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    Micro insurance, can be defined as' the protection of low-income

    people against specific perils in exchange for regular premium

    payments proportionate to the likelihood and cost of the risk

    involved'. It is one of several risk-management tools available to

    low-income households.

    MICROINSURANCE

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    KEY FEATURS OF MI

    Risk-pooling instruments for the protection for

    low-income households

    Insurance with small benefits

    Insurance involving low levels of premium

    Insurance for persons working in the informaleconomy, etc.

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    TWO DIRECTION OF MI

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    MI FOR ECONOMIC DEVELOPMENT

    There is a huge potential at the bottom of the pyramid as

    described by C.K.Prahlad.Around 4 billion people are

    unbanked worldwide. MI can create a potential market

    with a huge mass.

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    LARGE

    ENTERPRISES

    Middle Class

    Low-Income Entrepreneurs

    and Households

    Wealthy

    Building Enterprise Systems that Treat thePoor as the Top Priority

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    MI FROM SOCIAL PERSPECTIVE

    Microinsurance is likely to complement, rather than

    displace, existing ways of coping with risk. It gives a

    protection to low-income people according to their risk

    coverage.

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    WHAT RISKS DO POOR PEOPLE FACE?

    KEY RISKS

    DEATHILLNESS OR INJURY

    LOSS OF PROPERTY (THEFT, FIRE)

    NATURAL DISASTER (EARTHQUAKE, DROUGHT)

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    1.Retaining risk (self-insurance)

    2.Sharing risk (informal group-based mechanisms)

    3.Transferring risk (social protection).

    HOW POOR COPE WITH RISK

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    90% Indian population does not enjoy Social protection.

    26% population is bellow poverty, earning

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    WHO ALL INVOLVED IN MI

    GOVERNMENT

    REGULATORS/ SUPERVISORS

    SUPPORT INSTITUTIONS

    CATEGORIES OF INSURERS PROVIDING MICROINSURANCE

    INSURERS REGULATED UNDER THE INSURANCE LAW

    INSURERS REGULATED UNDER OTHER LAWS AND INFORMAL INSURERS

    INTERMEDIARIES

    POLICYHOLDERS

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    TYPES OF MICRO INSURERS

    COMMERCIAL INSURERS

    NGOs

    MICRO FINANCE INSTITUTIONS

    CBOs

    HEALTH PROVIDERS

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    MICRO INSURANCE PRODUCTS&SERVICES

    LIFEHEALTH CARE

    DISSABLITY

    EMERGENCY

    FUNERAL

    CROPS

    LIVESTOCK

    LOANS

    HOUSING

    FEES

    ASSETS

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    KEY CHALLENGES

    INSURANCE COVERAGE

    INFORMATION ASYMMETRY

    TRANSACTION COSTS

    DISTRIBUTION SYSTEMS

    CUSTOMER EDUCATION AND AWARENESS

    CONSUMER PROTECTION

    INFRASTRUCTURE

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    STRATEGY FOR GROWTH IN MI

    ORGANISATIONAL DEVELOPMENT

    PRODUCT DESIGN

    MARKETINGDECIDING THE MODEL

    PREMIUM COLLECTION

    SUSTAINIBILITY

    ROLE OF GOVERNMENT

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    ORGANIZATIONAL DEVELOPMENT

    1) ORGANIZATIONAL STRUCTURE2) RECRUITMENT

    3) TRAINING

    4) COMPENSATION

    5) INSTITUTIONAL CULTURE

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    PRODUCT DESIGN

    Product design starts with four basic steps:

    DEFINE THE TARGET GROUP

    IDENTIFY INSURABLE RISKS

    DETERMINE KEY PRODUCT FEATURES

    ESTABLISH PAYMENT CAPABILITIES

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    MARKETING

    1. PROMOTING INSURANCE TO THE POOR2. TURNING PROMOTIONS INTO SALES

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    PROMOTING INSURANCE TO THE POOR

    The poor often lack familiarity with insurance and do not

    understand how it works.They need greater awareness.

