Coming together for "securing futures" - "Public Private Partnership" - Insurance Conference 2019
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WWW.KMDASTUR.CO.UK
“Public Private Partnership” –
Coming together for “securing futures”
Insurance Conference 2019
“Enhancing the role of insurance for economic growth”
19th July 2019 I Avani Hotel – Livingstone Zambia
Biggest Risks: We should worry about WWW.KMDASTUR.CO.UK
Need to feed 9.6 billion people by 2050
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ur it y, hu .
c n
inse tritio
Food d malnu
an
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nt s + fai
r eve risis
w eathe + food c
eme ion
Extr f mitigat
o Extreme Poverty and inequality
l
ncia (income distribution)
ajor fina ion
am titut
ailure of m or ins
F s
hani • Poverty and inequality are intrinsically
mec Climate Change
flict linked. Poverty reduction - especially
t i on; con es for the poorest - can be greatly
igra uenc • Climate change will stress the
Sc ale m conseq economic, social, and political
enhanced through distributional
e l
Larg regiona systems that underpin each nation
policies. All the evidence confirms that
with Economic Uncertainty and distribution is central to fighting
state.
Financial Crisis poverty.
• The future outlook for the economy is • Climate change will have far-
• Poverty is believed to be the
unpredictable. It could involve - higher reaching effects on crop, livestock,
Conflict; Violence & War leading cause of overpopulation. Food
and more volatile inflation rate; lower and fisheries production, the production depends on croplands and
• Aside from the incalculable human economic growth or full-blown prevalence of crop pests, food
water supply, which are under strain as
losses, there are also enormous recession; unemployment; rapid production systems, and food human populations increase.
economic and social costs. devaluation of the currency. security.
“Public Private Partnership” – Coming together for securing futures 2/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019
A “tiny” change in the global climate could shake up the
entire agriculture industry WWW.KMDASTUR.CO.UK
Most studies now project adverse impacts on crop yields due to climate change (3°C warmer world)
The increasingly unpredictable weather systems have placed extra burden on food security & rural livelihoods
Characteristics of agriculture sector
Production dominated by small holder farmers
Production is predominantly rainfed
High transaction cost; limited access to finance
Low input / low – output (fragmented value chains)
Challenges posed by Climate Change
More erratic and extreme weather patterns
Increased incidence of drought and flood
Heat waves and higher evaporation
Increased incidence of pests and diseases
“Public Private Partnership” – Coming together for securing futures 3/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019
Farmers in our countries are progressively facing more
risks WWW.KMDASTUR.CO.UK
CLIMATE PROJECTIONS
Projected increase in temperature Erratic rainfall and increased Increased incidence of drought
of 1°C to 2°C by 2050 unpredictability of seasonal rains and other extreme events
KEY CLIMATE IMPACTS
AGRICULTURE LIVESTOCK
Reduced yields and / or crop failure Increased incidence of pests and diseases
Reduced soil moisture availability, increased Reduced feed and water sources increased
evapotranspiration and water stress livestock mortality
WATER HUMAN HEALTH
Reduced water quality and quantity Changing ranges of vector borne
Drying of wetlands and freshwater sources diseases. Increased risk from waterborne
Disruption of hydropower generation c diseases
“Public Private Partnership” – Coming together for securing futures 4/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019
Global underinsurance amid heightened global risks WWW.KMDASTUR.CO.UK
Insured vs uninsured loses, 1970 – 2018, in USD billion at 2018 prices
Economic losses = Insured + uninsured losses
protection gap - is the
financial loss generated by
catastrophes not covered
by insurance
The global all-catastrophe protection gap of the past two years combined was also impressively large at USD 280
billion, and more than half of that resulted from independent secondary and secondary-effect peril events.
In terms of 10-year rolling averages, economic losses grew by 5% between 1992 and 2018, and insured losses
by 4.7%. The existing protection gap is an opportunity for the insurance industry.
Source: Swiss Re Institute
“Public Private Partnership” – Coming together for securing futures 5/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019
Global healthcare expenditure—Trends and drivers WWW.KMDASTUR.CO.UK
The Global Burden of Disease Health Financing Collaborator Network (2017) estimates that global spending on
health will almost triple to USD 24 trillion by 2040.
