success story of sanasa - fair international seminar on agriculture and microinsurance

Success Story Of Sanasa Success Story Of Sanasa in Micro Insurance.in Micro Insurance.

SANASA INSURANCE COMPANY LIMITEDSANASA INSURANCE COMPANY LIMITED- - SRI LANKA -SRI LANKA -

Presentation to the FAIR International Seminar, Bangladesh on Presentation to the FAIR International Seminar, Bangladesh on Agriculture and Micro insurance : Experience in Afro- Asian Agriculture and Micro insurance : Experience in Afro- Asian

RegionRegion by by

Dr. P.A. KiriwandeniyaDr. P.A. Kiriwandeniya

Introducing - Sanasa Insurance Introducing - Sanasa Insurance Company Ltd (SICL)Company Ltd (SICL)

SICL is an insurance company established to serve members of SICL is an insurance company established to serve members of

Sanasa societies and clients of Sanasa subsidiary companies and Sanasa societies and clients of Sanasa subsidiary companies and

also members of other CBOs such as Funeral Aid Societies also members of other CBOs such as Funeral Aid Societies

established to serve low income households.established to serve low income households.

The term “Sanasa” is an acronym for a Thrift, Credit & Cooperative The term “Sanasa” is an acronym for a Thrift, Credit & Cooperative

Society. It also signifies the entire movement of Sanasa societies Society. It also signifies the entire movement of Sanasa societies

along with the group of Sanasa subsidiary companies.along with the group of Sanasa subsidiary companies.

Milestones of SICL Milestones of SICL SICL is an insurance provider emerged from a long and outstanding SICL is an insurance provider emerged from a long and outstanding

experience in microinsurance activities conducted by an organization experience in microinsurance activities conducted by an organization called “All Lanka Mutual Assurance Organization”(Almao) which was the called “All Lanka Mutual Assurance Organization”(Almao) which was the

insurance arm of SANASA prior to its incorporation under Companies Act. insurance arm of SANASA prior to its incorporation under Companies Act.

1989

1991

1993

1996

2002

2005

Formation of ALMAO with Society Leaders of Funeral Aid Societies.Pioneer in introducing Life Cover with Maturity Benefits , Accident and Health Cover

Declared as a Specially Authorized Society in the government gazette by the Ministry of Trade and Commerce

Amalgamation with Micro-Insurance Unit of Sanasa Federation

Establishment of Sanasa Insurance Company Ltd. (SICL) and ALMAO becomes the major shareholder

SICL begins operations in General Insurance as well.

Community Development survey by Forum of Development established by Dr. P.A. Kiriwandeniya. Starting point of the formation of the SICL

Vision of SICLVision of SICL

To establish a new society based on Co-To establish a new society based on Co-operative principles.operative principles.

Mission of SICLMission of SICL

To strengthen the society through adequate To strengthen the society through adequate Risk coverage and developing the Risk coverage and developing the community Through comprehensive risk community Through comprehensive risk cover.cover.

Objectives of SICLObjectives of SICL01. 01. To popularize insurance among the low income To popularize insurance among the low income

householders.householders.

02. 02. To introduce simple and affordable insurance To introduce simple and affordable insurance products for benefit of the poorproducts for benefit of the poor..

03. 03. To design less expensive insurance schemes which To design less expensive insurance schemes which provide benefits promptly.provide benefits promptly.

04. 04. To increase learning and dissemination of To increase learning and dissemination of best best practice for delivering micro insurance practice for delivering micro insurance services to services to the low income families.the low income families.

05. 05. To explore ways and means to strengthen capital To explore ways and means to strengthen capital reserves so as to ensure solvency and reserves so as to ensure solvency and

sustainability.sustainability.

SANASA Insurance Company Limited

Target Market of SICLTarget Market of SICLCustomers of SICL are mostly from the BPO market Customers of SICL are mostly from the BPO market consisting of:consisting of:

• Members and customers of Sanasa Primary Members and customers of Sanasa Primary societies & societies & non members. non members.

• Members of Funeral Aid societies and other CommunityMembers of Funeral Aid societies and other Community Based Organizations. Based Organizations.

• Customers of Sanasa Development Bank and Customers of Sanasa Development Bank and other Sanasa subsidiary organizations. other Sanasa subsidiary organizations.


