Page 1 of 8
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 07
August 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 221
Establishing the Optimal Micro-insurance Delivery
Model in Disaster Resilience
Siddharth Shankar Gupta
M.Tech, Disaster Mitigation and Management, IIT Roorkee
siddharthgupta885@gmail.com
Abstract
Disasters are amenable for losses due to
economic, political and social damages in
the society. The economic losses in case of
disasters are relatively higher for the
vulnerable people who have houses in
disaster prone areas. However, in the most
cases, the loss estimation does not involve
the loss of income and livelihoods of poor
people and on the other hand, poor people
have no basic knowledge about the micro- insurance schemes and they do not know
that how to get the profits from the micro- insurance schemes. This is why poor
people in disaster affected areas sustain
extremely as compared to the remaining
groups in the society.
This paper compromises to identification
of the best delivery model of Micro- insurance in the context of Disaster
Management. There are the various
delivery models for providing the micro- insurance services to poor people. So, this
paper deals that what kind of delivery
model is suitable for the vulnerable people
in the context of disaster management.
1. Introduction
Disasters are amenable for losses due to
economic, political and social damages in
the society. These disasters have adverse
impact on the poor people especially the
poorest people in the society. The poor
people work hard to get out from the
poverty line but disasters abolish all the
wishes of the poor people. Some poor
people get the benefit of micro-insurance
schemes and on the other hand, most of the
people do not get the micro-insurance
services due to the lack of the awareness.
Some people avoid the micro-insurance
services due to the higher transaction cost
as well as the high premium.
Micro-insurance may be define as in
exchange premium payment contrary the
losses due to the both natural disaster as
well as human induced disaster for the
affected people. Micro-insurance is based
on the risk transfer mechanism to manage
the risk pools by providing the micro- insurance products to the poor people in
the society.
Delivery model is the one of the channel to
provide the micro-insurance services to the
people. There are mainly four delivery
model like Full service model, Partner- agent model, Community based model and
Provider model. Using the above model,
the micro-insurance products deliver to the
people. This paper deals that what kind of
delivery model is suitable for the
vulnerable people in the context of disaster
management.
Page 2 of 8
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 07
August 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 222
Disaster micro-insurance schemes should
be seen as very important equipment for
the long term disaster risk reduction in the
field of disaster management. There is
need to amalgamation in the disaster
management with the micro-insurance as
well as to increase the public awareness of
micro-insurance schemes among the poor
people so that every vulnerable people can
get the benefit of micro-insurance schemes
and can get out from the cycle of poverty.
The success of Micro-insurance products
depends on the premiums cost as well as
the appropriate delivery model. Micro- insurance should be based on the low
premiums and based on the appropriate
delivery model in which the micro- insurance products easily deliver to the
poor people. If any micro-insurance
schemes have both qualities, it will be
successful in the wide scale in the context
of disaster management for India.
2. Delivery Models of Micro
insurance
Delivery model is used to provide the
micro-insurance products to target the
low income households, small enterprises
and businesses. Cohen and McCord
(2003) described the four type of delivery
model for providing the micro-insurance
services to the people.
2.1 Full Service Model- Under this model
any MFIs or any Government authorities
runs own schemes for the clients. Any
kind of loss or profit is absorbed by
authority or MFI. It is the responsible to
the development of the products as well as
the distribution of the products and it
manage well the risk pool.
Gujarat State Disaster Management
Authority is based on the full service
model.
2.2 Partner Agent Model- A partnership
is formed between insurance company as
the
‘Partner’ and the policyholder is made
by the intermediary as the ‘Agent’ such
as NGOs, MFIs and Other organization.
The insurance company is liable to take all
decision about the sales, product
servicing and manufacturing as well as
to delivery of the products to the
clients. On the other the agent is liable
to the design of products as well as of
the development of products having the
boundaries of the products that the
insurance company is granted to sell that
product. Vimo SEWA, SEWA with
National Insurance Company of India and
Afat Vimo is based on Partner Agent
Model.
2.3 Community Based Model- It
composes of small groups, NGOs
and other small enterprises. This is
responsible to develop own products as
well as to distribute the micro-insurance
products. It has the responsible to
manage the risk pool and absorb the
risk. This kind of the model is without
the role of commercial insurers.
Centre for Self –Help Development (CSD)
in Nepal and Swayamkrushi youth
charitable this based on Community Based
Model. Community Based Model has very
small in size and number of member is
relatively high. This increases the problem
to cover the claim handling process.
Therefore, it is not suitable for the long
term disaster management risk reduction.
Page 3 of 8
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 07
August 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 223
2.4 Provider Model- The providers of
Banking services and Microfinance can
access insurance contracts directly.
Usually they are linked with credit.
Provider model is used over a large area in
the insurance market. Due to high
transaction cost it cannot be used in the
field of disaster for the poor people.
Proshika in Bangladesh is based on
provider model offers the saving scheme to
both poor and rural households.
3. Micro-insurance scheme
There are several micro-insurance
schemes that are running in India as
well as outside the India. These are given
below- 3.1 Gujarat State Disaster Management
Authority (GSDMA) scheme: The
Gujarat State Disaster Management
Authority (GSDMA) was founded in 2001
after disastrous Earthquakes. It is based on
the Full service model. It played a
significant role to provide the government
relief and reconstruction in the assistance.
It provided a Compulsory group-based
housing insurance for those households
who had lost completely during the
earthquake disaster. It made a policy for
compulsory payment of 360 rupees having
protection with 10 years of the 14 types
of Natural and man-made disasters. The
maximum cover is one million rupees. To
spread risks GSDMA sought coinsurance
from commercial insurers to the value of
55%. Each insurer covers about 40,000
houses, and a system was developed to
share risks among the different risk zones
and insurers (AIDMI, 2005).
3.2 Vimo SEWA: The Self Employed
Women’s Association has been working
since 1982. It is an integrated insurance
scheme to support of women in the events
of accident, fire, natural disasters and
human-made disasters. In 1992 SEWA
made collaboration with ICICI lambord
which one of the insurance company of
India and switched in partner-agent model.
After that, it is kith as VimoSEWA
scheme. This scheme is responsible to
bestow insurance products like life,
health and illness to very poor people to
cover the disaster-risk areas. It has the
5000-6500 rupees in the case of the death
or housing collapse. This scheme has
premium of 50 rupees for the first 15
months and onward 100 rupees.
3.3 Afat Vimo: Afat Vimo is one type of
disaster insurance is intended to bestow the
services for the poor people who dwell in
the disaster prone areas. The motive of
Afat Vimo is to protect the property and
livelihoods of poor people in the moment
of disaster. The Afat Vimo is based on the
partner-agent model. Under this model, the
partnership formed between insurer
(LIC and UIIC) and agent (AIDMI and
SWAD). The premium of the scheme is
148 rupees annually. The total coverage of
this scheme is 95,000 rupees including
various components like lost life,
damage to house contents, stock-in-trade
etc.
3.4 Swayamkrushi Youth Charitable
(SYC): Swayamkrushi Youth Charitable
scheme is based on the Community based
model in Andhra Pradesh. The cover of
this scheme is 15,000 rupees in case of
Natural death and 30,000 rupees in case of
