Presentation made by M. Balasubramanian (Programme Leader, DHAN Foundation, India) at the 6th ICMIF Development Network Seminar (1-2 November 2012; Nairobi, Kenya)

1. Mutual’s answer to the
partner agent model
November 2, 2012
S.Balasubramanian
DHAN Foundation

2. • DHAN Foundation is a premier NGO of India working with over one
million families in 10,000 villages and slums in 12 states – Tamil
Nadu, Andhra Pradesh, Karnataka, Orissa, Madhya Pradesh,
Jharkhand, Kerala, Assam, Maharasthra, Bihar, Rajasthan and
Pondicherry - in more than 220 locations (panchayat unions / blocks)
with about 400 professionals working at the grass roots
• The insurance program has genesis in DHAN since 1992.
•The insurance has been accessed to over one million poor with
different risk covers – Life, health, livestock, crop and pension
(longevity risk)
•The insurance is accessed through collaboration with mainstream
insurers and mutual solutions

3.  Kalanjiam Community Banking Program
 Tank fed Agriculture Development Program
 Coastal Conservation and Livelihood Development
program
 Rainfed Agriculture Development Program
 Tata-Dhan Academy- Development Management
Education
 Information Communication Technology for poor
 Democratizing Panchayat
 Climate change adaptation
 Migration and development
 Youth and development
 Heritage Tourism

4. Community Banking Programme
Promote alternative
financial services and
mechanisms at the
grassroots level for poor
women

5. Tankfed Agriculture Programme
Organise the farmers to conserve and
develop tanks and improve tank fed
agriculture

6. Coastal Conservation and Livelihood
Development Programme
Relief (immediate)
Livelihood restoration
(short term)
Habitat reconstruction
(medium term)
Coastal zone
conservation and
management
(long term)

7. Reviving the best practices of
rain fed farming and promoting
livelihoods
Rainfed Agriculture Development

8. Tata-Dhan Academy
Grooming young graduates into
development professionals,
undertake research studies &
documentation of experiences

9. Developing IT applications for
poverty alleviation and
livelihood promotion
Information Technology for poor

10. Democratizing panchayats and
developing them as effective
local governance systems

12. People Mutuals is the insurance initiative of DHAN
Foundation
People institution promoted by federations of poor
Separate entity to implement the insurance
programme for poor organized by DHAN
Programmes
Supported by Oxfam Novib, Rabobank Foundation
and Achmea Foundation

13. • Collaboration with mainstream insurers
• Mutual solutions
•Hybrid approach - Accessing mainstream insurance products
and mutual solutions for the gaps in the mainstream products.

14. Partner agent model Full Service Model
Mutual Model Provider Model

15. •Commercial insurers together with MFIs / NGOs as partner agents
•Insurers utilize agent’s delivery mechanism to provide sales and basic services to
clients
•There is no risk retention and limited administrative burden for agents
•The insurer absorbs the risk
•The agent markets the product through its established network.
•Lowers the cost of distribution and thus promotes affordability.
•win-win situation: The distribution potential of the MFI with the institutional capacity of
an established insurer
•MFI itself will not place any risk on its loan portfolio
•Leverage potential: The insurance company may be able to reinsure part of its exposure
•Possible disadvantage: Insurance products too mechanically down streamed to the
poor.
•New concept of “micro-insurance agent ” in India, in addition to insurance agent /
corporate agent / insurance broker
•Micro-insurance agent can be NGO / SHG / MFI
•Micro-insurance agent can be appointed by an insurer by entering into a deed of
agreement

16. •Local communities, MFIs, NGOs and/or cooperatives
•Develop and distribute the product, manage the risk pool and absorb the risk.
•There is no involvement on the part of commercial insurers.
•The policyholders own and manage the insurance program, and negotiate i.e., with
external health care providers under health insurance
•Essential features:
•Voluntary membership
•Based on groups possessing common characteristics (members of a same
organization, villages, etc.)
•Promotion of solidarity, democracy, social cohesion, etc.
•Improve access to insurance through risk-sharing/resource pooling
•Not-For-Profit
•Mutual interest organizations (owners/ deciders/policyholders = members). Which
implies:
•Participation mechanisms (design of the insurance product and organizational
options)
•Control mechanisms (organizational and financial)
•Pro poor / member systems and processes. Example: Under health insurance, no
medical-based selection of the members

17. Appropriateness of Mutual Insurance
•No mainstream product in tune with the needs
•Lack of appropriate systems and processes
•For small and frequent risks
•Existence of strong social capital

18. Co-existence of mutual and commercial
insurance
•Assessing the insurance needs of members
•Negotiating and accessing appropriate
mainstream insurance products
•Mutual insurance to address the gaps
For covering the risks of members in entirety

19. Co-existence of mutual and commercial
insurance
Life insurance:
- DHAN’s experience
•Life risk cover up to 60 years – Mainstream insurance
•Life risk cover ≥ 60 years – Mutual insurance
Health insurance:
•Hospitalisation care cover – Mainstream insurance
•Primary care cover – Mutual insurance
Only mutual insurance is possible, when there are lack of pro member products /
processes or both.
Example: Mutual insurance crop income insurance – Lack of pro member product
Livestock insurance – Lack of pro member processes

21. Health initiatives

24. Micro Pension

25. Challenges for mutual insurance
•Mostly operate in small geographies and with small
population of membership thus limiting the geographical
spread of risks and law of big members
•Initial zero levels of solvency funds
•Not with in the radars of regulation
Prohibits access to reinsurance and the claim payments would be
jeopardised if the initial years are bad, thus influencing the viability of
insurance operations and the programme sustainability