BOP Market in Sri Lanka BOP Market in Sri Lanka (As per survey conducted in 2006 under the sponsorship of ADB)(As per survey conducted in 2006 under the sponsorship of ADB)

Non poorNon poor 20% over 900020% over 9000

44% between 6001-900044% between 6001-9000

25% between 3001-600025% between 3001-6000

11% Less than 300011% Less than 3000

MonthlyMonthly income in Rupees income in Rupees

Not so poorNot so poor

PoorPoor

ExtremelyExtremelypoorpoor

BOP BOP MarketMarket


Strategies adopted to serve customers at Strategies adopted to serve customers at different income levels of BoP Marketdifferent income levels of BoP Market

Insurance for Funeral ExpensesInsurance for Funeral Expenses::

This insurance has been designed mainly for the “extremely poor” with This insurance has been designed mainly for the “extremely poor” with provisions to cover other income sectors as well. provisions to cover other income sectors as well.

It is an insurance product for the whole family of a society member for a It is an insurance product for the whole family of a society member for a premium of Rs.360 (equivalent to about 3 US Dollars). Cover is provided to premium of Rs.360 (equivalent to about 3 US Dollars). Cover is provided to all society members under a group policy issued to the society.all society members under a group policy issued to the society.

Life InsuranceLife Insurance::

SICL offers life insurance product of various types including Pension policy SICL offers life insurance product of various types including Pension policy to suit needs of low income groups with premiums affordable to them. to suit needs of low income groups with premiums affordable to them.

# Insurance for Life Credit# Insurance for Life Credit: : To enhance borrowing capacity of Sanasa To enhance borrowing capacity of Sanasa society members and account holders of MFIs & Development Banks. We society members and account holders of MFIs & Development Banks. We have developed this product to cover loans of high values and also to have developed this product to cover loans of high values and also to ensure obtaining reinsurance support from “Hannover Re.”ensure obtaining reinsurance support from “Hannover Re.”

Dr. Kiri’s Presentation -3- SANASA Insurance Company Limited

Strategies adopted to serve customers at different Strategies adopted to serve customers at different income levels of BoP Market Contd…income levels of BoP Market Contd…

Non-life InsuranceNon-life Insurance::

Under this portfolio SICL offers following insurances at Under this portfolio SICL offers following insurances at minimum premium rates, affordable to the low income minimum premium rates, affordable to the low income groups and MFIs:groups and MFIs:

- - Personal Accident & Health InsurancePersonal Accident & Health Insurance: To provide benefits mainly to : To provide benefits mainly to directors, office staff members & society members.directors, office staff members & society members.

- - Property InsuranceProperty Insurance: Mainly to provide fire & other perils including cover for : Mainly to provide fire & other perils including cover for natural disasters to Sanasa buildings and also to private properties of natural disasters to Sanasa buildings and also to private properties of Sanasa members.Sanasa members.

- - Motor InsuranceMotor Insurance: Exclusively to provide insurance cover at concessionary : Exclusively to provide insurance cover at concessionary rates for poor men’s vehicles such as Three Wheelers & Motorcycles.rates for poor men’s vehicles such as Three Wheelers & Motorcycles.

- - Agricultural InsuranceAgricultural Insurance: : To provide all risk benefits of crop insurance as To provide all risk benefits of crop insurance as required by banks for crops such as maize, onions, sugar canes, and required by banks for crops such as maize, onions, sugar canes, and various other food crops so as to enhance borrowing capacity of farmers. various other food crops so as to enhance borrowing capacity of farmers.


Innovative Insurance Products Innovative Insurance Products Introduced Recently by SICLIntroduced Recently by SICL

- Weather Index Based Crop Insurance For Paddy (Rice) Farmers.- Weather Index Based Crop Insurance For Paddy (Rice) Farmers.

- Weather Index Based Crop Insurance for Tea growers.- Weather Index Based Crop Insurance for Tea growers.

- Livestock Insurance For Low Income earners.- Livestock Insurance For Low Income earners.


Weather Index Insurance (WII)Weather Index Insurance (WII)for Paddy(Rice) farmersfor Paddy(Rice) farmers

WII came into operation for the first time in Sri Lanka by Sanasa Insurance WII came into operation for the first time in Sri Lanka by Sanasa Insurance company in collaboration with following partners;company in collaboration with following partners;

-International Labour Organization (ILO)-International Labour Organization (ILO)

-Canadian International Development Agency (CIDA)-Canadian International Development Agency (CIDA)

-Développement international Desjardins (DID)-Développement international Desjardins (DID)

-Basix (India)-Basix (India)

-Financiere Agricole du Quebec – Developpement international (FADQDI)-Financiere Agricole du Quebec – Developpement international (FADQDI)

WII for Paddy commenced on experimental basis in 2010 and the number of WII for Paddy commenced on experimental basis in 2010 and the number of insurance policies increased from 570 in Yala season 2010 to 4815 policies in Maha insurance policies increased from 570 in Yala season 2010 to 4815 policies in Maha season 2012/2013.season 2012/2013.

