SIDBI VISIT TO BISWA

Mr. Ranjoy Choudhury of Small Industry Development Bank Of India (SIDBI), Bhubaneswar, visited BISWA office at Bhubaneswar and SHGs in the villages of Balipatna & Balianta on 9th Dec 2006. The objective of the visit was to discuss with the members of SHGs about their activities and also to have a detailed discussion on BISWA plan of action for these groups. He discussed with many group members. He was happy to know their activities and expressed his satisfaction on it.

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Communicate Minds
31st Dec 2006 FORTNIGHTLY

Volume-52

SENSITISATION PROGRAM ON TSC

BISWA organized a sensitization program on Total Sanitation Campaign (TSC) at the Gram Panchayat Office of village Baduapali on 22nd Nov 2006. The resource persons of this program envisaged the members of the Panchayat Raj Institution (PRI) about the problems of sanitation practices in rural areas. They also tried to create awareness on hygine and sanitary practices at PRI level. The objective of the program was to ensure availability, use and maintainance of sanitary latrine for safe and hygienic disposal of human excreta in rural areas. Mr. D.C Behera, Junior Engineer, Rural Water Supply and Sanitation (RWSS) briefed the importance of sanitary practices and he explained the details of Technical aspects used in making a sanitary latrine. The diseases caused by improper sanitation were also told by the resource persons during the program. The Word Members of each village of Baduapali Gram Panchayat, Sarpanch, Secretary and other PRI members of Baduapali were present during the program. The resource persons of the program were Mr. Lingaraj Dash, Asst. Manager, Planning (Water and Sanitation), BISWA and Mr. D.C Behera, Junior Engineer, Rural Water Supply and Sanitation (RWSS), Maneswar. The program was coordinated by Mr. Umakanta Pati, Project Incharge, BISWA and Mr. Jibardhan Rout, Sarpanch, Baduapali. The program was a great success and the PRI members agreed to implement the sanitation practices in Baduapali in collaboration of BISWA.

ADVISORS
Khirod Ch. Malick

WORKSHOP ON MICRO INSURANCE

According to a recent study on micro insurance, BISWA has emerged as a leading micro finance institution in India ranking top in micro insurance as well. Micro-credit delivery of BISWA MFI program is carried out in Self Help Group (SHG) model and by 31st Dec 2006 BISWA has promoted as many as 19638 SHGs across its area of operation. Almost 96% of the members of these SHGs belong to Below Poverty Line (BPL) category. A major of these members is their proneness to natural calamities. Hence, BISWA provides them micro insurance facility to bring them under a social security umbrella. Recently BISWA organized three workshops to sensitize the general mass regarding the benefits of insurance coverage. The first workshop was organized on 26th Dec 2006 at Koraput. It was a oneday workshop and ten persons participated in it. The objective of the workshop was to identify the existing best practices among the micro insurance providers. The workshop also aimed towards some innovations in need assessment, product design and delivery mechanisms implemented by micro insurance providing institutions and to build a complete inventory of the existing approaches within the micro insurance sector. Design development of new targeted products and delivery mechanisms for micro insurance was also promoted in this workshop. The second workshop was organized on 27th Dec 2006 at Kalahandi and 12 persons participated in it. The objective of this one day workshop was the same as the above. The last workshop was organized on 28th Dec 2006 at the central office of BISWA at Danipali, Sambalpur. It was also a one-day workshop and fifteen persons participated in it. The objective of the workshop was to identify the existing norms in micro insurance and to draw a common view on need assessment, product design and delivery mechanism in micro insurance. Many press reporters were present in this workshop and it got a very good response in the media. The video clippings of the workshop was shown in the local channels and news relating to this featured in almost all the local dailies. Ms. Shakti Khanna and Mr. Pankaj Joshi, correspondents from PlaNet Finance India, New Delhi were the Resource Persons in these workshops. The workshops were organized by BISWA and Mr. Guru Prasad Nahak, In- Charge; Insurance Cell coordinated all these events on behalf of BISWA.

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Pitabasa Sethi Ajoy Shroff Jogeswar Majhi Shiv Prasad Meher Aurobinda Mahapatra

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Editorial Workshop on Micro Insurance An Insight to Micro Insurance Other BISWA News

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MONTHLY REVIEW MEETING OF DISTRICT COORDINATORS

The monthly Review meeting of the District Coordinators took place at BISWA Training Institute Hall (BTI) on the 29th and 30th Dec 2006. Mr. K.C Malick, Chairman, BISWA took a three hour session, where he pointed out many important attributes like personality, honesty and punctuality of the staff. He said that to work with a Voluntary Organization one should posses the above qualities. Then he took the progress report of the District Coordinators. The Zonal Coordinators also presented the progress report of their respective Zone also.

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EFFECTIVE ENERGY MANAGEMENT India is a country, rich in resources. But we are very poor in managing our resources. We deliberately or mistakenly waste electricity by keeping fans, lights, computers, air-conditioners and other types of electric appliances switched on, even when we do not have the need of those. Energy conservation has received attention in India since the mid 70s.But the impact of energy conservation efforts are felt at a very low pace as the commercial energy: consumption was very low as compared to these days. Recent, due to the changes in economic structure of the country there is a rapid increase in energy demand as well. Structural changes in the economy have led to an expansion of the industrial base in the country, and subsequently the increase in demand for energy. Electricity generation sector has not expanded at a desirable level. Thats why if we could put some effort to save electricity then itll be better for the economic growth of our country. Now-a-days it is seen that the industrial and the service sectors has created a renewed awareness about the economic advantage of energy conservation. So, we should work together for the economic growth of our country and also to save our money by proper use of electricity.

