Project Nefscun at Nepal
In 2003 NEFSCUN, a cooperation for savings and credits in Nepal, asked MIAN to do a business case on micro insurance.
Nepal Federation of Savings and Credit Cooperative Unions Limited (NEFSCUN) is the national body for savings and credit cooperatives (SACCOS) and their district unions in Nepal. This member-based organization provides financial and non-financial services to its members, guided by international credit union principles and values. NESFCUN promotes, strengthens and provides a forum for SACCOS to become viable community-based financial institutions, by providing value-added services such as education, training and financial services. NEFSCUN’s core services support SACCOS in providing financial solutions for their individual members.
NEFSCUN has over 650 SACCOS as members, including 31 district unions representing over 350,000 individual members in 2009: 45% female and 55% male. Over 70% of SACCOS-members live in rural areas, their income dependant on the agricultural sector. In urban areas, SACCOS provide their services mainly to members that are active in small business and cottage industries as well as in agricultural related jobs, such as horticulture.
Introduction of the death risk policy
After just two years, the first policies were issued in 2005 (death risk insurance). Soon after the issuance of the first policies, confusion arose about the right of indemnity of the insured. Members were told that this product would improve the standard of living, so they got the impression that this policy was a type of savings product. The idea of insurance, paying premium now and eventually receiving indemnity in the future, is something that is quite difficult to understand for NEFSCUN-members.
The initial policies had to be cancelled and a renewed product was introduced. Soon, however, it became clear that this pure death risk policy was not the insurance product people were looking for. Right now, SACCOS sell some 1500 policies for the minimum covered amount of Rs5000 (€ 50). Keeping in mind the reactions of the members, we advised NEFSCUN not to make a great effort to introduce this product in more SACCOS. It does not make any sense to push a product that people are not asking for.