The Micro Insurance Academy believes that there is strength in numbers both at the community and partner levels and we strive to harness this collective power. Our partners include organizations of all sizes whose commitment to sustainable healthcare reflects our own.
The MIA always works with partners (NGOs, MFIs, etc) helping them to understand the features and solutions that micro insurance offers, and capacitating them to implement as many of the functions as possible within their target grassroots communities. Not only is this in line with our core principle of Subsidiarity, but it also allows us to utilize local expertise, such as understanding the local languages or political contexts, to enhance our innovation based on the local realities.
Together with the local partners, we create a process, and design products, that meet their needs, priorities, and willingness to pay. This is accomplished through a comprehensive series of local workshops with the communities to train, coach, and assist them in developing relevant and cost-effective systems and processes.
In which sector do these partners work? (Check all that apply)
Citizen sector (nonprofits, NGOs) , Private sector , Public sector (government).
Provide one sentence describing your impact/intended impact.
We empower communities to protect their livelihoods using the exciting financial tool of microinsurance and help reduce their financial vulnerabilities through relevant solutions.
Please list any other measures of the impact of your innovation.
The impact of our innovation has many dimensions. Our innovation saves lives through increasing access to health insurance and providers by underserved communities throughout India.
Resource-poor people will also be protected from the financial burden associated with unexpected and unmanageable health expenses.
Local community members will be empowered to take on roles and responsibilities they may not have thought possible, and gain skills in vast new areas.
We train local researchers and local insurance executives at the village level to take over many of the functions that are traditionally done by insurance companies.
This ensures that the community is empowered to take control over their future, and become fully self sustainable within a 5-year time horizon. Moreover, our innovation will result in faster claims processing, reduced instances of fraud, mobilize local resources, and improve democratic governance at the local level.
Does your innovation address and/or change banking regulations?
No, our innovation is completely managed by the local communities
How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation?
Our innovation has the potential to reach thousands of poor and underserved people in the developing world. The beneficiaries of this innovation are people living in poor communities throughout India and beyond. MIA’s model of providing the infrastructure for local communities to engage in their own micro insurance schemes is self sustaining and will continue to reach communities well after the initial project has come to an end.
This Entry is about (Issues)
How is your initiative financed (or how do you expect your initiative will be financed)?
In the MIA model, the local insurance schemes are sustainable from the very first day of operation. As all associated costs are covered by the premium, the community can be assured of their health insurance scheme long into the future. Additionally, the management of the scheme fund is set up to collect between 3-5 percent of the premium into a reserve fund, which can be used for advisory services as and when required. When the community needs to revisit the specific benefits of their insurance package, these reserve funds can be accessed to pay for a consultancy or a recalibration of actuarial costs.
If known, provide information on your finances and organization:
Audited accounts available on request.
The MIA currently has some 30 staff and volunteers in its Delhi office, with another dozen or so part time collaborators across the world.
What are the main financial barriers and how do you plan to address them?
Getting the data required to adapt the CHAT metrics is a very costly and intensive effort. The steps involved include the design of survey tools, cognitive pre-test and analysis, household surveys, key informant interviews, focus group discussions, and rigorous statistical and actuarial analysis for the adaptation of the CHAT tools to the local language and context. To address this challenge, we are engaged in a multi-year research project aimed at developing a cost effective methodology to design better health insurance products.
Aside from financial sustainability, how do you plan to grow the initiative?
We plan to expand the initiative through advocacy at the grassroots and international levels. We incorporate an awareness building campaign into our project to generate knowledge among rural communities on the benefits of participation in micro health insurance schemes. This campaign includes street games, radio advertisements, and other mediums appropriate to the audience. In addition, we advocate on the global arena through our participation in international conferences, a growing web presence, and partnerships with donors and NGOs.
Please select one
What was the motivation or defining moment that led to the creation of this innovation? Tell us the story.
Years of my efforts to develop top-down systems through which governments would deliver equitable and efficient health insurance for all have had few results. The frustration that most people at base of the pyramid (BOP) in low-income countries cannot afford to pay for healthcare required a personal paradigm shift. This project is that new paradigm.
If poor people are to pay a premium, they insist on a compelling why-to-buy proposition that is relevant to their daily priorities. These priorities are context-specific. Yet, insurance business today is based on few “one-size-fits-all” products, with most of the premium covering distribution/advertising, commissions, and high profit margins. This needs to be converted to customized solutions and low margins, with most of the premiums covering risk.
As insurance makes sense only when it is trusted, I shifted action from commercial settings to embedding the process in existing trusted social structures at grassroots level, based on transparent governance by the people for the people. The insurance industry does not offer this trust-base at BOP. Therefore, we had to set up a new entity to support the expansion of the new paradigm at BOP.
The personal voyage from being with the UN to working at grassroots level started with conceptual work (and a book), on to juxtaposing with evidence (through surveys, analysis, feedback from grassroots and publications) and then action: establishing the Micro Insurance Academy, to train grassroots communities to govern their process of insurance. As this microinsurance action is scaled, we will add links to reinsurance.
Please provide a personal bio of the social innovator behind this initiative.
David Dror has been involved in development of social health insurance worldwide for many years, notably with ILO; he is the originator of the Social Re concept linking microinsurance to reinsurance.
Dr. Dror is Professor of Health Insurance at Erasmus University Rotterdam MC (Institute of Health Policy and Management). He has published extensively on microinsurance, health economics and insurance in India and elsewhere; to view many publications click here
a) Please identify the individuals that your innovation benefits (Please check all that apply)
Producers , Consumers , Holders of assets.
b) Do you help the people you serve to buy goods or services using financial innovation? If so, how?
People are socially embedded creatures who buy goods and services by reference to what others do. We build on this logic to develop health insurance.
Health insurance essentially should convert unexpected and unaffordable health costs to affordable and expected transactions. This can be done best by pooling risks and resources of large groups. Hence we launch micro health insurance units that enable communities to buy services in ways that single individuals cannot do on their own. Contracting services and negotiating prices of healthcare is complicated.
We pursue this objective in steps: We obtain the information needed to create context-relevant actuarial and cost estimates. We enable grassroots communities to prioritize the services they will insure by running simulation exercises (called CHAT: Choosing Healthplans All Together). We enable grassroots communities to govern the business-process of insurance, through training and by providing access to IT tools.
This enables the poor to enjoy the benefits of health insurance, by converting out-of-pocket spending on healthcare to more financially efficient premiums
c) Do you help the people you serve to sell goods or services using financial innovation? If so, how?
Yes, we help people at the base of the pyramid to access insurance services, and thus reverse the dictum that “the poor are uninsurable”. Everything we have been doing is about financial innovation beyond microfinance.
Microfinance is usually limited to savings and credit. Insurance offers more financial benefits to the poor than mere savings or credit; yet, the offer of insurance products to the poor is derisory, and in fact the poor have almost no access to relevant and affordable insurance today.
By identifying groups that already enjoy their members’ trust through previous community-based activities, and offering them our step-by-step stewardship (through initiation workshops, followed by training and technical assistance) first to understand the benefits of being insured, then to implement context-relevant micro insurance solutions, and to act as “barefoot insurers” of their collective risks.
We offer a broad range of services of financial literacy, followed by mutual insurance that benefits the entire group, and thus inclusive access to risk management that strengthens existing groups
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