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Renewal Dynamics in Micro Health Insurance: Sustainability Insights from Pakistan

Explore how claim rates shape sustainability in micro health insurance in Pakistan through renewal patterns and impact on claim trends. Analyze AKAM program data to identify renewal predictors and assess claim patterns over time.

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Renewal Dynamics in Micro Health Insurance: Sustainability Insights from Pakistan

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  1. Development and Sustainability in Emerging Health Insurance Markets: Evidence from Microinsurance in Pakistan

  2. Agenda • Research question • AKAM micro health insurance program • Models and results • Conclusion

  3. Research question • Using data from a micro health insurance program in Pakistan, I identify how claim rates evolve as households renew their policies. • Do claim trends suggest increasing or decreasing sustainability?

  4. Sustainability: Facts and Literature Facts: High loss ratios, low renewal rates Literature: • Sustainable: Pauly, Blavin and Meghan (2008) • Not sustainable: Biener and Eling (2010)

  5. AKAM micro health insurance program • Northern Area of Pakistan (1st time) • Premium: 400 PKR ($5 USD) per person • Coverage: • Inpatient service (25,000 PKR) • Life insurance for head of HH (25,000 PKR) • One outpatient voucher (50 PKR) • Healthcare provider

  6. Data • 16,026 Households from 4 enrolment periods • Overall loss ratio: 1.97

  7. Comparison between new and renewed household

  8. Cross-period loss ratio comparison Nov cohort

  9. Models Model 1 Probability of renewing Renewal Claim Model 2 Two-part model Model 3 Total claim Total Amount Frequency Severity

  10. What predict renewal? Question: • Are households who filed claims during the current period more likely to renew? Dependent variable: Renewal decision in the next period

  11. What predict renewal? Result: • Filing claim (+0.13) • 1,000 PKR claim (+0.01) Other significant variables: • (+):Previously renewed, family size, child and elderly percentage

  12. Does renewal affect claim patterns? Model 2: two-part model Dependent variables: frequency and severity Model 3: total claim Dependent variable: total claim

  13. Does renewal affect claim patterns? Result: • Frequency: 1strenewal (-0.05) 2nd renewal (-0.05) • Severity: 1strenewal (-0.07) 2nd renewal (-0.01) • Total claim: 1strenewal (-0.32) 2nd renewal (-0.36)

  14. Conclusion and implication • Renewed business showed improved loss ratio. • It suggests that the high loss ratio is a start up cost.

  15. Thank You!

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