Micro Health Insurance in India: Pointers for Progress

This article examines the effectiveness of micro health insurance products that comply with the Insurance Regulatory and Development Authority (IRDA) Microinsurance Regulations 2005.

The IRDA concept paper states that microinsurance should protect the assets and lives of target populations against insurable risks. The paper examines the impact of Jan Arogya Bima, a micro health insurance product in India. Study findings include:

• Insurance covered selective cases of hospitalization and failed to provide protection to many other illness episodes;
• Half of the most expensive illness episodes were not reimbursed even when households were insured and incurred catastrophic expenses due to hospitalization and other medical needs;
• Households were required to pay considerable amounts out-of-pocket even when they were insured;
• Insured individuals could not be sure about the continuity of their coverage beyond one year and this uncertainty reduced their incentive to insure.

The article states that the key to generating more revenue for insurance is in improving the value proposition and variety of microinsurance products and providing after sales service.