MICROCAPITAL STORY: SKS Teams with ICICI Lombard General to Provide Health Insurance for Rural Poor in Indian States of Karnataka, Andhra Pradesh, and Orissa

Following an announcement earlier this month, SKS Microfinance (previously reported (1), (2), (3)), an Indian microlending organization, has worked with ICICI Lombard General, an Indian insurance company, to roll out a health care product for the rural poor in Karnataka, Andhra Pradesh, and Orissa by March 8 of this year. This is a continuation of a pilot program introduced in Karnataka in February 2007. The problem of health insurance, while of growing concern in Western nations, is just another symptom of the severe poverty afflicting millions in developing nations. According to United Nations Development Programme, of the one billion people in India, 950 million — 95 percent — are living without health insurance. SKS currently offers a loan cover insurance plan in conjunction with Life Insurance Corporation of India to offer life insurance at the rate of 1 percent of the total loan amount. Their new health insurance plan, dubbed “Swayam Shakti,” will offer annual premiums of between USD 5 and USD 13, allowing clients to cover themselves, their spouse, and two children for the equivalent of between USD 500 to USD 1300. This scheme is based on an SKS survey of 248 rural families, which found that 67 percent of respondents spent an average of USD 59 on health services per year, and that 45 percent of respondents had to borrow money to do so.

A rapidly growing microfinance institution, SKS was founded in 1998 by Vikram Akula. The organizaition currently serves 513,108 women borrowers via 653 branches throughout India, providing loans of USD 123 on average. SKS received a rating of A- from from Micro-Credit Ratings & Guarantees India Ltd. (M-CRIL). In 2007, SKS reported to the MIX Market, a microfinance clearinghouse, total assets of USD 78.8 million with a gross loan portfolio of USD 63.2 million. They also reported a return on assets of 7.5 percent and a return on equity of 9.22 percent, with an operational self sufficiency of 115.68 percent.

ICICI Lombard General Insurance is a joint venture between India’s ICICI Bank Limited and Canada’s Fairfax Financial Holdings Limited. The company provides several insurance options designed specifically for rural clients, and has worked with MFIs BASIX and the Microcredit Foundation of India (MFI) to pilot insurance solutions for several years (MIX Market Profiles: BASIX, MFI).

By Priya Rajdev

SKS News: Pilot Health Insurance Program, February 2007

SKS: Home, About SKS; Previously Reported: (1), (2), (3)

Vikram Akula: Previously Reported, TIME Profile

ICICI Lombard General: Home, Rural Insurance

MIX Market: Home, SKS Microfinance, BASIX, MFI