CARE has teamed up with leading insurance company Allianz to provide insurance to 200,000 of India’s poorest households. R.N. Mohanty, CARE’s Tsunami Response Program director in Chennai (India), tells us how it works.
Allianz Group
Bonn/Chennai (India), Mar 11, 2008
CARE und Allianz Bajaj have teamed up for microinsurance
Allianz.com News: What is this project?
Mohanty: CARE and Bajaj Allianz, the Indian arm of the global insurer Allianz, are working together to provide insurance for some of the poorest people in southern India, who were affected by the tsunami. Together, we are helping poor people understand how taking out insurance can help households and communities cope with the risks they face – from illness to major disasters, such as the tsunami – so that they are less vulnerable to losing everything after a disaster ever again.
How can poor people afford insurance premiums?
Mohanty: People living on less than one euro a day cannot usually afford to get a bank account, let alone take out insurance or use other financial services.
This microinsurance product is affordable because Bajaj Allianz and CARE are offering insurance which is tailored to the specific communities with which we have worked. People in this area have told us what they consider to be the risks they face and the products are customized for them. This is in an area where insurance companies do not normally sell their products and if they do sell any, the products do not address people’s needs.
The insurance products are designed to be affordable
What is different about these insurance products?
Mohanty: Many of the products are "bundled" – that is, they cover many risks at once, and community members can choose which types of insurance they want to buy. Also, the insurance products are designed to be affordable, so, for instance, a family could buy a health insurance package offering cash for hospital visits, for 16 rupees (25 eurocents) per month for a couple, or 10 rupees (16 eurocents) for a single person. Groups of people are also able to buy insurance together if they want to protect an asset such as a business.
Also, insurance products in India are generally only available to people up to 59 years old – after which the population is seen as too high a risk for hospital cash and non-life products particularly. Bajaj Allianz and CARE are offering insurance coverage to people from 18 to 70 years.
Is microinsurance the best way to ensure people are less vulnerable to disasters?
Mohanty: Microinsurance is one of the best ways to ensure people are less vulnerable to disaster as it means people can recover their losses and are less dependent on external help. It is like a form of social security. By offering a cushion from which people can bounce back, it speeds their recovery from disaster and ensures they have a ready cash flow.
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