    To persuade poor regarding insurance benefits with their limited

    resources to meet any perils.

    To make sure the safety return of their sum with additional

    benefits even if they dont claim.

    Creating trust among low income people for insurance providers.

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    TURNING PROMOTIONS INTO SALES

    To market insurance to the poor, microinsurance providers use

    a three phase process to turn promotions into sales, which

    includes:

    1) Raising awareness

    2)Helping potential clients understand the products

    3) Activating the market.

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    MICRO-INSURANCE DELIVERY MODELS

    One of the greatest challenge for micro-insurance is the actualdelivery to clients. Methods and models for doing so vary

    depending on the organization, institution, and provider involved.

    In general, there are four main methods for offering micro-

    insurance

    1. THE PARTNER-AGENT MODE

    2. THE FULL-SERVICE MODEL

    3. THE MUTUAL MODEL

    4. THE PROVIDER MODEL

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    PARTNER AGENT MODEL

    Under this model the relationship between the policyholder and an

    insurance company (the partner) is facilitated by an intermediary

    (the agent) such as an NGO, a microfinance institution or any

    other organization with close contacts to the target group. partner-

    agent health microinsurance model are common in India,

    including:

    VimoSEWA and ICICI Lombard Shepherd and United India Insurance Company (UIIC)

    Karuna Trust and National Insurance Company (NIC)

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    PROVIDER-DRIVEN MODEL

    The healthcare provider is the micro-insurance scheme,

    and similar to the full-service model, is responsible forall operations, delivery, design, and service. There is an

    advantage once more in the amount of control retained,

    yet disadvantage in the limitations on products and

    services.

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    COMMUNITY-BASED/MUTUAL MODEL

    The policyholders or clients are in charge, managing and

    owning the operations, and working with external healthcareproviders to offer services. This model is advantageous for its

    ability to design and market products more easily and

    effectively, yet is disadvantaged by its small size and scope of

    operations.

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    MODES OF PREMIUM COLLECTIONThe way premiums are collected has a direct

    bearing

    on per unit transaction costs. The five most

    common

    ways are:

    a) Loan linked,

    b) Debit order,

    c) Fixed deposit,

    d) Link with another financial transaction

    e) Door to door collection.

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    PREMIUM COLLECTION CONTROLSTo minimize fraud and mistakes in premium collection, both

    hierarchical and horizontal controls need to be put in place.

    Hierarchical controls require at least a rudimentary structure within

    the organization to monitor the quality of the premium collection

    process. If insurers choose to outsource the process to

    other organizations, horizontal controls should be created. For

    example, by demanding some sort of collective security from the

    organization or structure to which the process is outsourced.

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    PREMIUM COLLECTIONPREMIUM COLLECTION

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    SELF EMPLOYED WOMENS ASSOCIATION

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    STRATEGIES FOR SUSTAINABILITY

    The main strategies to achieve sustainability, divided into three

    categories:

    A) LIMIT BENEFITS

    B) FOCUS ON EFFICIENCY

    C) DIVERSIFY INCOME SOURCES

    Many microinsurers use group insurance to maximize

    efficiency. For example, the member benefit approach is one

    of the most effective ways of minimizing operating costs for

    the insurer and transaction costs for the insured.

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    ROLE OF GOVERNMENTSGovernments can promote the development of supply and demand

    for micro insurance through a variety of other mechanisms.

    A)CREATING AN ENABLING LEGAL ENVIRONMENT

    B) EDUCATION AND SOCIAL MARKETING

    C) STRENGTHENING INSTITUTIONS

    D) PROVIDING FINANCIAL ASSISTANCE.

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    PRESENTED BYSURESH KUMAR NAYAK

    M.COM(FINANC E),BHU,VARANASI

    MBA(FINANCE &OPERATION) DOMS NIT TRICHY

    THANKYOU