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LIVESTOCK INSURANCE MUTUAL MODEL Indira Kranthi Patham P.Chinna Thataiah, Regional Project Director, SERP, Hyderabad.

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Presentation on theme: "LIVESTOCK INSURANCE MUTUAL MODEL Indira Kranthi Patham P.Chinna Thataiah, Regional Project Director, SERP, Hyderabad."— Presentation transcript:

1 LIVESTOCK INSURANCE MUTUAL MODEL Indira Kranthi Patham P.Chinna Thataiah, Regional Project Director, SERP, Hyderabad.

2 PRELUDE Livestock is the most important asset for the poor and are susceptible to different types of risks. Livestock is the most important asset for the poor and are susceptible to different types of risks. Accidental Death of animals in not uncommon. Accidental Death of animals in not uncommon. The mortality among livestock is one of the principal reasons for the loan default by the poor. The mortality among livestock is one of the principal reasons for the loan default by the poor. Livestock are subject to risk of disease and death resulting in grievous loss in the livelihoods of the poor in the absence of comprehensive insurance for livestock. Livestock are subject to risk of disease and death resulting in grievous loss in the livelihoods of the poor in the absence of comprehensive insurance for livestock. Indira Kranthi Patham

3 Emergence of an idea A detailed analysis by CBOs (VO / MS / ZS) on the disintegration of the groups revealed sudden death of milch animal which is a major source of income resulted in fall in income levels thereby making them to default payments. A detailed analysis by CBOs (VO / MS / ZS) on the disintegration of the groups revealed sudden death of milch animal which is a major source of income resulted in fall in income levels thereby making them to default payments. To whirl this situation CBOs have demanded to put in place a mechanism to re-create the lost asset. To whirl this situation CBOs have demanded to put in place a mechanism to re-create the lost asset. Outcome of detailed discussions in Zilla Samakhya is to pilot asset insurance scheme to begin with livestock and to pilot it in one District of the State. Outcome of detailed discussions in Zilla Samakhya is to pilot asset insurance scheme to begin with livestock and to pilot it in one District of the State. Indira Kranthi Patham

4 Vizianagaram Model in Short The scheme is christened as Loan Protection Scheme with an objective to provide relief to the SHG members who owns the Milch Cattle (Buffalo / Cow), in the case of death of the animals to recreate the lost asset. The scheme is christened as Loan Protection Scheme with an objective to provide relief to the SHG members who owns the Milch Cattle (Buffalo / Cow), in the case of death of the animals to recreate the lost asset. This is a premium based scheme with an annual 2% on the total cost of the animal. The insurance is valid for one year. This is a premium based scheme with an annual 2% on the total cost of the animal. The insurance is valid for one year. 100% of the cost of the animal insured will be paid to the member with in 7 working days after reporting of claim in call centre. 100% of the cost of the animal insured will be paid to the member with in 7 working days after reporting of claim in call centre. The scheme is totally self-managed by CBOs. Accounting, Monitoring and Documentation systems are conceived and designed in house. The scheme is totally self-managed by CBOs. Accounting, Monitoring and Documentation systems are conceived and designed in house. Indira Kranthi Patham

5 Insurance Procedure Every SHG member intending to join the scheme has to submit a written application to the ZS through MS and VO. Every SHG member intending to join the scheme has to submit a written application to the ZS through MS and VO. The VO and MS need to recommend the application. The VO and MS need to recommend the application. The applications shall be accompanied by an amount equivalent to 2% of the estimated value of the animal. The applications shall be accompanied by an amount equivalent to 2% of the estimated value of the animal. On approval of the application Zilla Samakhya will issue a bond. On approval of the application Zilla Samakhya will issue a bond. Once the policy bond is provided to the member, it is presumed that the animal is insured from that date for a period of one year. Once the policy bond is provided to the member, it is presumed that the animal is insured from that date for a period of one year. Two photographs of all the animals insured are taken & kept as record in ZS Call Centre. Two photographs of all the animals insured are taken & kept as record in ZS Call Centre. Submission of application VO / MS recommendation Letter Subject to: Application being accompanied by the above letter 2% as entrance fee Approval of Zilla Samakhya Issue of Bond (Certificate of insurance) Indira Kranthi Patham