Healthcare expenditure as a Absolute OOPS and estimated health
percentage of GDP protection gaps in emerging markets
(2000, 2005, 2015) (2015, in USD billion)
Source: World Bank (World Development Indicators)
“Public Private Partnership” – Coming together for securing futures 6/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019
Need for an “Universal” health insurance scheme WWW.KMDASTUR.CO.UK
Share of informal employment in total employment, including agriculture (percent, 2016)
Source: ILO (2018)
“Public Private Partnership” – Coming together for securing futures 7/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019
Quantifying the health protection gap (HPG) WWW.KMDASTUR.CO.UK
Estimated size of HPG in emerging regions across the world, 2017
“Public Private Partnership” – Coming together for securing futures 8/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Root causes of Protection Gaps WWW.KMDASTUR.COM
Frontier markets Emerging markets Mature markets
Demand Side
Affordability
Awareness
Appeal
Trust
Culture
Behavioral biases
Supply Side
Transaction costs
Informational asymmetries - adverse selection / moral hazard
Institutions/ infrastructural issues
Availability of risk data for pricing
Limits to insurability
No specific provisions for microinsurance, lack of or limited Government support
“Public Private Partnership” – Coming together for securing futures 9/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Stakeholder interests WWW.KMDASTUR.COM
Stakeholder Interests
Government Insurance Companies Consumers
Provide universal access to Ensure stable, transparent Increase accountability and
financial services regulatory process responsiveness
Ensure affordable and basic Provide trained human Improve quality and reliability
quality service resources and opportunities of service
Promote fair competition Improve productivity and Ensure fair pricing
efficiency
“Public Private Partnership” – Coming together for securing futures 10/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019What is PPP in Insurance Scheme context? WWW.KMDASTUR.COM
An insurance PPP is a contractual agreement between the public sector, represented by a
Ministry or local authority through a Government programme and the private sector, represented
by the insurance industry and its service providers and distribution partners, that combines
business objectives with public policy goals in a cost – efficient and effective way (Ramm,
2011)
“Public Private Partnership” – Coming together for securing futures 11/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Key steps in implementing a
functional PPP model WWW.KMDASTUR.CO.UK
To define the objectives, institutional
Definition and structure, roles, financing mechanisms,
To have coordinated and effective Design infrastructure and the legal and regulatory
M&E that will support evidence framework
based decision making and
accountability
Monitoring &
Industry analysis
Evaluation (M&E)
To understand the capacity
of the insurance industry (in
To maintain proper programme terms of financial and
operation and project management operational)
through a dedicated PMU (Project
Management Unit)
Tendering and
Maintenance
selection of partners
To follow a competitive
tendering process to identify
the right partners best suited
To agree on the terms of the partnership (roles /
Implementation to the objectives
responsibilities) and the implementation of the
schemes based on defined procedural guidelines
“Public Private Partnership” – Coming together for securing futures 12/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019PPP Models/ Structures WWW.KMDASTUR.CO.UK
Model 1 Model 2 Model 3
Government Government Government
(Central/ Regional/ Local) (Central/ Regional/ Local) (Central/ Regional/ Local)
Reinsurance Company(s) Insurance Pool/
Board
Local Insurance Reinsurance
Company(s) Company(s)
Direct marketing / enrollment
Direct marketing / enrollment Local Insurance Local Insurance Reinsurance
Company(s) Company(s) Company(s)
Aggregators
(distribution channels) Aggregators Aggregators
(distribution channels) (distribution channels)
Beneficiaries (end client) Beneficiaries (end client) Beneficiaries (end client)
“Public Private Partnership” – Coming together for securing futures 13/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Case Study: Delivery of universal health insurance –
Indian Model >> WWW.KMDASTUR.CO.UK
PPP Model USD 7,000
Implementation
Cover per family
through Insurance
per year for
and/or Trust and/or
serious illnesses
Mixed Mode
537 million
Portable
Improved Access
Improved
people
Access
to to
Affordable Benefits can be
Over 100 million
