Gimi

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It is a scheme that uses, among others, an insurance mechanism whose beneficiaries are (at least in part) people excluded from formal social protection schemes, in particular informal economy workers and their families. The scheme differs from others created to provide legal social protection to formal economy workers. Membership is not compulsory (but can be automatic), and members pay, at least in part, the necessary contributions in order to cover benefits. The expression "micro-insurance scheme" designates either the institution that provides insurance (e.g., a health mutual benefit association) or the set of institutions (in the case of linkages) that provide insurance or the insurance service itself provided by an institution that also handles other activities (e.g., a micro-finance institution). To make a comment on this definition, go to theKnowledge Map.

What risks are covered by microinsurance?

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Micro-insurance schemes can cover various risks (health, life, etc.). The most frequent microinsurance products are:

Life micro-insurance (and retirement savings plans) provides coverage against the financial consequences of old age or of the death of a breadwinner.
Health micro-insurance provides coverage against the financial consequences of ill health and maternity. The financial consequences can take several forms: direct medical costs of prevention, care and cure (fees for consultations, laboratory tests, medicines, hospitalisation, delivery, etc.); direct non-medical costs such as costs of transportation, food in case of hospitalisation; and indirect costs (opportunity costs), as ill health and maternity usually entail a loss of productive time for both patients and caretakers. Health micro-insurance schemes usually cover direct medical costs covering a predetermined list of risks (or health services). Very few schemes provide cash benefits (income replacement) in case of ill health or maternity.
Disability micro-insurance provides coverage against the financial consequences of disability, whether temporary or permanent, depending on the contract. Disability is called temporary when the physical loss is reversible and lasts for a limited period of time (generally up to three years).
Property micro-insurance (assets, livestock, housing) provides coverage against the financial consequences of the damage or loss of personal assets, work premises and tools (e.g. hut micro-insurance against fire, theft of belongings, or death of livestock).
Crop micro-insurance provides a financial compensation in the case of crop failure generated by uncontrollable adverse events (e.g., drought, crop pest).

Linkages

What is contracting?

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Contracting includes all types of measures seeking to enhance or facilitate the establishment of contractual agreements between social security schemes (community based or statutory social security schemes, insurance companies, etc.) and the health sector (health service providers). Such agreements may focus on the enforcement of quality standards (availability of drugs, equipment, etc.), fees, methods of payment (such as cash less agreements), etc. These agreements may be formal / written or informal.

Contracting measures may include: the implementation of an appropriate legislative framework or a master plan, the establishment of a special unit within the Ministry of Health in charge of the contracting process, the design of guidelines or tool kits aimed at facilitating the design, the establishment and monitoring of agreements, etc.

For further information ...

What are linkages?

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Linkages refer to all types of partnership agreements between institutions, which aim to facilitate the access, management or financing of social security.
Institutions involved may include:

Other micro-insurance system(s);
Civil society organizations (local NGO, associations, etc.);
Micro-finance institutions;
Associations or federations of mutual health organizations;
Networks of cooperatives, trade unions;
Outsourced technical management providers such as Indian TPAs, public management centres, accounting experts;
Pharmaceutical industry or other industries;
Private or public insurance companies;
Social security funds;
Social assistance programmes;
Public health and prevention programs;
Local or national governments;
International cooperation (International NGO, United Nations, global social trust, global fund)

Linkages may include:

Subsidies and redistribution;
Financial consolidation (reinsurance, guarantee funds);
Technical support and advice;
Pooled management functions;
Support in enrolment and premium collection;
Information sharing and best practices;
Regulation and/or control;
Joint contractual agreements with healthcare providers or defining and establishing a contractual agreement framework;
Access to networks of healthcare providers;
Joint participation in defining and establishing national strategies for extending social protection (linkages at a political level).

Social assistance

Contractual arrangements

Feasibility

When should a feasibility study be carried out?

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1- A feasibility study should be carried out before the start-up of a new scheme. The implementation of a new health micro-insurance scheme is based on the conclusions of the feasibility study, and particularly on the selection of:

●the benefit/premium combination(s);
●the scheme's organizational framework;
●a set of operating rules.

These conclusions may be adjusted following the first few accounting periods. In this respect, monitoring and evaluation play a crucial role by enabling adjustments to be made to the initial scheme design on the basis of experience.