6 Redemption of Claim Upon the death of insured animal, the information passed to call centre ( & ) by either member or VO or Villager. Upon the death of insured animal, the information passed to call centre ( & ) by either member or VO or Villager. Call centre directs the Bhima Mitra to visit the Village. Call centre directs the Bhima Mitra to visit the Village. Bhima Mitra along with the VO conducts local enquiry, takes a photograph of the dead animal and submits the documents to the LPS sub-committee in Zilla Samakhya along with recommendations of VO. Bhima Mitra along with the VO conducts local enquiry, takes a photograph of the dead animal and submits the documents to the LPS sub-committee in Zilla Samakhya along with recommendations of VO. Contd.. Contd.. Indira Kranthi Patham

7 LPS sub-committee will either settle or reject the claim based on the merit of the documents produced and recommendations of the Bhima Mitra and VO. LPS sub-committee will either settle or reject the claim based on the merit of the documents produced and recommendations of the Bhima Mitra and VO. The claim is settled to the VO by way of cheque/DD. The claim is settled to the VO by way of cheque/DD. The VO will settle the claim to the member in cash / cheque as decided by member / SHG. The VO will settle the claim to the member in cash / cheque as decided by member / SHG. Redemption of Claim Information to Call Centre CLAIMSETTLEMENT PROCEDURE Inspection by Area Committee consisting of Community Members Submission of Applicationin the prescribed format Recommendation by VO, elders of the Village Enclosure of Photograph of the dead animal Recommendation of Mandal Samakhya Approval of the claim by Zilla Samakhya Issue of Cheque / DD in favour of VO Payment to the member by VO / OB Indira Kranthi Patham

8 The community based animal insurance scheme is perhaps the first of its kind in the country. The community based animal insurance scheme is perhaps the first of its kind in the country. The major advantage with the scheme is that it is community owned hence bogus claims can be totally eliminated. The major advantage with the scheme is that it is community owned hence bogus claims can be totally eliminated. Increase in the number of animals insured and less number of deaths lead to an idea of reducing the premium. (premium reduced from 4% to 2%) Increase in the number of animals insured and less number of deaths lead to an idea of reducing the premium. (premium reduced from 4% to 2%) Zilla Samakhyas aim is not to earn money but to mitigate the risk. Zilla Samakhyas aim is not to earn money but to mitigate the risk. The claim settlement process is very simple and time bound. The claim settlement process is very simple and time bound. Performance Indira Kranthi Patham

9 Claim settlement is within 7 days. No Postmartum, No death certificate required from AH Department. Simple certificate by VO, Verification by MS / ZS Bhima Mitras and a photograph of dead animal taken by Bhima Mitra is what all required. Claim settlement is within 7 days. No Postmartum, No death certificate required from AH Department. Simple certificate by VO, Verification by MS / ZS Bhima Mitras and a photograph of dead animal taken by Bhima Mitra is what all required. The simplicity of the scheme lies in the fact of intimation of the claim just by a phone call to the call centre. The rest including documentation, photography and Processing of Settlement etc., is all done by the bhima mitras at no cost to the member who never moves out of the village at either enrolment or settlement of claim stage. The simplicity of the scheme lies in the fact of intimation of the claim just by a phone call to the call centre. The rest including documentation, photography and Processing of Settlement etc., is all done by the bhima mitras at no cost to the member who never moves out of the village at either enrolment or settlement of claim stage. Performance Indira Kranthi Patham

10 Performance Indira Kranthi Patham

11 Experience of Vizianagaram ZS with Loan Protection Scheme has successfully demonstrated that CBOs can run livestock insurance schemes on a fairly large scale. Experience of Vizianagaram ZS with Loan Protection Scheme has successfully demonstrated that CBOs can run livestock insurance schemes on a fairly large scale. SL NO Cause of death CLAIMS 2006 CLAIMS 2007 CLAIMS 2008 CLAIMS Acute Timpanists Hemorrhagic Septicemia Trypanosomiasis Food & Mouth Disease Food & Poisoning Milk Fever Black Quarter Snake Bite TOTAL DEATHS Indira Kranthi Patham