Affordable
Quality Care families poor and
availed in all
Quality Care vulnerable families
empaneled
hospitals across
eligible
the country
Comprehensive
Power to State
cover
States given No limit on family
flexibility to decide size; age and
on mode of covers pre-existing
implementation diseases
“Public Private Partnership” – Coming together for securing futures 14/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Case Study: Delivery of universal health insurance –
Indian Model >> WWW.KMDASTUR.CO.UK
Mode of Implementation –
Insurance Mode - States / Union Territories s will do the open tendering process for selection of Insurance Company
Trust / Assurance Mode - Through Society / Trust of State Health Department
Ecosystem of PM-JAY
Benefit Packages Monitoring &
Capacity Building Fund Flow Portability
Evaluation
Enabling Portability of Services
Verification of Beneficiaries
Insurer Awareness
Guidelines SHA Generation
NHA
Payer
IT Platform
Quality
Call Centre
Assurance
Beneficiary
(end client)
Pradhan
Public Mantrai
Arogya Mitra Grievance
Fraud Prevention Private
Redressal
Hospital
Empanelment and real time transactions with Hospitals
“Public Private Partnership” – Coming together for securing futures 15/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Case Study: Delivery of universal health insurance –
Indian Model >> WWW.KMDASTUR.CO.UK
Defining the “target” market –
Target Group for Rural Target Group for Urban
Total deprived Households targeted for AB PM-JAY Occupational Categories of Workers
who belong to one of the six deprivation criteria • Rag picker
amongst D1, D2, D3, D4, D5 and D7: • Beggar
• D1: Only one room with kucha walls and kucha roof • Domestic worker
• D2: No adult member between age 16 to 59 • Street vendor/ Cobbler/hawker / Other service provider
• D3: Female headed households with no adult male working on streets
member between age 16 to 59 • Construction worker/ Plumber/ Mason/ Labour/
• D4: Disabled member and no able-bodied adult Painter/ Welder/ Security guard/ Coolie and another
member (D4) head-load worker
• D5: SC/ST households (D5) • Sweeper/ Sanitation worker / Mali
• D7: Landless households deriving major part of their • Home-based worker/ Artisan/ Handicrafts worker /
income from manual casual labour Tailor
Automatically included - • Transport worker/ Driver/ Conductor/ Helper to drivers
• Households without shelter and conductors/ Cart puller/ Rickshaw puller
• Destitute/ living on alms • Shop worker/ Assistant/ Peon in small establishment/
• Manual scavenger families Helper/Delivery assistant / Attendant/ Waiter
• Primitive tribal groups • Electrician/ Mechanic/ Assembler/ Repair worker
• Legally released bonded labour • Washer-man/ Chowkidar
“Public Private Partnership” – Coming together for securing futures 16/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Case Study - Indian Model -
World’s single largest agriculture insurance market WWW.KMDASTUR.CO.UK
Defining the “target” market –
All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas are eligible
for coverage; ~ 52.1 million farmers are covered (2017-18), bundled with essential livelihood services such as
agricultural credit compulsorily
Public co-financing of premiums and catastrophe losses
Setting insurance enabling uniform terms & conditions
Government
(Central: State / Regional/ Local) Efficient, transparent and uniform settlement of claims
Co-financing of premium
Reinsurance
Reinsurance
Local Insurance GIC RE (National Other International
Company(s) Reinsurance Company) Reinsurance Company(s)
Sales & Premium
Loss Settlement
Financial Institutions Beneficiaries (farmers)
(Lending Institutions)
“Public Private Partnership” – Coming together for securing futures 17/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Case Study - Indian Model -
World’s single largest agriculture insurance market WWW.KMDASTUR.CO.UK
Role of Government
Government support in subsidizing
premium and implementation
through a multi-agency framework
under the guidance of the Ministry
of Agriculture and Farmer’s
Welfare; Investment in open data
infrastructure and integration of
climatic and agronomic data from
multiple sources
Government modified operational guidelines for PMFBY
Government penalty for delay in claim settlement . The farmers will be paid 12% interest by insurance
companies for a delay in settlement of claims beyond two months of the prescribed cut-off date.
Delay in subsidy sharing - State governments will have to pay 12% interest for a delay in release of the states’ share
of subsidy beyond three months of the prescribed cut-off date for submission of requisitions by insurance companies.
