MICROCAPITAL STORY: CARE International and Allianz Pioneering Microinsurance Against Disaster for India’s Poor

Aid agency CARE international and global insurance company, Allianz are offering community health insurance in the southern Indian region south of the city of Chinnai, an area badly hit by the December 26, 2004 tsunami. Packages covering natural catastrophes and accidents will be available for 16 cents a month. A family of four can be insured for an average annual cost of ten dollars US.

The microinsurance products offered by CARE and Allianz are customized according to the needs and requests of local communities who are themselves involved in designing policies covering death, medical treatment for injuries in accidents, funeral costs, hospital expenses, and wages during illness. Within a year, CARE and Allianz expect to have 200,000 clients aged 18-70 buying their microinsurance products.

This is the first community-based insurance model in India’s private sector. Working as a kind of cooperative, a village works as a group to insure members against illness and accidents, handling all transactions, much like the village banking model.

Villagers pay monthly insurance premiums into a community fund or mutual. The Community fund retains 65 percent of the premiums to be used for medical treatment up to an agreed-upon ceiling. The remaining 35 percent is given to Allianz’s India branch, Bajaj Allianz to be used to cover ceiling excess.

Geoffrey Dennis, chief executive of CARE International UK, views microinsurance as a much needed social security often missing in poorer communities. With an estimated 250 million potential microinsurance policy holders in India, Werner Zedelius, member of the board of management of Allianz SE, expects to be profitable within the first year, and plans to reinvest towards further expansion of microinsurance.

Allianz Group is a leading global provider of insurance, banking and asset management. Founded in 1890, Allianz Group serves over 80 million customers in 70 countries. Allianz also offers microinsurance products in Indonesia and Egypt.

Founded in America in 1945 to aid a war-torn Europe, CARE International is now one of the largest aid agencies, helping 55 million poor people each year in 70 countries. CARE supports microfinance projects in Asia, Africa, and Latin America.

By Melissa Duscha

Additional Information:

Allianz Group: http://www.allianz.com/en/allianz_group/index1.html

Bajaj Allianz: http://www.bajajallianz.com/BagicCorp/index.jsp

CARE International: http://www.careinternational.org.uk/Welcome%20to%20CARE%20International%20UK+6877.twl

CARE International Newsroom: Pionneering disaster insurance for some of India’s poorest people

FINCA: http://www.villagebanking.org/