Health microinsurance as a component of aid in Pakistan

The Atlantic reported last month about an unconventional aid organization in Pakistan that appears to be overcoming some of the barriers to traditional aid programs:

So while USAID is very good at quickly mobilizing assistance to disaster-afflicted communities, it carries a lot of political baggage — so much so in places like Pakistan that the U.S might be better off in the long run by downsizing USAID’s direct activities there and working through alternative programs.

One good model might be the Rural Support Programmes Network. A sprawling collection of local NGOs, the RSPN was founded by the Agha Khan Network in 1982, and has since become its own, separate program. While the stats about its reach are impressive — reaching millions of the poorest homes across a vast swath of Pakistan — what’s especially fascinating about RSPN are its methods.

Put simply, RSPN has a different focus than normal aid programs. They emphasize the development of institutions first, and only after that institution is established do they worry about its output or performance. The NGO also heavily invests in the smallest scale of the community, from conceptualization to execution, hiring mostly locals to administer projects. Lastly, they have extraordinarily long project timelines — sometimes as long as 15 years from start to finish.

RSPN’s activities might be of interest to readers of this blog because they run a significant health microinsurance program:

But the most interesting project RSPN has done in rural Pakistan is a collaborative micro-healthcare insurance system. For very little money — $3.50 a year in some cases — poor people can get access to basic medical care (especially maternity care) and assistance if they face hospitalization.

A hyper-local focus on poor, isolated communities has created an unexpected way to provide previously unfathomable sorts of services to the poor at very low cost. The RSPN affiliates who provide microinsurance reach almost a million people, and at very little cost, by employing local community members for expertise, services, and administration.

Milliman has been working with microinsurance organizations for a number of years. You can hear Milliman actuaries’ perspective on microinsurance in this video, and some interesting case studies are to be had here. For a little light reading about microinsurance, here’s the report of the Munich Re Foundation’s 2011 global microinsurance conference.