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Problems for micro-insurance schemes linger

Role of Jubilee Life Insurance for community-based health insurance facilities appreciable

The claim to health is an economic, social and cultural right to which all individuals are entitled. Pakistan is far from providing this right to millions of its residents, especially people living in rural and far-flung areas.

A report launched in 2016 by the Ministry of Planning, Development and Reform details that nearly 39 percent of Pakistanis live in multidimensional poverty. In 2015, Pakistan signed off the Sustainable Development Goals (SDGs) framed on the human rights focusing on improving healthcare by 2030. Except Afghanistan, Pakistan has one of the lowest ranking health indicators compared to other countries in this region.

Community-based financing

Community-based financing arrangements are useful tools in economic development and aim to help poor families by offering insurance plans. The coverage benefit is lower than a usual insurance plan; therefore, poor people pay considerably low premiums.

Community-based financing options are attracting interest from insurance companies across the world. The major community-based financing arrangements that currently exist in Pakistan are being offered through Benazir Income Support Program (BISP). Other policies are provided in conjunction with Microcredit and Micro Health Insurance services offered by various microfinance institutions (MFIs), microfinance banks, NGOs and rural support programs. These are not sufficient to reach poverty stricken population of the country, especially in non-urban areas.

Private organizations find it hard to reach regions that are far-flung and less developed. These are the regions that greatly need these social initiatives.

Role of Jubilee Life Insurance

In a first of its kind collaboration, Jubilee Life Insurance (JLI) has partnered with the Government of Gilgit-Baltistan. Under this arrangement, JLI is offering community-based health insurance facilities as part of its social initiative in Gilgit district of Gilgit-Baltistan region. This scheme is being funded by a German government owned development bank known as KfW. This development bank is also funding health schemes in four districts of Khyber Pakhtunkhwa (KPK), as part of their CSR Program.

Gilgit-Baltistan is highly mountainous and 43 percent of its population suffers multidimensional poverty. Population in the Gilgit district is spread-out in hilly terrain where reach to union councils located in the outskirts of this district is time consuming and quite difficult. Medical facilities are inaccessible to majority of the residents unless they travel to the central city of Gilgit. Most of villagers do not travel to receive medical attention unless their situation is worst, due to time and financial constraints.

Jubilee Life Insurance, a subsidiary of the Aga Khan Fund for Economic Development (AKFED) and one of Pakistan’s leading private insurance companies, has collaborated with Department of Health, Government of Gilgit-Balitistan to offer health insurance products, under Social Health Protection Initiative to the ultra-poor population identified through BISP data.

Jubilee Life has been involved in offering community based health insurance schemes to poor community of Gilgit-Baltistan since 2007.

Health insurance is a rapidly expanding business in Pakistan. By offering various health plans, Jubilee Life Insurance is expanding the range of financial services available to families in Gilgit-Baltistan which had previously been excluded from such schemes.

For the first time in Pakistan, the Government; run DHQ hospital and City hospital in Gilgit have been added to an insurance company’s panel.


Non awareness about insurance

In Pakistan, generally, there isn’t enough awareness about insurance and its importance. Insurance is supposed to provide protection and an avenue for investment. Majority of Pakistani working class are being insured by employers. It is extremely important to prepare for the future and be ready for any troubles with regards to life’s insecurity.

It is important that government bodies and insurance companies collaborate and work together to ensure that this health based social initiatives expand within the country and reach people who need it most. With the insurance to GDP ratio of 2 percent and an insurance density of 10 percent, the country offers a dynamic opportunity for the development of need-based insurance products.

According to the World Bank around 4 percent of the population falls below the poverty line as a result of unforeseen hospitalization in Pakistan. A brief survey reveals that insurance products are targeted for the middle and upper class segments.

Micro-insurance products

Some telecom companies have started micro-insurance products with the help of insurance companies. These include Telenor Pakistan’s Easypaisa micro-insurance plan in collaboration with Adamjee Insurance and UBL’s Omni Term Life Insurance Plan; both offered to people with lower purchasing power.

The government of Punjab, with the help of the State Bank of Pakistan (SBP) and the Bank of Punjab, has introduced a crop loan insurance program for small farmers while the Sindh government has started a province-wise universal life insurance plan for accidental deaths. These initiatives are limited in scope and size and hence not sufficient to cover the country’s vast population that has a lower purchasing power. Supportive steps are required at both the government and private level to provide insurance coverage to the poor.

The government should design a suitable regulatory framework for the development of micro-insurance schemes. This set of regulation needs to be flexible, business supportive and encourage the development of new micro-insurance plans.

The step should be followed by facilitating insurance companies to form alliances and building partnerships with telecom service providers in order to develop unique micro-insurance policies since 110 million plus strong telecom customers present an untapped opportunity. This will involve designing steps for the easy issuance of licenses, minimum monitoring and reporting requirements.

The development of micro-insurance products needs to be encouraged by reducing tax rates on the earnings of insurance companies and offering tax incentives to buyers of micro-insurance policies. Decision makers at insurance companies should assess the demand of micro-insurance policies.

The untapped micro-insurance market can be reached by building consumer awareness to help the poor protect themselves from financial shocks.

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