Author: Professor Dr David Dror, Micro Insurance Academy, New Delhi, India
Publisher: World Scientific Publishing, December 2018, 552 pages
ISBN (hardback) 978-981-3238-47-3: Cost $148
ISBN (eBook) 978-981-3238-49-7: Cost $118.
According to the author, “This book addresses three issues. The first is how to catalyze demand for health insurance and develop insurance literacy among the largely illiterate and innumerate programme target population, using training to build an enabling consensus, allowing locals to create and administer such schemes. The second involves the process of developing simplified methods for risk assessment, which can help to underwrite risks, price the micro health insurance schemes, and ensure proper implementation. The third issue is formulating a compelling business case which would make this health insurance affordable, financially sustainable, and operationally scalable”.
Such an exercise would be inconceivable without 20 years of immersion in the empirical and academic universe of health microinsurance (HMI). The book proves that 20 years have been enough firmly to engage in the construction of such knowledge in a way that is socially useful and scientifically rigorous.
Considering that the HMI is ‘community-based’ and because “like in the case of commercial insurers, MIUs also strive to pay all underwritten claims at all times” (p. 225), no one would want to prolong the HMI experience if it did not deliver welfare gains to the direct stakeholders and meet the minimum requirement of financial viability.
At first sight, the book’s title, its methodological rigor and the intensive use of econometric tools give the impression of an extremely technical subject. However, the focus is on real-life questions. The reader meets men and women, communities, living conditions, calculations, hesitations, anxieties and projects driven by the rejection of fatalism. A whole section of vast ‘uncovered areas’ of development macroeconomics, as well as microeconomics of insurance, is being written.
The author has demonstrated that the community-based health insurance model can offer a way forward if it is organised as an insurance from the outset. Thus, premiums must reflect both the levels of willingness-to-pay and the confidence level used in calculating the risk of insolvency.
This entails a shift from informal reciprocal risk-sharing to rule-based risk transfer, considering the ‘iron law’ of solvency capital requirements. This shift becomes acceptable to the grassroots groups when they understand that such framing of mutual aid is their only way to obtain the welfare gains without risking the financial failure of the insurance due to deviant behaviour. Hence, insurance education becomes a necessary step in implementing the strict discipline of a more efficient production choice than simply maintaining contingency savings.
Mr Dror’s book constitutes a solid basis to raise some new questions, such as how big data can be employed better. What role should international organisations and the insurance industry play in providing technical assistance at the grassroots level? Or how to articulate microinsurance with a new class of securitized funds; Or, the portability of experiments across locations to succeed in applying the most appropriate models to different contexts. This book has the merit of motivating researchers to address these questions. A
The book reviewer Michel Vaté is professor emeritus at the University of Lyon and associate researcher at the Thomas More Institute (Brussels-Paris).