While women form 70% of the world’s poor, microinsurance structures often overlook the specific needs of women causing them to fall through the cracks. To best serve the low-income, it is essential that product design and delivery take into account women’s unique needs says Ms Mary Ellen Iskenderian of Women’s World Banking (WWB).
Microinsurance has tremendous potential to provide security and stability to a poor household. As of 2009, it is estimated that only 3% of the low-income population in the world’s 10 poorest countries have a microinsurance product, leaving approximately two billion people un-served. Research has demonstrated that healthcare costs exert the most financial pressure on poor families as they have little ability to absorb risk. Moreover, medical problems are compounded by the fact that the poor are less likely to seek treatment early in an illness for fear of losing income by taking time away from businesses or other responsibilities.
The need to meet the cost of an unexpected health emergency is the most common reason poor families must liquidate their businesses or sell productive assets, such as livestock or equipment. This deprives families of the tools they once had to generate income and further perpetuates the cycle of poverty. The need to provide women with healthcare and the means to pay for it is acute. Women comprise 70% of the world’s poor. They typically earn less than men and have less ownership and control of property. Yet, they tend to be the primary caretakers for their families.
Need to serve the low-income
Women have a unique and pressing need for appropriate means to manage health-related risk. Despite the challenges that women face, WWB’s studies have shown that women tend to save money and handle risk more responsibly than men. Women typically utilise their earnings to improve the care and standard of living in their households. Women are an important segment for risk-mitigating products, such as microinsurance and with very few products currently in existence, there is significant potential for insurers looking to tap into the low-income market.
To best serve the low-income women, it is essential that product design and delivery take into account women’s unique needs. Women face health issues related to pregnancy and childbearing. However, the majority of microinsurance products currently available preclude care for many of women’s most pressing health concerns. For example, many health insurance programmes exclude pregnancy coverage completely, citing the high costs for insurers and customers. The primary goal should be to create insurance programmes that strike a balance between providing coverage that meets the needs of low-income women, while minimising operating costs for the delivery channels and insurers and keeping premiums low to improve affordability and accessibility. Finding coverage that supports the entire family can be a challenge, often forcing families to pick and choose who to insure often leaving women and girls uninsured.
Innovative solutions
In April 2010, to address the shortage of microinsurance products available to low-income women, WWB worked with its network member Microfund for Women (MFW, Jordan) to launch Ri’aya (The Caregiver Policy). Ri’aya is a unique micro-health insurance product that provides a cash benefit after hospitalisation to help with costs associated with loss of business, medical expenses, transportation and other household needs. To create the product, WWB and MFW conducted in-depth gender research with more than 1,000 of MFW’s clients to gain a thorough understanding of client needs. The study revealed that the majority of MFW’s clients were not insured and, when in need of healthcare used public facilities paid for by savings or borrowings. It was found that most women saw the value of health insurance but viewed cost as a barrier.
The pilot insurance product was created in partnership with Zurich Financial Services Group and its local Jordanian partner Al Amara, and with support from the International Labour Organization (ILO).
The product, mandatory with every new loan from MFW, requires the payment of a nominal monthly premium of JOD0.75 (US$1.05) and provides coverage equivalent to JOD10 for each night spent in the hospital. Unlike the majority of insurance products available, most of which are gender neutral, the Ri’aya benefit was designed to cover all hospital visits related to pregnancy, a feature that WWB felt was critical to include in order to meet the needs of women and improve maternal health.
Since its launch, the product has garnered significant demand from MFW clients with over 50,000 policies outstanding. Beyond demand, the most important observation concerns the approximately 50% of claims for pregnancy-related health issues proving that Jordanian women are using the product not only to protect their businesses but also to protect their own health and well-being.
Successful partnerships
Creating and delivering a successful microinsurance product requires a strong partnership between the microfinance provider and the insurance provider throughout the entire process. In particular, it is important that the two parties educate each other on their respective areas of expertise. The local insurance partner must understand the specifics of serving the low-income segment and the microfinance provider must understand its partner’s underwriting processes. Given the high-volume, low-value nature of microfinance transactions, a significant success factor for the Caregiver Policy was the insurer’s willingness to allow MFW to manage a significant portion of the claims process.
Flexibility in product design is also important for a successful partnership. From the experience with Caregiver Policy, it was found that not only did Microfund for Women’s clients need health insurance coverage, but their family members did as well. While compensation for time away from a woman’s business was important, healthcare costs for family members were still exerting a significant economic burden on low-income women. There are several health microinsurance programmes that allow family coverage, but high incremental costs for adding family members often make full coverage unaffordable. In many cases, the choice of full family coverage is simply not available.
To respond to this need, WWB and MFW worked with Jordan Insurance Co to develop a cash-benefit family policy that is affordable and provides meaningful coverage for MFW clients and their families. The recently-launched product pilot will allow MFW clients to cover all members of their family, providing a JOD20 benefit per night spent in the hospital, double the per person benefit level of the existing Caregiver Policy, for a premium of JOD1 per month per person. WWB believes this new product will encourage poor women and their families to seek medical treatment when necessary, and will ease the financial burden healthcare emergencies present.
Ms Mary Ellen Iskenderian is the President and CEO of Women’s World Banking.