Feasibility studies permit schemes to get off to a good start and to avoid being confronted later on with regular upheavals that could discourage new members and eventually lead to the scheme's failure.

2- A feasibility study must be carried out before each new phase of activity.

The development of a health micro-insurance scheme over the years usually consists of several phases. A set of objectives corresponds to each phase. When the objectives of a particular phase have been reached, the scheme may either maintain its 'cruising speed' or begin a new phase of development in its operations: widen the scope of persons covered, offer new benefits, introduce new services, conclude agreements with new health providers, etc. Prior to the start of a new phase, it is important to carry out a new feasibility study.

It may also be the case that, during a new phase of development, changes occur in the data corresponding to the scheme’s context, thus requiring certain features to be re-designed. It is important to carry out a new feasibility study in such cases as well.

These new feasibility studies enable promoters to verify the relevance of the developments or changes under consideration, and to define precisely the characteristics or activities of the scheme, while ensuring that they do not jeopardize the scheme's efficiency or viability.

What is a feasibility study?

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A feasibility study is the first step in any project aimed at setting up or further developing a health micro-insurance scheme. Its objectives are to:

● test the relevance of the future health micro-insurance scheme; that is, ensure that it offers a suitable response to the problems raised, while taking into account the context in question;
● determine the characteristics of the future scheme that will encourage its development and sustain its viability;
● describe an initial situation to serve as a reference point for the subsequent evaluation of the scheme's impact on the health context and on access to health care.

Note: In certain cases, setting up a health micro-insurance scheme may not be the best solution. For example, in a context in which there are no health care facilities of acceptable quality, it might make more sense to improve the quality of existing health structures (or even create new ones) before setting up a health micro-insurance scheme. Likewise, in order to meet certain needs for the coverage of minor risks, other methods of financing (prepayment, health savings and health credit) may be just as effective as micro insurance.

For these reasons, a feasibility study should be approached with an open mind and without any preconceived notions as to what type of scheme to set up or what type of benefits to provide. Indiscriminate copying of other schemes should be avoided. The fact that a health micro-insurance scheme is operating in the country, the region or even in the next village, does not mean that it is well-suited to the needs and characteristics of the target population or to the context of the particular micro-insurance scheme under consideration.

Specifically, a feasibility study makes it possible to:

● highlight existing problems: difficulty experienced by the target population in meeting health expenses; problems related to the quality of existing health facilities; etc.;
● identify the causes of such problems: seasonal variations in income; inadequate income to meet certain health expenses, such as hospitalization; lack of motivation on the part of health care staff, etc.;
● validate the idea of setting up a health micro-insurance scheme;
● collect the data needed to make relevant choices and to design a sound health micro-insurance scheme;
● design the health micro-insurance scheme: services covered and levels of coverage, organization of the scheme, operating rules, etc.;
● prepare for implementing or further developing the scheme: develop a strategy and a plan for setting up the scheme; prepare reference documents and the supporting materials and tools needed to start up operations;
● prepare for the official establishment of the scheme.

For the sake of simplifying, the feasibility study may be broken down into the following four phases:

● Initial phase to prepare for and plan the feasibility study;
● Data-collection and analysis phase;
● Scheme design phase;
● Phase to prepare for the implementation of the scheme.

In practice, feasibility studies are usually carried out in a more fluid fashion, alternating back and forth between analyzing the situation (based on the collection and analysis of data) and designing the scheme.

Are there sample feasibility studies available that are less than two years old?

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Yes. To access them, simply go to the GIMI library and conduct a search using the search criteria theme "feasibility".

Management

What is a management procedure?

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It is a rule or a set of rules followed in order to conduct technical management activities, such as those related to enrolment, premium collection and claims settlement.

Example of a management procedure: prior to accepting an application for membership, it is important to verify that the applicant, that is, the future member, has not already been terminated by the health micro-insurance scheme in the past.

What are the main management areas of a micro-insurance scheme?

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Management areas include:

● Technical management, which deals with insurance-related activities: enrolment, collection of premiums and membership fees, claims settlement. It also deals with preventing the occurrence of insurance-related risks or limiting their effects: adverse selection, moral hazard, etc. Another of its functions is the establishment relations with certain external actors, in particular with health care providers.

