'Light-touch' rules to help MFIs elbow in tiny health insurance mkt

FE Team | Published: March 11, 2013 00:00:00 | Updated: February 01, 2018 00:00:00

A Z M Anas It will require a minute Tk 4.0 million in initial investment to launch small medicare insurance for 25,000 ultra-poor in a country where the majority are uninsured, a top micro-insurance expert said Sunday. "It's a huge niche market… For NGOs (non-government organisations), it's an opportunity to penetrate both rural and urban markets," said Mosleh Uddin Ahmed, who heads up UK-based consultancy Micro-insurance Research Centre. "Micro-insurance offers new line of business and services for the non-profit community, because 35 per cent low-income households are to rely on out-of-pocket expenses to defray health care costs," he added. Bangladesh lacks state-backed universal insurance scheme, with the vast swath of 150-million-plus population being uncovered. Although private insurers sell life and health insurance, only the fat-walleted clients can afford to snap up the products. That leaves a room for hundreds of microfinance institutions (MFIs) to pick up the slack. Out of 212 partner organistions of PKSF (Palli Karma Shahayak Foundation), Mr Ahmed said, only three micro-financiers with a combined membership of 7.0 million currently offer tiny health insurance. PKSF is the apex financing body of micro-lenders operating in the country. Referring to a Stanford University survey for members of the beleaguered microfinancier Grameen Bank, Mr Ahmed said, 60 per cent of its borrowers default on health grounds. If introduced now, the expatriate expert figured out that the insurance market for the so-called "bottom of the pyramid" population would reach TK 140 million over a time span of five years. He noted there is a need for a strategic tie-up between NGOs and health care providers to help the micro health insurance programme get off the ground. He said donors' grant would be needed at the initial stage to design product, mount awareness, and negotiate with healthcare providers to make the premium affordable to the target members, the bulk of whom live on less than US$ 1.0 a day. "But the danger is donor-funded projects often lead to more dependency than self-reliance," the micro-insurance consultant said. He also said commercial insurers should be coaxed to break into the small insurance market for the hardcore poor perceived to be difficult-to-reach. Mr Ahmed, a chartered accountant by training, however, listed regulations by the state-linked insurance watchdog as the "biggest threat" to the non-government groups aspiring to enter the health insurance market geared to the poorest of the poor. "Current rules by IDRA (Insurance Development Regulatory Authority) don't allow non-insurance providers to elbow in the market," he said. M Mosharrof Hossain, finance director at BURO Bangladesh, said his microfinance institution is ready to introduce small health insurance programme for its 1.2 million borrowers provided regulations by the IDRA, which polices the Tk 85 billion insurance industry, are "supportive". "We will love to serve the extreme poor whose livelihoods often get clobbered due to health shocks. Micro-insurance is going to be a new source of growth for us, too," said Mr. Hossain, whose organisation has so far forked out TK 10 billion in microloan, taking on the title of the countries fourth biggest microlender.