Health Microinsurance Pilot Project by Constanta Foundation

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Health Microinsurance Pilot Project by Constanta
Foundation
Levan Lebanidze MFC conference 26-28 May 2005,
Bucharest
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The Mission of Constanta is to provide easily
accessible and high quality financial services to
micro and small entrepreneurs of Georgia
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Donors of Constanta

• SAVE THE CHILDREN
• UNHCR
• USAID
• SHOREBANK ADVISORY SERVICES
• CGAP
• British Petroleum
• Care
• Mercy Corps
• Chemonics

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FFinancial Products of ConstantaFoundation

• Since 1997 - Group Loan
• Since 2001 - Individual Loan
• Since 2004 - Seasonal Loans
• Since 2004 - Individual Agro Loan (pilot project)
• Since 2004 - Microinsurance (pilot project)

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Basic Statistics

• At the moment 25 representations of Constanta
  Foundation covers almost all principal regions of
  Georgia
• By April 2005 gross outstanding loan portfolio
  reached USD 5,200,000
• By April 2005 total number of active clients
  totaled up to 17,000
• Constanta Foundation has passed the threshold of
  Financial Self Sufficiency in 2002 and remained
  fully self sufficient entity since that time

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Health Microinsurance Project

• Background of the idea
• At the 5 year anniversary of the organization,
  the Management decided to motivate best and
  oldest clients and to award them. Health
  insurance packages where bought for them. Results
  were remarkable clients expressed deep
  satisfaction resulting in raising loyalty to the
  organization.

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Health Microinsurance Project

• Main objectives to be achieved by the Project
• Achieving better results in ensuring financial
  security of the low-income population
• Reducing delinquencies caused by health problems
  of the borrowers
• Increasing loyalty towards the organization and
  gaining some competitive advantages
• Adding alternative, Non Lending product to the
  product portfolio of the organizaton in order to
  make additional sources of income

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Health Microinsurance Project

• Achieving better results in ensuring financial
  security of the poor population
• Frequently happening health problems
  reflect negatively on microentrepreneures
  household budget and sometimes cause reduction in
  assets and liquidation of the micro-businesses
  they are relying on. Therefore, health insurance
  schemes could be a very useful mean to improve
  their financial security.

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Health Microinsurance Project

• 2. Reducing delinquencies caused by health
  problems of the borrowers
• Financial problems described above are
  directly reflected on borrowers businesses and
  if the problems cause reduction in assets,
  repayment capacity of the borrower may be
  jeopardized.

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Health Microinsurance Project

• 3. Increasing loyalty towards the organization
  and gaining some competitive advantages
• As the microinsurane product will be
  exclusively offered by Constanta Foundation some
  competitive advantage as well as increaesed
  loyalty towards the organization will be
  achieved.

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Health Microinsurance Project

• 4. Adding alternative, Non Lending product to
  the product portfolio of the organization in
  order to make additional sources of income
• Microinsurance may be successfully used as
  an alternative, non-lending product. Commisison
  fees, received by Constanta could be a good
  additional income for the organization.

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Health Microinsurance Project

• Product Development
• Partner Aldagi
• Model Partner-Agent
• Responsibilities of Aldagi Insurance schemes
  and medical services
• Responsibilities of Constanta Product
  distribution and administration in terms of
  registration, payments and terms

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Health Microinsurance Project

• Basic terms, components of the products
• Aldagi-Assistance 24-Hour Telephone Service
• Coverage of All Expenses Related to Emergency
  Service, Including Transportation (unlimited
  service)
• Insurance Benefit in the Case of Emergency
  Hospitalization (covering both therapeutic and
  surgical cases)
• Insurance Benefit in the Case of Emergency
  Hospitalization (covering surgical cases).

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Health Microinsurance Project

• Product 1
• Aldagi-Assistance 24-Hour Telephone Service
• Coverage of All Expenses Related to Emergency
  Service, Including Transportation (unlimited
  service)
• Insurance Benefit in the Case of Emergency
  Hospitalization (covering both therapeutic and
  surgical cases)
• Product Price for a Person per Month 4.80 GEL

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Health Microinsurance Project

• Product 2
• Aldagi-Assistance 24-Hour Telephone Service
• Coverage of All Expenses Related to Emergency
  Service, Including Transportation (unlimited
  service)
• Insurance Benefit in Case of Emergency
  Hospitalization (covering surgical cases).
• Product Price for a Person per Month 3.80 GEL

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Health Microinsurance Project

• Product 3
• Aldagi-Assistance 24-Hour Telephone Service
• Insurance Benefit in Case of Emergency
  Hospitalization (covering both therapeutic and
  surgical cases)
• Product Price for a Person per Month 4.00 GEL

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Health Microinsurance Project

• Product 4
• Aldagi-Assistance 24-Hour Telephone Service
• Insurance Benefit in Case of Emergency
  Hospitalization (covering surgical cases).
• Product Price for a Person per Month 3.00 GEL

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Health Microinsurance Project

• Product Delivery Methodology
• Product is introduced and delivered at Group Loan
  preparation and disbursement meetings
• Insurance term coincides loan term
• Insurance repayments are made together with loan
  repayments

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Health Microinsurance Project

• Results of 1 year Pilot

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Health Microinsurance Project

• Analysis of the situation
• Lack of insurance culture among the target group
• Difficulties with the sales force reluctance
  and skepticism
• Insufficient promotion
• Changes in the market situation (improving state
  medical emergency services)

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Health Microinsurance Project

• Lessons Learnt
• Because of the lack of insurance culture
  promotion of the product should be more intensive
• Management of the sales force should be improved

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Health Microinsurance Project

• Gained Benefits
• Developed infrastructure for midified products
• Developed systems to manage microinsurance
  products
• Experience with partnering insurance provider.

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Health Microinsurance Project

• Thank You