1 Microinsurance as a tool to extend Social protection Strengths and weaknesses Future perspectives Valérie Schmitt Diabaté Aly Cissé ILO / STEP, october 2007

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3 Strengths & Weaknesses Financial protection and answer to the SP needs Financial protection increased through pre- payment, pooling of risks Benefit package well adapted to the needs when design is participatory Limited scope and levels of benefits in the absence of subsidies Flat rate contributions (no redistribution) The poorest are not included (those who cannot contribute) Pb of equity with deductibles and ceilings Coverage (towards universal coverage) Good capacity to reach excluded populations (IE, rural world) Population covered weak as a % of the target (y c. in Asia).. Voluntary membership and non conducive or poorly adapted legal framework Efficiency Low transaction costs Strong capacity to reduce fraud and moral hazard Flexible administrative procedures according to the needs and capacities of the target group (ex: monthly instalments) Small and varying size of risk pools (voluntary affiliation)  Income difficult to predict Low level of management training, computerization and MIS 

4 Strengths & Weaknesses Governance Direct participation of members in decentralized decision making Access to health care Improved conditions of access, increased use of health services, increased quality (agreements) Improved transparency in billing / fee setting and management of healthcare Role in education, information, prevention Weak capacity to negotiate with HC providers (and often limited to the local level) Inadequacy of health care supply (necessity of a better coordination with health care policy) Policy planning Bottom up with / without policy support Recent inclusion in National strategies of extension Legislation 

5 Perspectives Building on the strengths Coping with the weaknesses Participatory design of the benefit package Continue to play a strong role in prevention, education.. Decentralized structure for the day to day management (social control) Decentralized decision making process New financing sources, subsidies of the premiums, progressivity Indirect payment of contribution Automatic / compulsory affiliation Outsourcing of technical management to professional structures with computerized MIS and sound monitoring Enhanced coordination with HC sector: -Professional structures developping networks of accredited HC providers, federations of schemes with a strong bargaining power -Coordination with public health policy (adequacy supply / demand) Inclusion in national strategies of extension of SP, of development of health and poverty reduction Development of legal frameworks

6 Perspectives Building on the positive aspects Coping with the weaknesses Participatory design of the benefit package Continue to play a strong role in prevention, education.. Decentralized structure for the day to day management (social control) Decentralized decision making process New financing sources, subsidies of the premiums, progressivity Automatic / compulsory affiliation (group contracts, legislation) Outsourcing of technical management to professional structures with computerized MIS and sound monitoring Enhanced coordination with HC sector: -Professional structures developping networks of accredited HC providers, federations of schemes with a strong bargaining power -Coordination with public health policy (adequacy supply / demand) Inclusion in national strategies of extension of SP, of development of health and poverty reduction Development of legal frameworks Setting coherence Stand-alone microinsurance, cannot in itself significantly contribute to the extension of social protection Its limitations may be overcome if microinsurance is integrated into national strategies of extension of social protection It becomes one of the instruments (among others) used to implement these strategies

7 Perspectives Building on the positive aspects Coping with the weaknesses Participatory design of the benefit package Continue to play a strong role in prevention, education.. Decentralized structure for the day to day management (social control) Decentralized decision making process New financing sources, subsidies of the premiums, progressivity Indirect payment of contribution Automatic / compulsory affiliation Outsourcing of technical management to professional structures with computerized MIS and sound monitoring Enhanced coordination with HC sector: -Professional structures developping networks of accredited HC providers, federations of schemes with a strong bargaining power -Coordination with public health policy (adequacy supply / demand) Inclusion in national strategies of extension of SP, of development of health and poverty reduction Development of legal frameworks Linked schemes Well-designed linkages between institutions have a high potential to accelerate the extension of social protection

8 Perspectives Building on the positive aspects Coping with the weaknesses Participatory design of the benefit package Continue to play a strong role in prevention, education.. Decentralized structure for the day to day management (social control) Decentralized decision making process New financing sources, subsidies of the premiums, progressivity Indirect payment of contribution Automatic / compulsory affiliation Outsourcing of technical management to professional structures with computerized MIS and sound monitoring Enhanced coordination with HC sector: -Professional structures developping networks of accredited HC providers, federations of schemes with a strong bargaining power -Coordination with public health policy (adequacy supply / demand) Inclusion in national strategies of extension of SP, of development of health and poverty reduction Development of legal frameworks Innovative financing solutions Equitable access to social protection requires some external resources to ensure sufficient financing and sustainability. These resources can consist of cash transfers from governments to schemes taken from general revenue but could also be based on a redistribution of funds between statutory and community-based schemes. They can also come from the private corporate sector, foundations, global funds, international solidarity … Temporary sustainability challenges due to small risk pools and fluctuating contribution incomes can be compensated through financial consolidation mechanisms (e.g. re-insurance or a guarantee fund).