Habitat for Humanity India's disaster risk reduction insurance

This case study examines a Habitat for Humanity India (HFHI) pilot phase for a disaster insurance product to complement and enhance social security measures within its beneficiary communities. The goal of this comprehensive insurance policy is to provide asset and property coverage against a wide range of natural and manmade perils and extend coverage to both the beneficiary and their family members. This case study reflects on and is useful for the partners, including insurance carriers, insurance brokers and reinsurers, and NGO partners serving as insurance agents. 

The pilot highlighted the following lessons learned: 

• Risk premiums are expensive. The market for this product is immature and unregulated, meaning there is high risk for the insurer due to insolvency and defaults on claims in the case of extensive and repeated disasters. Therefore, the product must be priced accordingly.
• When priced to cover the higher costs associated with this particular market segment risk, the resulting product becomes very expensive and can make the collection of premiums from clients a difficult task.
• Self Help Groups (SHGs) play a vital role in communication. Engaging SHGs as key market actors in the initial phase of the initiative helps to ensure community strengthening, as members came together to learn, plan, discuss and eventually file applications.
• NGOs or any responsible licensed authority must take the lead as the main point of contact for clients. While volunteers are extremely helpful in facilitating the insurance process in the initial stages, responsibility must rest with the NGO to ensure that the claim process is efficient and does not lead to unnecessary delays.
• A stable insurance product with adequate premium options is a requirement to increase uptake and reaching scale. Premium collection centers are a good option for unregulated markets. Online premium collection is not a feasible as the low income sections of the population generally does not have access to the internet.
• Working directly with clients is the best way to understand the risks.