East African Experience
Dr. Nelson Gitonga
Insight Health Advisors – May 2010.
WHY MICRO HEALTH INSURANCE?
There is a viscous cycle between health status and poverty
 Lack of resources is one of the biggest barrier to accessing health
services for the poor and low income earners
 In Kenya 38% of the ill who who did not seek care cited lack of money as
key barrier (Kenya Household Health Expenditure Survey 2007)
 Out-of-pocket spending on health only worsens poverty
 WHO estimates 125 million households globally spend over 50% of
annual income on health
 Catastrophic healthcare expenses drives about 25 million households
into poverty each year
 Poor households identify Illness/Injury, Death of family member as
the most common causes of decline in wellbeing (Narayan et al 1999)
Insight Health Advisors
WHAT IS MICRO HEALTH INSURANCE?
Definition
Low cost voluntary private insurance products
and services targeted at the poor and low income
earners as a means of protecting them from
vulnerability arising from risk events
Insight Health Advisors
WHAT DO WE KNOW ABOUT MICRO
HEALTH INSURANCE?
Some basic facts
 Health insurance is one of the many products offered by micro-
insurance
 The low income earners participating in micro-insurance usually come
from largest economic sectors in East Africa – informal and agriculture
 Most common model for micro-insurance is a Partnership Model
The risk carrier (insurer) partners with a distribution & financing channel (MFI’s
and other community & agricultural organisations) and a network of low cost health
providers (often public, FBO and small private providers)
 Donors subsidize premiums/contributions in some cases to facilitate
affordability and fast uptake of the products
Insight Health Advisors
HOW CAN MICRO HEALTH INSURANCE HELP?
Micro-insurance can play a key part in poverty alleviation,
income protection, and health status:
Reaching low income earners –frequently left out by conventional
private health insurance and public pay-roll based health insurance
schemes
Acting as the primer for future expansion of public/social health
insurance and offer useful lessons for planning universal coverage
Offering more sustainable health insurance than community insurance
since its risk is managed professionally and can be bundled with other
insurance and financial services
When combined with other micro-insurance products and microfinance
services, its an essential part of providing broad vulnerability protection
to the poor and low income earners.
Insight Health Advisors
HOW TO DESIGN A MICRO HEALTH
INSURANCE PLAN
Step 1: Strategy,
Goals, Model
Step 5: Product
Administration
KEY STEPS
Step 4: Product
Distribution
Insight Health Advisors
Step 2:
Market/Target
Research
Step 3: Product
Development
WHAT ARE KEY PROCESSES TO IMPLEMENT
MICRO HEALTH INSURANCE?
 Marketing & Distribution of products and services by agent






organisation (MFI, farmers organisation, community group etc)
Recruitment of members and payment of contributions (If MFI is
involved they may finance the contributions). Contributions maybe
annual or monthly.
Accessing services from selected panel of healthcare providers (access
control through lists, ID, referrals, photo or biometric cards)
Interface between provider and insurer through managed care
principles.
Processing of claims and payment (Fee for service, fixed
reimbursements and capitation).
Client relations and insurance cover renewal process.
Financial and business management of scheme
Insight Health Advisors
CHALLENGES WITH MICRO-INSURANCE
 Without subsidies will not be affordable for the very low income







earners and absolute poor.
Presents high financial risk for insurer (e.g. high transaction and
admin costs, low retention, fraud, financial and social volatility
and of target groups)
Problems associated with adverse selection and moral hazard
since it is voluntary insurance
Difficult to build sufficiently large risk pool for sustainability
Lack of technical ICT and management skills to manage the
schemes
Shortage of health workers and poor health infrastructure
Weak or restrictive regulatory framework
Lack of understanding of insurance concept (risk pooling)
among targeted groups
Insight Health Advisors
EXAMPLES FROM EAST AFRICA
Existing micro-insurance schemes
 Kenya:
 CIC Insurance with various MFI’s (some initial donor support).
 British American Insurance with KTDA (Kenya tea development
authority) (some initial donor support).
 UAP Insurance with Equity bank.
 Various MFI initiated schemes -Faulu Kenya
 Uganda:
 Microcare Insurance (Closed down?) (some initial donor support)
NB: In all the above cases thorough and systematic reviews and case
studies are needed to distil the valuable lessons learned
Insight Health Advisors
EXAMPLES OF MICRO HEALTH INSURANCE
CIC/MFI’s
Microcare/CBO’s
UAP/MFI
Inception date
Model
2001
Partnership of Insurer
btwn MFI’s (Faulu,
KADET, KWFT, KREP) and co-op
societies.
2000
Insurer/HMO
working directly with
CBO’s and MFI’s.
Mid 2008
Partnership of
insurer with Equity
Bank (Commercial
bank and MFI)
Target Group
Geographical
Coverage
Clients and members
of participating
organisations in rural
and urban areas
Formal and informal
sector /community
organisations in
urban and rural
areas. MFI members.
Bank Clients across
the country. Initial
pilot selected urban
areas.
Benefits
IP cover including
HIV/AIDS and
chronic conditions.
Also sold public IP
insurance cover –
NHIF.
Comprehensive IP
and OP cover, each
unique to the group
insured. Includes
HIV/AIDS & health
promotion.
OP and IP cover
including HIV/AIDS,
chronic conditions &
maternity. Fixed
reimbursements and
capitation used.
Outpatient (OP)
Inpatient (IP)
Insight Health Advisors
EXAMPLES OF MICRO HEALTH INSURANCE
CIC/MFI’s
Microcare/CBO’s
UAP/MFI
Membership &
Characteristics
13,000 members
(2008 - all microinsurance products
- 260,000)
85,000 members
(2007)
2,000 (2009)
Average Premium
/Contribution
$80 p.a. (for a
$ 30 to $ 300 p.a. For IP
family of 5, shared
and OP cover.
IP cover limit $
7,000 p.a. (20072008). NHIF option
$ 26 p.a. per family.
From $ 90 to $ 280
per person p.a. for IP
and OP cover
ranging from $ 1,000
to $ 13,000 p.a.
(2008)
Comments
Claims and admin
costs higher than
anticipated, hence
financial loss.
Challenge of MFI’s
marketing
insurance.
Unique bancassurance
model. Bank finances
premiums. Uptake
good but slower than
expected. Profitable
in 2nd Year.
Insight Health Advisors
Microcare collapsed in
2008. Possible causes:
Low premiums
compared to risks,
financial & risk mngt,
adverse selection,
member & provider
fraud, rapid growth.
Thank you!
Please contact me through
the Network for Africa if you have more
Questions at
www.network4africa.com
Horton Court| Lenana Road 3rd Flr| Suite G| P. 0 Box 29775 00202 | Nairobi| ngrgachoka@gmail.com| +254 202 504 628