● Internal control, which consists of verifying whether decisions have been implemented and whether the scheme's operating procedures and obligations, as defined in the statutes, internal rules, contracts, etc., have been properly respected.

● Monitoring, which consists of following the progress of the scheme's activities, and making adjustments if necessary.

● Evaluation, which consists of assessing the scheme's operations, and determining whether its initial objectives have been met.

● Internal organization, human resources management, accounting and financial management.

What financial documentation must a health mutual organisation produce?

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Primarily: the account of yearly results and the statement of accounts.

Legislation/Regulation

How can a legislative framework be designed in a participatory way?

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The experience of the project "Support to the establishment of a regional framework for the development of mutual health organizations in EMWAU (UEMOA) countries" (2004-2006) is interesting in this regard. The objective was to support requesting EMWAU countries in the design or revision of a legislative framework on social mutuals or mutual health organizations.

In order to reach this objective, national workshops were organized. They provided a space for dialogue and exchange and enabled the main actors concerned by this legislation to participate in the creation process of the framework.

States' representatives, mutual organizations representatives, health care providers, social partners, and development partners in each EMWAU country were invited in each EMWAU country to a national workshop. For three days, working groups work and discussions were held in order to engage in a shared thought process on the elements to be included in the legislative framework. A lawyer was then asked to draft a legal text for each country which included the results of the workshop.

The final objective is to reach the adoption of a common Act on social mutuals at the EMWAU level. Therefore a common act was drafted from a synthesis of the eight national legal texts.

What are the benefits of micro-insurance regulation?

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A lack of regulation may be problematic particularly as far as the legal security of the insured party is concerned. A badly designed legislative framework may restrict the development of micro-insurance and insurance provision for lower-income groups. It is therefore important that legislative frameworks implemented in concerned countries enhance the establishment of micro-insurance schemes while protecting those who are insured.

A legislative framework adapted to micro-insurance has at least three major benefits:

1. It ensures the legal security of the insured
Micro-insurance institutions collect funds (premiums, subsidies) and conduct insurance activities, often at a local level. To this end, it is important that their activities be carried out in the framework of clear legal rules (notably prudential rules in order to control the viability of these institutions).
2. It enhances the development of micro-insurance institutions and increases the reliability and credibility of these institutions, especially:
1. a) By setting working rules for these institutions
2. b) By providing these institutions with a legal status
3. c) By detailing their rights and obligations
4. d) By identifying authorities to regulate them
Such a framework provides individuals with more confidence when they consider joining a micro-insurance scheme. It can be also used as a benchmark or guidelines by micro-insurance organizations in the conduct of their activities and in their development.
3. Thanks to the regulation, the State may recognize the role of these institutions in the fight against poverty and the extension of social protection, as well as their specific benefits and may support them in achieving their mission in the interest of the general public.

Marketing

What is social marketing?

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Social marketing is the design and implementation of programmes intended to bring about social change using concepts from commercial marketing. Social marketing seeks to influence social behaviours not to benefit the marketer, but to benefit the target audience and society in general.

How could social marketing be applied to micro-insurance?

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Social marketing of insurance products towards excluded people can entail the sensitisation of various actors whose involvement is essential in order to obtain descent social protection coverage for excluded people.

Social marketing in this field is however a very new subject, with great potential for development. For example, ongoing studies in Senegal aim to identify and assess the advantages for the target population of joining a micro-insurance scheme: access to quality health care, reduction of financial insecurity, increased self-reliance/independence, empowerment.

Mechanisms

What are the main mechanisms for the extension of social protection in low-income countries

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There is a wide range of mechanisms that can be used to extend social protection.

Social insurance schemes can extend existing or modified benefits to previously excluded groups or contingencies, either on a compulsory or voluntary basis. They may also enhance their effectiveness through improved governance and design
Special social insurance schemes can be set up for excluded groups.
Universal benefits covering the whole target population without any income test or conditions (for instance, those over a certain age) can be implemented.
Social assistance programs targeting specific vulnerable groups can also be implemented: waivers, social pensions / cash benefits, conditional cash transfers (for instance based on school attendance).
The encouragement and support of the development of micro-insurance and innovative decentralized social security schemes to provide social protection through communities, social partners or civil society organizations.

