Over 45,000 inhabitants of Madurai in the Indian province Tamil Nadu now have mutual death risk cover. With that, MIAN has come to the end of the first phase of its project in India after three years.
The project began at the end of 2003 at the initiative of the Rabobank Foundation and Oxfam Novib. The local development organization DHAN, a co-operative with one and a half million members, asked about the possibility of expanding the recently introduced micro-financing project to include micro-insurance.
Do it yourself
Initially, a co-operative project with local insurers with whom DHAN was already doing business was considered. After extensive talks with 6 insurance companies, we concluded that the project would not succeed on that basis. DHAN decided to do it itself. The first problem was the lack of expertise in the field of insurance. To solve that, Simon Kadijk of Donatus was asked to set up a training programme. But more was needed. Simon: “We had realized by then that the lack of knowledge wasn’t the only problem, there was also no proper administrative system. Michiel Berende of Interpolis proved willing to take up the burden. The result was that in November 2004 we departed as a team – Annette, Michiel and myself – for Madurai to give the project definite shape.”
A little more about DHAN: the organization was set up according to the ‘waterfall principle’, in which the number fifteen turned out to be crucial. In each village or city neighbourhood, about fifteen families form a local self-help group, consisting mainly of women. Fifteen of these groups are bundled into a so-called cluster. Fifteen clusters, in turn, work together in a federation. That means that a federation has between 3,000 and 3,500 members. There are 72 federations. The idea of DHAN and MIAN is that each of those federations should set up its own mutual insurance company for micro-insurance.
The Madurai team went to work enthusiastically. Annette focused her attention on product development, strategy and the layout of the organization. Simon concentrated on training the local professionals (professional workers from DHAN), who would then be able to pass on their knowledge to the clusters and the self-help groups. Michiel put his energy into replacing the Dutch software by an IT system, developed together with DHAN, based on open source programming. The team was supported from the Netherlands by Arend Stolk, an expert in the field of continuous processes. The system would be fully operational at the beginning of 2007. That is no mean achievement, as Simon explains. “You mustn’t forget that many of the people don’t even know their own date of birth. And so many people have the same name. Another huge problem is that the majority cannot read or write. That means that we often have to rely on helpful neighbours. Luckily, social control in India is traditionally very strong. If you want to know if someone is healthy, for example, when they join the insurance programme, the best thing to do is to ask their neighbour. That way you will get an honest answer.”
State of affairs
How far are we now with this ambitious project? Annette: “At the moment there are 15 federations with their own mutual. We are talking about more than 45,000 insured persons. They currently have death risk cover. That costs about 10,000 rupees (200 euros), of which about 3,000 is needed for the cremation. For the sake of clarity: the average family income is about 100 rupees a day (2 euros). The insurance can be expanded to include income cover in case of illness and a simple pension provision. A trial with harvest cover is currently underway in two villages and we would like to set up a form of insurance with income cover in case of hospitalization. There is a great demand for that, but there are also many difficulties. For example. it’s not much use taking out that kind of insurance if the nearest hospital is 300 km away. What you need then is more basic local facilities, such as a doctor’s post and a clinic. That does not concern insurance, so MIAN does not deal with that. That is why we set up the foundation Friends of DHAN. That is separate from MIAN and focuses on supporting DHAN in realizing all kinds of facilities.”
The first project has now been completed. According to Simon there is every reason to be satisfied. He is supported in that by an evaluation by Wim de Jager, member of MIAN. “I am glad we were able to get Wim to join the project. He provides precisely what we still needed: in-depth financial expertise, call it the accountant’s work. Wim makes sure that the financial reporting is correct and he also audits the accounts. In October 2006 he joined us on a trip to India and he was very satisfied with the way in which the administrative organization has been formed at DHAN. His recommendations and advice are extremely valuable for the people who work there.”
In conclusion, Simon and Annette sum up: “Activities like this help local communities in developing countries to become increasingly self-sufficient. By involving the people themselves and getting them to participate actively, we promote their feeling of self-respect and the social cohesion becomes stronger. A time will come when we must leave. But we shall leave behind something positive that will continue to grow.”