AN INSIGHT TO MICRO INSURANCE

Micro insurance is the provision of insurance to low-income households. Poor households are especially vulnerable to risk, both in the form of natural calamities as well as more regular occurrences of illness and accidents. Microfinance Institutions (MFIs) have played an active role in reducing or protecting against this vulnerability through providing credit for increasing income earning opportunities and through providing savings services to build up resources that can be drawn down in cases of emergencies. However, such events still translate into crisis for many poor households and erode the economic gains they have made as clients of microfinance programs. Credit and savings services are inadequate when households are exposed to risks which cause losses that are beyond their means. Insurance can serve as a promising response to such client needs. Today micro insurers are providing different forms of insurance for life, health, property,

disability, agriculture (crop), etc. Poor households pay a small vii. Premiums are economically premium for limited coverage in the event of losses. affordable. In general, for an insurance Principles of micro insurance: policy to be an attractive purchase, the cost of premiums must be substantially Basic principles those should be observed by micro insurance less than the benefit offered by the policy. providers are universal to insurance and risk management. They include: Micro insurance offering institutions: I. Similar units exposed to risk. Insurers require that risks in a particular class or group of policies be similar. For example, a Around the world, insurance is offered life insurer would require that holders of a certain life by formal insurers, microfinance institutions (MFIs), health institutions, insurance policy all have similar exposure to the same types of agricultural and health cooperatives, death risk. Insurers also require that the group insured (or the traditional societies (e.g., funeral risk pool), includes a large number of these similar risks, societies), and many other types of relative to the total population. Large numbers of policyholders institutions. reduce the potential for adverse selection (a situation where claims are higher than expected because only high-risk Microfinance institutions are perhaps in households purchase the insurance) and increase the likelihood a unique position to provide micro that the variance of actual claims will be closer to the expected insurance as they have extensive mean used in calculating premiums. networks and are already offering financial services to poor clients. In some ii. Limited policy holder control over the insured event. cases, MFIs link with formal insurance Insurance protection cannot be offered if policyholders can companies and act as agents for the control whether an insured event will occur. If a policyholder formal insurer, although the insurer retains has sufficient control over whether a risk can occur, they can all of the risk. MFIs can also form joint take advantage of the insurance provider. Selling an insured ventures with formal insurers and share truck and claiming it as stolen; setting fire to an old, insured both risk and management. Some MFIs home to build a new one with the insurance settlement; and feel that while they have the networks failing to properly care for an insured goat thereby increasing among the poor, they are not technically the chance it will die of disease; all of these actions take proficient to provide insurance services. advantage of the insurer by increasing their claims experience So, they team up with professional above expectations. These behaviors are called moral hazards. insurance providers who have the iii. Existence of insurable interest. Insurance cannot be technical expertise in the area. provided to policyholders who have a vested interest in a loss Typical business models for micro occurring. A property insurance policy, for example, on a home insurance: cannot be sold to anyone other than the residents of the home. There are four general organizational iv. Losses are determinable and measurable. Insurance models for delivering insurance services providers must have a mechanism for verifying the occurrence to the poor. of a loss and identifying its cause and value. In the partneragent model, insurers v. Losses should not be catastrophic: The risk-pooling and MFIs team up to exploit each others mechanism of insurance breaks down against risks that cause comparative advantages. Insurers utilize large losses for a substantial portion of the risk-pool at the MFIs efficient delivery mechanism that same time. provides the sales and basic services to vi. Chance of loss is calculable. Setting insurance premiums the clients. MFIs benefit from being able requires estimating the size of expected losses and the chance of loss.

to provide insurance to their clients with no risk and limited administrative burden. In the community-based insurance model, the policyholders are themselves the owners and managers of the insurance program. This model is used mainly in health insurance. The members themselves design, develop, service and sell the product, and they negotiate with external health care providers. The Full-service insurance model is similar to the model followed by formal sector insurers, when the provider is singly responsible for all aspects of product manufacturing, sales, servicing, and claims assessment. The insurers are wholly responsible for all insurancerelated costs and losses, but they also retain all profits. provider and the insurer are the same. Like the community-based model this model is also used mainly in health services, where hospitals or doctors offer policies to individuals or groups. Obstacles in designing a micro insurance scheme Several obstacles make it challenging to design a sound micro insurance scheme. Insurance is a complex matter requiring a certain degree of technical expertise that most MFIs simply do not possess. This is why many MFIs form partnerships with formal insurance companies who have the technical expertise. But even in this case challenges to serving the poor remain. In poor areas demand is often thin due to the regular premiums members must pay. It is often by trial and error that institutions can figure out the right combination of prices and services, and this takes time, effort, and skill. Insurers also find it very

hard to operate in areas with frequent natural disasters of very large magnitude. Two other factors, those of moral hazard and adverse selection, make it difficult to provide insurance. Moral hazard arises because individuals take advantage of the insurance to deliberately overvalue their assets and make claims for loss that they help incur. Adverse selection occurs because only individuals who are prone to a particular risk would purchase insurance against it. These raise the costs of insurance provision. (Source: www.microfinancegateway.org)

Activities of BISWA in Micro Under the provider model, the service Insurance:
One of the important products of BISWA micro-Finance operation is microinsurance. As a social security measure, BISWA covers its clients under three major insurance schemes; i.e.; JBY of LICI, Health Insurance of ICICI Lombard and Oriental insurance for Assets coverage. By the end of December 2006, BISWA had covered the following number under the schemes: 1. JBY of LICI: 42960

2. Health insurance of ICICI Lombard: 152341 (Primary Members) & 457023 (Dependent). 3. Oriental Insurance: 142000