The Business Case for Health Microinsurance in India: The Long and Winding Road to Scale and Sustainability

This Brief provides an analysis of a group of private and publicly supported Indian health microinsurance programs (HMIs) to determine if a business case is evolving. It examines the viability of entities that take part in government supported programs, and of the ones competing with or complementing such programs. Findings are based on analysis of 2008-2011 financial outcome data, review of payments made by HMI sponsors to other participants along the insurance value chain and insights drawn from conversations with program staff. They include:

• Without government subsidized benefits, even long established, private HMIs in India are struggling to achieve scale and sustainability;
• The emergence of the government funded scheme for the poor is having a competitive impact on private HMIs, forcing them to consider offering complementary services;
• While high loss ratios are a significant problem for the business case, high distribution and administrative costs, to varying degrees in both private and public HMIs, are more severe hurdles to sustainability.