De-empanelment of insurance companies - Insurance companies providing crop insurance services are expected to
perform according to standard operating procedures, and not complying with guidelines may lead to de-empanelment
“Public Private Partnership” – Coming together for securing futures 18/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Role of “Government” WWW.KMDASTUR.COM
Data Outreach Risk Financing
Collect Link to credit Promote risk pool
Audit Premium subsidies Reinsurance
Manage & Finance Public awareness Disaster relief fund
Financial Support
Support product design & Enabling environment
development
Institutional framework
Product development &
pricing
Legal framework
Technical support
Consumer Protection
“Public Private Partnership” – Coming together for securing futures 19/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Universal Insurance Schemes (Structure and Design) WWW.KMDASTUR.CO.UK
Policyholder of Management Board Weather
Risk Monitoring and
Insurance Policies (Participation from Govt., Data/
Evaluation
/ Schemes Metrological Dept., Insurance (Deployment of tech
Hazard
Regulator, Association) Data platform)
Health Data/ Health Data/
Central/ Federal Weather Data/ Weather Data/
Hazard Data Hazard Data
Trigger + State of Premium
State / County1 emergency
Scheme built/ designed
Local Insurance
around a
Trigger Company(s)
State / County2 Insurance payout Catastrophe Fund
payouts
Reinsurance
Premium premium Payout
National / Central / Federal and/
Reinsurance
or Local (County)
State / County n Company (s)
Government(s)
“Public Private Partnership” – Coming together for securing futures 20/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Lessons Learnt WWW.KMDASTUR.CO.UK
Use insurers as an ally to achieve public policy objectives » insurance can be used as a complementary tool to
align incentives and create behavioral changes, and to reduce and manage risks
Define the target beneficiaries correctly » Comprehensive risk cover can be provided to final beneficiaries when
insurers have and optimal understanding of the risk profile and preferences of end clients (beneficiaries)
A strong legal and regulatory framework » provides certainty to both the public and the private sectors around the
commitments and investments needed to implement a programme over the long term
Allocate roles and responsibilities between the public and private sectors » Assign responsibilities for each of the
critical activities in the implementation process to create an overall accountability for the success of the scheme
Capacity building across stakeholders (implementation agencies) » provide technical capacity to design policy;
oversee insurance schemes; monitor and audit insurance programme
Establish a robust monitoring and evaluation framework/ systems » To establish a result oriented environment.
Evaluations overtime will shed light on how to improve the design and operation
“Public Private Partnership” – Coming together for securing futures 21/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019Four essential factors to ensure PPP
programme success WWW.KMDASTUR.COM
1. 4.
Transparent and aligned Clear communication
objectives strategy
Key
Success
Factors
2. 3.
Unified legal and regulatory Effective governance and
framework monitoring mechanism
“Public Private Partnership” – Coming together for securing futures 22/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019About K. M. Dastur & Company London
WWW.KMDASTUR.CO.UK
WWW.KMDASTUR.CO.UK
“Public Private Partnership” – Coming together for securing futures 23/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019About KMD Group WWW.KMDASTUR.CO.UK
Introduction Mass / Microinsurance initiatives
Founded in 1973 by the late Mr. K.M. Dastur, The Group’s endeavor is to bridge the
erstwhile Country Head of Norwich Union Insurance divide/gap between the world’s
K. M. Dastur & Company Limited, London is a insurance markets and the most
Registered Lloyd’s Broker, regulated by Financial vulnerable, low-income households
Conduct Authority (FCA) through relevant and inclusive insurance
KMD has almost five decades of experience in all solutions
classes of Insurance and Reinsurance brokerage
As an organization believes – in the power
with highly experienced and skilled team of
of inclusive finance as an effective tool
professionals
for poverty alleviation, to transform the
As an Independent brokerage operation KMD
ideas (concepts) into action and action into
offers a range of Risk Management services and
impact
design Insurance/ Reinsurance Solutions using
Standard and Customized techniques Partners with Governments, regulators,
Locally registered and regulated offices in Asia, multilateral and bilateral aid agencies and
Africa, Europe, Mediterranean & Middle East foundations on policy frameworks and in
500+ experienced (re)insurance and advisory designing / implementing universal
professionals worldwide
“Public Private Partnership” – Coming together for securing futures 24/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019About KMD Group WWW.KMDASTUR.CO.UK
Guiding Principles Approach / Methodology
Partners and Clients
“Public Private Partnership” – Coming together for securing futures 25/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019WWW.KMDASTUR.CO.UK
“If the Fourth Industrial Revolution (4IR) is to be an engine for positive change, it should
deliver for the most vulnerable sections of society.”
Dan Rees
International Labour Organization
For any further details, please contact
Ayandev Saha
Email: ayandev.saha@kmdastur.com; ayandev.saha@hotmail.co.uk
Mobile no: +91-9920193512 / +250-787064366; Skype: ayandev1
“Public Private Partnership” – Coming together for securing futures 26/25 IAZ Insurance Conference 2019 | 17th to 19th July 2019You can also read
