Abstract:
Microinsurance in Pakistan is still in its nascent stages. More than half of
the current microinsurance policies in effect in Pakistan are offered through the
Benazir Income Support Program (BISP), with the remainder provided in
conjunction with microcredit services offered by various microfinance institutions
(MFIs), microfinance banks, nongovernment organizations, and rural support
programs (RSPs). The policies offered by the microcredit sector are mainly creditlife
policies, which cover loan balances in the event of the borrower’s death. In
addition, some lenders—principally the RSPs—offer small health insurance
policies covering the hospitalization of the borrower and (sometimes) their spouse.
As catastrophic health expenses and deaths in the family are among the most
important economic stressors that households face, it makes sense that
microinsurance should first make inroads in these areas.
It is difficult to say what impact microinsurance has had in Pakistan, since
few rigorous evaluations have been undertaken to date. What we do know is that
utilization has been low, explained by providers as limited client awareness of the
benefits and coverage. In the short to medium term, microinsurance outreach can
be expanded by offering health microinsurance (HMI) coverage to microcredit
borrowers’ entire households, and by offering HMI to all community members
within an RSP, rather than only microloan borrowers and their spouses.
Partnering with mobile phone operators for automated, digital payments can also
significantly expand potential customer volume while reducing transaction costs.
HMIs might also be combined with health savings accounts that households can
use to pay for medications and outpatient services not covered by HMI plans.
Provinces could also leverage the existing database of poverty scorecards
implemented by BISP to channel partially government-subsidized microinsurance
policies toward poor households just above the BISP threshold.