Modifications to the WII product for Paddy is in progress with the objective of Modifications to the WII product for Paddy is in progress with the objective of expanding further to reach a new target of 10,000 farmers. expanding further to reach a new target of 10,000 farmers.


Weather Index Insurance (WII)Weather Index Insurance (WII)for Tea Growersfor Tea Growers

CommencementCommencement WII for Tea came into operation under the sponsorship of International Finance Cooperation WII for Tea came into operation under the sponsorship of International Finance Cooperation

(IFC), the private sector arm of the World Bank Group to advance economic development by (IFC), the private sector arm of the World Bank Group to advance economic development by investing in strictly for profit and commercial projects which reduce poverty and promote investing in strictly for profit and commercial projects which reduce poverty and promote development.development.

ObjectivesObjectives To develop To develop weather index –based insurance products weather index –based insurance products that are climate responsive and cater to that are climate responsive and cater to

diverse food crops in Sri Lanka.diverse food crops in Sri Lanka. To promote To promote institutional capacities institutional capacities of SANASA Insurance Company Ltd (SICL) in order to make of SANASA Insurance Company Ltd (SICL) in order to make

it possible to develop weather index-based insurance products and do under-writing efficiently.it possible to develop weather index-based insurance products and do under-writing efficiently. Raise awareness amongst 50,000 Raise awareness amongst 50,000 Sri Lankan farmers on the availability of the developed Sri Lankan farmers on the availability of the developed

weather index-based insurance products and their benefits. weather index-based insurance products and their benefits. Current StatusCurrent Status Business of WII for Tea commenced in 2012 and is progressing well.Business of WII for Tea commenced in 2012 and is progressing well.


Livestock Insurance for Livestock Insurance for low income farmers.low income farmers.

Livestock InsuranceLivestock Insurance is a protection mechanism available is a protection mechanism available to livestock farmers against any eventual losses due to to livestock farmers against any eventual losses due to theft and burglary and also losses due to death and theft and burglary and also losses due to death and permanent disability of cattle.permanent disability of cattle.

In the field of Livestock Insurance too, Sanasa Insurance In the field of Livestock Insurance too, Sanasa Insurance Company is the first organization to introduce a micro chip Company is the first organization to introduce a micro chip having Radio Frequency Identification Device (RFID) having Radio Frequency Identification Device (RFID) technology to be implanted under the cattle’s ear so as to technology to be implanted under the cattle’s ear so as to trace and identify the insured animal and to pay claims in trace and identify the insured animal and to pay claims in the event of happening an insured peril.the event of happening an insured peril.

SICL is planning to solve many challenges faced by milk SICL is planning to solve many challenges faced by milk farmers by adopting various strategies under its farmers by adopting various strategies under its “Insurance Plus” program.“Insurance Plus” program.


Challenges in developing Weather Challenges in developing Weather

Index InsuranceIndex Insurance..

Scaling up weather index insurance depends on :Scaling up weather index insurance depends on :

-Availability of reliable meteorological data.-Availability of reliable meteorological data.

-Availability of weather stations in close proximity to cultivating areas. -Availability of weather stations in close proximity to cultivating areas.

-Awareness in weather index insurance among potential farmers. -Awareness in weather index insurance among potential farmers.

-Farmers, willingness to pay insurance premium.-Farmers, willingness to pay insurance premium.


Lessons learned in operating Weather Lessons learned in operating Weather Index Insurance.Index Insurance.

Weather index insurance is not a sole solution for all risks faced by the farmer . It can Weather index insurance is not a sole solution for all risks faced by the farmer . It can not be operated in all areas. Yet, it shows great promise as a tool to reduce the sever not be operated in all areas. Yet, it shows great promise as a tool to reduce the sever effects from weather related phenomena.effects from weather related phenomena.

It is an easily-operated strategy, free from defects of delays, lack of transparency, It is an easily-operated strategy, free from defects of delays, lack of transparency, presence of human error, bureaucracy and complexity in claims settlement presence of human error, bureaucracy and complexity in claims settlement proceduresprocedures..

Weather insurance seems more effective when it is linked to a large package of risk Weather insurance seems more effective when it is linked to a large package of risk management strategies and services.management strategies and services.

Unwillingness of farmers to pay premium may be overcome by premium subsidy Unwillingness of farmers to pay premium may be overcome by premium subsidy support program overcome by introducing premium subsidy scheme. ( at least for the support program overcome by introducing premium subsidy scheme. ( at least for the initial period to get them familiarized with Weather Index Insurance ) initial period to get them familiarized with Weather Index Insurance )


success story of sanasa - fair international seminar on agriculture and microinsurance

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