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Setting up a Mutual Insurance-how and what?

What are the essentials required to setup and manage a mutual insurance system effectively
by

KUMAR SHAILABH

on 22 January 2013

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Transcript of Setting up a Mutual Insurance-how and what?

This story is of Mr PremNath Sakale who is a painter by profession

A few months back he fell from third floor of a building while painting and broke his vertebra

He was admitted into a private hospital where he was asked to pay 3.5 lakh rupees for his treatment

His wife who is an Uplift member did not know where to get all this money

What did Anita do then? Anita's claim was presented to the claim committee which sanctioned the highest limit of 15000 Rs







ANITA SAKALE after receiving the claim had to say this- "if I was not an Uplift member I had to sell my only asset -My house" Anita contacts the Service Executive situated in the slums who calmed her down and then called the 24X7 Helpline of Uplift.

The Uplift doctor then took the case details and asked Anita if she is ok to shift her husband out

The Uplift Dr called up the public hospital and talked to the social worker and told her that Anita does not have money to pay for the operation-the social worker okayed the operation saying that since she is an Uplift member she will pay.

Premnath was operated the next morning in only 35000 Rs kns;kvns;knv;s nd;kvnkdvn;k Do you wish to start a programme
like this for Rajasthan Lets then understand
How do we setup this Uplift system?
What are the requirements?
What things we have to take care of and what processes are required to setup the Mutual System? The Service Executive was present




She knew what she had to do 24X7 Helpline With the help of Uplift Dr




Anita could get the right information and guidance Anita had been oriented well





she knew where she needed to go what she needed to do in emergency Uplift network hospital was there The treatment cost was out of reach for Anita





but thanks to the working helpline and the health care network the cost could be reduced Anita had participated in the client education series

Client Education is part of the Business Plan and is a compulsory and systematic feature

Client education is not only required for the member but is a critical component of Mutual operation! Service Executive was specially appointed for this job(dedicated staff)

Service Executive Job description is made , workload is calculated ,targets are given





this is all part of the business plan Uplift has made a system that members use and appreciate






Just making a system is not enough it should meet the needs of the client The Claim was processed by Uplift Back office and was sent to the claim committee on time

Uplift risk management is sound because its systematically done and also because Uplift has a good membership base in one geography!
Pune - 80000 Mumbai - 28000 The systematic training given to members helps in deciding 200-300 claims a month smoothly






thanks to the business plan and Mutual Regulations Voluntary vs
Compulsory or Enbloc Geographically concentrated or dispersed Law of large numbers Distribution
Design Voluntary or Compulsory

the experience till now is that voluntary programmes have either closed down or are close to be shut down

Generally those organisations go for Voluntary who have strong funding and sustainability is not an issue

There are three dangers in a Voluntary scheme- High distribution cost, High adverse selection and almost no growth

Its our understanding that org who go for voluntary either do not understand the Mutual model or do not take the model seriously! What care do we have to take if do it compulsory or enblock

First we should ensure that the members get the correct and complete information

Second we have to take special care about the services we provide - we need to deliver services faster since we have more time and members should feel them

We also then need to built an elaborate system where members can get back to us freely and we can communicate to them easily-systematic feedback collection, checking quality of post sales services is very critical in Mutuals! Geographically dispersed and concentrated

5000 families in 50 villages across five district

Or 5000 families in 10 villages in one district







It not only increase the cost of distribution but of the entire operation

Those areas villages and districts were density is high should be the ones we start with Insurance is a numbers game

Whether we work with an Insurance company or we do it inhouse as Mutuals one thing is very very important-NUMBERS






Insurance is based on the probability of incident and its cost (or damage)

If we have to start Mutuals we need a minimum of 20000 families in one district for health and 100000 families for life!

This is because while the frequency of health incidents may be high the loss due the death of an earning member is higher SYSTEMS Dedicated team Business Plan Standard Processes What you expect from an Insurance company?




Please share your experiences Top Management R and M&E We have to consider two points in balance always when we design a Mutual system Cost effecient Client Effective Dedicated Team

Most of the organisation treat insurance as an side activity mostly MFI's

Insurance work is mostly understood as selling the policy and a bit more when claims comes in

We have to be extremely careful if we are doing it inhouse

We need a dedicated team to run the Mutuals systematically

Selection of the team , training, job descrition workload calculation and work performance need to be designed properly

There has to be a specialist technical support team to help the field teams Uplift- Aapke yahan se saare forms 25 tarikh tak aa jane chaiye- Abhi tak nahi aaye?

Sadysa sanstha- Pichle hafte holi thi isliye staff chhuti pe tha hum agale hafte tak bhejne ki koshish karenge!

What do we understand?

Lets please understand that we are working as an insurance company and this kind of situations are not good but unacceptable !

Every process should be time bound-with actor, action, location clearly spelt out and this should be known to all concerned staff members Top or senior Management

It has been Uplift's experience that if the top management is not directly looking in the over all management things dont work

The senior management has to systematically review planning and performance and keep a close eye on the business plan targets!

Senior Management should look into the reports very closely every month and go in details. This has to be done initially for atleast two to three years! Reporting, Monitoring aur Evaluation

Three very important steps have to be a part of the Mutuals

to understand
How is the Mutual business running ,
Where are we falling short,
where do we have to change the processes,
How much are we spending on what process
Are those processes having the desired effect,
Is the Staff working properly,

All these and many other indices have to be known for good decision making

The SOPs have no value if the top management do not look into the matter- there has to be a day where the entire operation is reviewed

Reporting has to be time bound and as per plan. Business Plan

Business Plan does not mean Budget!

Business Plan is a comprehensive document of which budget is a part

Business Plan generally has the following contents and is made for a three to five years period

Goals, Objectives and targets

Risks and Challenges identification and possible solutions Operational details

Area of operation number of villages and families to be covered over a period of time

Data collection (reporting ) at which level

SOP is part of the Buiness Plan

SOP decides the HR requirement and resources

Come to know how much each processes cost and its efficiency indicator

For example enrolment - who will do it when will it happen with how many people what will be the cost Staff Job description at all levels and reporting and monitoring details Investment details-items required over a period of atleast 5 years Income and expenditure forecast Risk Scenarios,Performance Indicators Business Performance including

Enrolment
Renewals
Claim frequency
Average Claim Cost
Number of claims
Reserves One of the biggest mistakes that is generally done when doing Mutuals is the notion of flexibility when its community based

Flexibility is interpreted as lax ness

Community remains a romantic idea till its backed by a proper system!

Without system no Mutual can work
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