New Health Insurance Product in Africa

In the [first post](http://healthmarketinnovations.org/blog/2011/feb/2/developing-new-market...) of a two-part series on creating a health insurance product to serve the poor in Dar es Salaam, Tanzania, MicroEnsure’s Richard Leftley discussed the challenges involved in marketing a totally new kind of product through individual sales. Here, the MicroEnsure CEO discusses how they established infrastructure in Tanzania to carry risk and process requests—fulfill “back office” duties.

*How did you set up the infrastructure to sell health insurance in Tanzania?*

If you want to do health insurance for the poor there are [three distinct roles](http://www.microensure.com/whatwedo-businessmodel.asp). The first role is to carry the risk. In Tanzania, <strong>insurance companies saw this market as a loss-making proposition</strong>. They believed you couldn’t charge this client base enough to cover the costs. We set about building our own insurance company which is a cell captive funded by [Hollard](http://www.hollard.co.za/) in South Africa. The risk carrier for this pilot, the South African insurer Hollard, gave MicroEnsure the authority to design and sell products on its behalf. A local insurance company called [Golden Crescent](http://www.gca.co.tz/index.htm) agreed to issue insurance policies locally; they re-insured themselves to Hollard, where claims are taken.

The second role is being the front office, the entity that sells insurance. <strong>The front office needs to be accessible, have a strong brand, and points of sale in the right locations</strong>. Our partnership with the Anglican Church provides an extremely strong brand with convenient points of sale. The front office also needs to be able to be cash transactions to payout claims and take premiums. We hired local nurses to administer claims and “boys on bikes” to help control fraud and reconcile claims.

The third role is the back office: involves things like designing the product, educating the client base, handling the processing names and addresses, administering claims. We have worked with our IT provider [AcessMeditech](http://www.acessmeditech.com/) to configure their TPA system for our use on this product. We are renting the system for this pilot test with all programming support provided from India.

*Have you met any of the beneficiaries of this product?*

Yerusa Vomo is a 70 year-old grandmother who joined the Imani Health Programme in November 2010. Just a couple of months later, Yerusa visited her doctor at Mikumi Hospital in Dar es Salaam complaining of a persistent headache and a fever.

Yerusa who has been suffering from a case of hypertension for the past ten years was able to <strong>undergo a comprehensive medical checkup</strong>. She explained that she had stopped taking her medication for hypertension as it caused her loss of appetite resulting in weight loss. The diagnosis revealed that Yerusa was not only suffering from Malaria but also a severe case of gastrointestinal worm infestation.

As a member of the Imani Health Programme, Yerusa was treated immediately with the necessary medication and is currently on the road to recovery.

*Neat. So will you sell to people outside Dar, if the pilot is successful?*

Right now, the pilot in Dar is key to helping us understand what it takes to implement health insurance outside of India. What kind of skills do we need on the team? How long does it take, can we develop and run a network of healthcare providers, how many policies do we need to sell to break even, what regulatory challenges will we face, etc. We also want to see if the individual sales model works.

Simultaneously, we are working on a different model with PharmAccess in northern Tanzania. Here, we will use our underwriting facility and third party administration software to serve the [KNCU](http://www.equalexchange.coop/tanzania) coffee grower union, 67 cooperatives. There are roughly 1000 members per cooperative. As a group, they vote to take insurance or not. If more than 50% of people say yes, they all take insurance, and the premium is deducted from the proceeds of coffee sales.