Community-based insurance schemes are an increasingly popular way of pooling resources to protect poor people against the risks of sickness, asset loss, accident and death. But many such schemes are plagued by high drop-out rates. New evidence from India suggests a simple failure to contact members for re-enrolment could be the primary cause.

The Self Employed Women’s Association (SEWA) offers an integrated package of life, hospitalisation, accident and asset insurance for poorer self-employed women in Gujarat, India. Researchers from SEWA, in India, and the London School of Hygiene and Tropical Medicine, in the UK, consider why members have tended to drop out despite the community-based insurance scheme’s clear advantages.

Members join by paying an annual premium of 100 Indian Rupees (around two days’ wages for a rural agricultural worker) or by paying a fixed deposit (the interest on which covers the annual insurance premium). Full-time staff and local leaders known as ‘aagewans’ enrol members and take care of their claims. But membership renewal rates are low. In some cases, up to 70 or 80 percent of clients fail to renew their annual membership.

Lack of funds, poor understanding of insurance and dissatisfaction with the scheme have all been cited as reasons in the past. The researchers surveyed a sample of 220 urban members of the SEWA Insurance scheme (both drop-outs and renewed members) to identify their willingness and ability to renew insurance membership, their trust in the scheme, and self-reported reasons for dropping out. They observed several important trends:

• Renewed members are more likely to come from better educated households.
• Renewed members are more likely to have submitted a claim in the previous year.
• Renewed members tend to have a higher socio-economic status and a higher probability of hospitalisation per household.
• Fifty-seven percent of drop-outs contacted said their main reason for dropping out was that noone came to ask them if they were interested in renewing their insurance.
• Women are significantly more likely to renew if they have strong links with SEWA (for example, membership in SEWA Union or a SEWA bank account).

SEWA has already taken steps to boost enrolment in its community-based insurance scheme. Aagewans now have lists of members for whom they are directly responsible. Prior to the last recruitment campaign they visited these members and provided them with relevant information. The researchers recommend the following to improve re-enrolment:

• rewards for long-term membership in the scheme
• more regular contact between aagewans and their members (to improve service and build trust)
• a ‘no-claims bonus’ (discount) for those members renewing their insurance who did not submit a claim in the previous year.

The researchers note that the study has flaws, as it draws from a small sample and uses quantitative methods limited in their scope. Nonetheless, it does indicate that simple improvements in the administration of SEWA Insurance could hugely increase the efficiency of the scheme and the extent to which it can serve poorer members.

Source(s):
‘Why have the Members gone? Explanations for Drop-Out from a Community-Based Insurance Scheme’, Journal of International Development, 19 (5), pages 653-665, by Tara Sinha, M. Kent Ranson, Falguni Patel and Anne Mills, 2006

id21 Research Highlight: 9 October 2007

Further Information:
Tara Sinha
Self Employed Women's Association
Chanda Niwas, Opposite Karnavarti Hospital
Ellisbridge
Ahmedabad 380001
India

Tel: +91 (0)79 26580530
Contact the contributor: taragsinha@yahoo.co.in

Self Employed Women's Association, India