Microinsurance relevance

What kinds of risks do poor people face?

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In most developing countries, all households and communities face multiple risks, but workers in the informal economy and their families and low-income groups are especially vulnerable to the following risks:

Natural risks such as drought, flood, erratic monsoon rain, crop pests, fire that can cause loss of assets including loss of work premises and tools.
Environmental risks such as problems associated with deforestation, pollution.
Health risks such as sickness, child delivery, epidemics.
Life-cycle risks such as old-age and death.
Economic risks such as unemployment, business or harvest failure, loss of assets, death of livestock.
Policy based and institutional risks such as a lack of legislation to protect workers, insufficient public services (e.g., a lack of health care facilities or inappropriate public health care policy), taxation.
Social and political risks such as crime, theft and related loss of assets, gang activity, civil war.

National policies and strategies

How can micro-insurance be integrated into a country's existing social protection system?

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An increasing number of states consider micro-insurance to be a tool for the extension of social protection, and include this mechanism in their strategies of extension.

In several countries micro-insurance schemes are already part of the process of designing and implementing progressively more coherent and integrated social protection systems: in India the partner-agent model contributes to increasing the formal acceptance of these schemes; in Senegal micro-insurance schemes are mentioned in the national social protection strategy as a key mechanism to extend social protection; in Rwanda and Ghana, the State implements nation-wide social protection schemes in health that are built on district and community-based mutual organizations.

Several elements are key for this integration to happen, among them:

1. The official recognition (by governments and social partners) of micro-insurance as a tool for the extension of social protection. This implies for instance that micro-insurance be integrated in national strategies of extension of social protection, health development and poverty reduction (e.g., PRSPs).

2. The design and adoption of appropriate legal frameworks, that may specify - among other things - the role of micro-insurance in the national system of social protection and introduce a set of rules and institutions for the supervision of the operations of micro-insurance schemes: regulatory body (e.g. ministry in charge), procedures of agreement, etc.

3. The development of linkages between micro-insurance and other components of social protection of:

functional linkages (e.g., channeling social assistance and social services to eligible micro-insurance members; distributing commercial insurance products or social insurance services through micro-insurance schemes ), and
b. financial linkages including mechanisms of redistribution (e.g.,premium subsidies financed by taxes or transfers from statutory social security schemes).

What are the main mechanisms for the extension of social protection in low-income countries?

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There is a wide range of mechanisms that can be used to extend social protection.

Social insurance schemes can extend existing or modified benefits to previously excluded groups or contingencies, either on a compulsory or voluntary basis. They may also enhance their effectiveness through improved governance and design.
Special social insurance schemes can be set up for excluded groups.
Universal benefits covering the whole target population without any income test or conditions (for instance, those over a certain age) can be implemented.
Social assistance programs targeting specific vulnerable groups can also be implemented: waivers, social pensions / cash benefits, conditional cash transfers (for instance based on school attendance).
The encouragement and support of the development of micro-insurance and innovative decentralized social security schemes to provide social protection through communities, social partners or civil society organizations.

Contingencies

Statistics

What are, in the field of social security, the main reasons to use some household survey data?

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Understanding individual and household decision-making.
Such surveys are typically based on complex and detailed questionnaires, covering the whole population but with a relatively small sample size. They offer a host of information on the socio-demographic and socio-economic characteristics of individuals and the households in which they live, including:
- household size and composition
- demographic characteristics (age, sex, ethnic group, nationality, migration, etc.) of household members
- employment status of household members
- wages and other income of all household members
- social security benefits received in the household
- household expenditure and sources of expenditure
Monitoring welfare indicators
- Next to complex household budget surveys, in some countries - especially where the latter are not available - large-scale rapid monitoring surveys are conducted.
- Objective: designed for the specific purpose of social exclusion and social protection evaluation, and cover a more limited set of data.
- Drawback: the major drawback of such surveys is that due to information restrictions, causal analysis at the household level is rarely authorized.
Impact evaluations
- Objective: impact evaluations aim to reveal which impacts were caused by the social transfer and which ones might have been caused by other factors. Survey data allow for an efficiency and effectiveness analysis of different benefits, especially for assistance type programme (means-tested benefits, conditional cash transfers).
- Some examples and further explanation are presented in the micro simulation

What can household survey data be used for?

