For the first time ever, poor people in India can buy comprehensive health insurance, through an innovative scheme put together by an aid agency and a private insurer. The community-based health insurance scheme run by CARE International and Allianz offers coverage packages which protect people against natural catastrophes or accidents for well under ten cents a month – an affordable rate even for those who earn less than two euros a day.

CARE and Allianz are offering the products in an area hit by the Boxing Day tsunami in 2004, in four regions south of the city of Chennai, where CARE works. Within a year, CARE and Allianz expect to have up to 200,000 customers aged 18 to 70 buying the microinsurance coverage.

Unlike other microinsurance products sold to poor communities in India, and around the world, Allianz – together with its Indian joint-venture partner, Bajaj Allianz – and CARE are offering bespoke, rather than off-the-shelf products, to this vulnerable group of people. The communities themselves have been involved in designing the new policies, which will cover death, medical treatment for injuries in accidents, help with funeral costs and hospital expenses, as well as paying wages during illness.

Wolfgang Jamman, national director of CARE Germany, said, "Microinsurance provides a comprehensive measure of social security in an area which desperately needs this sort of protection against accidents and shocks that can push poor communities right to the limit."

The community-based health insurance scheme is a first in India’s private sector because it works as a cooperative system. Entire villages work together as a group to insure their residents against illness, and then they handle the transactions of the premiums themselves, the average annual cost of which is around seven euros for a family of four.

With technical advice from Bajaj Allianz and CARE, the villagers set up a community fund, known as a "Mutual", into which they pay their monthly insurance premiums. The cooperative insurance, the Mutual, retains 65 percent of that income, while the remainder is passed on to Bajaj Allianz, which uses it to cover expenses for excess payments.

In case of an illness, a doctor appointed by Bajaj Allianz and CARE treats the villagers and, if necessary, sends them to partner hospitals in the region. Most medical treatment is covered by the Mutual fund up to a ceiling, agreed in advance by the community itself. Bajaj Allianz covers any costs above that amount, such as surgery or other complex procedures.

R.N. Mohanty, who oversees the project for CARE International in India, said: "The insurance packages CARE and Allianz are offering people are the first of their kind. The people we work with are among the most vulnerable in India, and they are at risk of an increasing number of natural disasters. By working with these communities so closely, we are sure we are able to offer them the products they know they need."

Werner Zedelius, member of the board of management of Allianz SE responsible for growth markets said: "Traditionally, poor people cannot afford the premiums for insurance cover, but here we have developed a set of products the community can afford and actually wants to use. For us, microinsurance is a growing social business. We expect it to be profitable within the first year and plan to reinvest any profits into the project to enlarge it further."

CARE runs a variety of microfinance projects in many of the 70 countries it works in around the world, from Asia and Africa to Latin America.

Allianz also offers microinsurance in other Indian states as well as in Indonesia and Egypt. The microinsurance market potential in India is estimated at well over 250 million policy holders.


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