12 Zilla Samakhya is now the largest agency with 90,035 animals in its clientage which is much more than all the insurance companies in Vizianagaram put together. Zilla Samakhya is now the largest agency with 90,035 animals in its clientage which is much more than all the insurance companies in Vizianagaram put together. It is essential to keep the cost of overheads as well as running expenditure at the minimum, to ensure the sustainability of the scheme. It is essential to keep the cost of overheads as well as running expenditure at the minimum, to ensure the sustainability of the scheme. The success of the scheme lies in its simplicity and time boundness in settlement of claim. The success of the scheme lies in its simplicity and time boundness in settlement of claim. The success of the scheme critically hinges on the ability of the CBOs to check bogus claims. The community supervision and vigilance that was found to be very effective should be nurtured further. The success of the scheme critically hinges on the ability of the CBOs to check bogus claims. The community supervision and vigilance that was found to be very effective should be nurtured further. An important precondition for the success of the scheme is its ability to negotiate a re-insurance with any company in the market. Re-insurance minimises the total liability on the ZS and distributes the risk port folio. However, economics of re-insurance needs to be worked out carefully. United India Insurance Company came down from 4% to 2% + TAX, keeping in view the experience of Vizianagaram district and also agreed to honour all claims settled by Zilla Samakhya without any fine print. An important precondition for the success of the scheme is its ability to negotiate a re-insurance with any company in the market. Re-insurance minimises the total liability on the ZS and distributes the risk port folio. However, economics of re-insurance needs to be worked out carefully. United India Insurance Company came down from 4% to 2% + TAX, keeping in view the experience of Vizianagaram district and also agreed to honour all claims settled by Zilla Samakhya without any fine print. LEARNINGS Indira Kranthi Patham

13 Claim settlement process Claim settlement process Claim settlement period Claim settlement period Postmortem Postmortem Conditions Conditions Documentation Documentation Indira Kranthi Patham Very rigid Very rigid 30 – 60 Days 30 – 60 Days Required Required Person has to physically carry the animal to the nearest hospital for Postmortem. Person has to physically carry the animal to the nearest hospital for Postmortem. Preserve the dead animal for postmortem if in case of 2-3 continuous holidays. Preserve the dead animal for postmortem if in case of 2-3 continuous holidays. Physically inform the Insurance Company & Physically follow it up till the settlement is over. Physically inform the Insurance Company & Physically follow it up till the settlement is over. Flexible & Community Friendly. Flexible & Community Friendly. 7 days 7 days Not required Not required Just leave a message in the call centre rest all including documentation & handing over the cheque is taken care by Bhima Mitras. Just leave a message in the call centre rest all including documentation & handing over the cheque is taken care by Bhima Mitras. Traditional Insurance Our Insurance Lot of money saved, Time saved and Hardship saved

14 Road ahead During the current year, in addition to Vizianagaram, Cattle insurance shall be scaled-up in 6 more Districts. By 2010 around 6.00 million SHG women shall be covered under loan / Credit Insurance.By 2010 around 6.00 million SHG women shall be covered under loan / Credit Insurance. By 2011 Cattle insurance will be universalized to all the Districts in Andhra Pradesh State covering around 10 million CATTLES. Indira Kranthi Patham

15 Road ahead The main aim of Zilla Samakhya in running this scheme is to mitigate the risk. Zilla Samakhya in convergence with Animal Husbandry Department has prevented large number of deaths since last year by pressing in services of qualified veterinary doctors to attend to animal emergences. All the animals insured with Zilla Samakhya have been vaccinated for Foot & Mouth decease, Black Quarter, Haemorrhagis septicaemia and Antrax by Animal Husbandry Department meaning there is special medical attention for each and every animal. Result – Sizeable decreases in deaths. Indira Kranthi Patham

16 Technologies Since the scheme is on to huge expansion as part of replication it is decided to bring in State - of the - art technology to keep up the pace of settlement of claims. Various technology options are under consideration. Talks are on with technology providers. Indira Kranthi Patham

17 Government of Andhra Pradesh partnering with World Bank in poverty reduction through empowerment of poor people. Thanks for your patience Q ?


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