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In the field of social security, household survey data are particularly useful for estimating the following measures that can serve for social security monitoring:

gathering information on the distribution of specific risks among the population, correlates of specific risks, and participation in social security,
identifying existing gaps in coverage and analyzing factors related to these gaps (e.g. where social security is not reaching specific social and economic groups or regions). This is often best undertaken in conjunction with administrative data.
calculating aggregates of individual or household income and expenditure that allow for the estimation of insurable earnings, average wages, average expenditure. In some cases, where information on taxes and contributions incurred is available and reliable, the aggregate level of taxes and contributions could be assessed. Listed aggregates are often used as denominators for the calculation of specified performance indicators (e.g. average replacement ratios of benefits in payment, administrative costs in relation to total insurable earnings),
calculating aggregates of the total employed population, total insured population and total beneficiaries, that are used to estimate scheme indicators (e.g. scheme demographic ratio),
evaluating the effectiveness of schemes in terms of outcomes achieved (e.g. increasing levels of income in relation to the poverty line, the impact of social protection on education and health outcomes),
modelling the performance of social security schemes in the long term, particularly with respect to coverage and benefit levels as well as to the impact of external factors (e.g. increasing/decreasing unemployment, increasing consumption and levels of income).

Monitoring and Evaluation/Rapid appraisal

What does it mean to evaulate the viability of a health micro-insurance scheme?

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Many factors influence the viability of a health micro-insurance scheme. Viability may be evaluated on four different levels:

•Administrative. Evaluation of the quality of monitoring carried out by the HMIS.
•Technical. Evaluation of the ability of the HMIS to manage insurance-related risks, such as adverse selection, over-consumption (moral hazard) and over-prescription. This evaluation relates to the quality of the risk portfolio.
•Functional. Evaluation of the ability of the HMIS to respect the basic insurance principle, i.e. to provide benefits in return for premiums.
•Financial and economic. Evaluation of the ability of the HMIS to rely on its income to cover expenses over the long term.

For further information, please refer to Health Microinsurance Schemes: Monitoring and Evaluation Guide, ILO-STEP (in French only, English forthcoming).

What is the difference between monitoring and evaluation?

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A distinction is usually made between monitoring and evaluation; in practice, however, the distinction is not always obvious. The two techniques are, in fact, related and complementary, and involve many of the same tools.
Monitoring may be defined as a continuous activity that consists of:

•Overseeing the proper execution of the scheduled programme of activities;

•Providing timely information needed for sound management and effective decision-making.

Effective monitoring is an essential condition for the success of an HMIS. Success, in the case of an HMIS, may be defined as the ability to honour its commitments to its partners – in particular, its beneficiaries and health care providers – on an ongoing and sustainable basis.

A "monitoring system" may be defined as the complete set of procedures, tools, information flows and responsibilities that allow for the collection and processing of data in the monitoring process. Management information systems (MISs) constitute an important tool for information-enabling monitoring.

Evaluation is a periodic activity. It involves taking stock of actions carried out during, or at the end of the accounting period. Generally speaking, evaluation involves assessing whether stated objectives have been fully or partially achieved, or not at all. The evaluation should reveal the reasons for discrepancies between the actual and forecasted levels of achievement of objectives.

The evaluation may concern the whole entity (e.g. a project), certain activities (e.g. educational activities carried out within the ministry of social affairs) or merely some of its characteristics (e.g. the viability of an enterprise).

What are the main management and monitoring tools?

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There exists a great diversity of management and monitoring tools used by health micro-insurance schemes.
Administrative and technical management tools

Membership card
Insured and premium file
Insured, premium and membership fee register
Guarantee letter (if applicable)
Treatment certificate (if applicable)
Health care providers' invoice
Claims register

Additional administrative and technical monitoring tools

Socio-demographic characteristics of the population in the area of operations and the target population
Beneficiaries monitoring sheet
Renewal monitoring sheet
Claims listings by provider
Number and cost of claims monitoring sheet
Average claims cost monitoring sheet
Risk frequency monitoring sheet

Financial management tools

Budget
Cash flow plan

Financial monitoring tools

Budget monitoring sheet
Cash flow monitoring sheet
List of investments