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Grantee
Partly state owned, Property and Casualty Company Limited (PICC) is a leading non-life insurance company in China. With more than 5,500 domestic branches, it provides a broad range of property and casualty insurance products, including accidental injury insurance and short-term health insurance.
Project Summary
- Project name: Migrant Workers' Personal Accident & Health Insurance
- Project start date: January 2009
- Duration: 3 years
- Country: China
Beneficiaries
The project targets the internal migrant workers in China. In 2007, migrant workers were estimated to number around 210 million and have become a pillar of the country's work force. Less educated than other groups of workers, they tend to be more vulnerable and have difficulties realizing their legal rights to employment, medical care, a pension and education of their children. PICC aims to educate people on the use of insurance as a risk management tool and cover more than 900 000 lives by the end of the pilot project.
Project Description
Through this pilot, PICC intends to explore ways to provide better protection to migrant workers. The project will deliver personal accident and health insurance (in case of accident) to migrant workers in selected provinces of China. Through consumer education, the target market will gain awareness of the value of insurance. This project will explore new delivery channels (local village committees, sales outlets and employment agencies) and test how to cover claims incurred in provinces other than where the policy was sold (i.e., inter-provincial coverage). For example, insured migrant workers will be able to claim reimbursement for certain medical expenses in provinces outside where the policy was purchased. In later phases of the project, PICC will also seek to add value to the product by collaborating with medical facilities to provide migrant workers with services such as direct payments and medical monitoring.
Key Challenges
- Market penetration due to migrant workers' low income and low level insurance awareness. Combined with the small per contract marginal revenue, it will be a challenge to create the initial push to gain sufficient scale for the project.
- Underwriting risk, stemming from the hazardous working conditions and low standard of living of the migrant workers. In addition, moral hazard and adverse selection can lead to an unsustainably high claim ratio.
- Company operational risk mainly comes from offering the unique coverage across provinces. PICC will be testing an inter-regional claims infrastructure that requires efficient and effective operations and IT. The resulting cost of such an infrastructure can be high.
Learning Agenda
- What are the risk management needs of migrant workers and their families? What is the value from the proposed product? What other products are in demand?
- What is the most efficient and high-outreach sales channel for accident and health microinsurance for migrant workers in China?
- What is the impact of consumer education on sales and renewal rates?
- How can PICC effectively manage claims coming from a province other than where the policy was bought?
More information on the project
Website of the grantee:
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