Spotlights: Insuring the Poor against Healthcare Costs

A man waits to have his child seen at the Aga Khan University Hospital in Karachi.
Photo: AKU/Gary Otte Many poor people who begin the long climb out of poverty are pushed back by financial crises caused by illness or the death of a principal breadwinner. Paying for health care or funeral arrangements often takes away the assets built up over years of struggle. Some families become indebted to money lenders; others sell their livestock, crops or housing.

To address this major obstacle, the Aga Khan Agency for Microfinance (AKAM) has been developing insurance products for the poor since mid-2005. With its partners, AKAM opened the First Microinsurance Agency Pakistan in 2007 and the First Microinsurance Agency Tanzania in late 2008.

“Microcredit has helped millions of poor people in developing countries, but they remain at the mercy of a death or serious injury of a family member, the loss of a crop or livestock, or a natural disaster… Families are then forced to make the same difficult climb out of poverty a second or even a third time. By creating a wider range of better targeted products such as microinsurance, the poor will have the ability to protect their assets.”
Speech at the Inauguration of the Aga Khan Agency for Microfinance, Geneva, Switzerland
22 February 2005AKAM’s hospitalisation insurance, for example, helps families prepare for both expected and unexpected health expenditures by encouraging saving for the future and providing insurance safety nets for catastrophic events. The insurance safety nets kick in when households experience an event requiring immediate hospitalisation, such as accidents, obstructed births and acute illnesses. Risk-pooling mechanisms make it possible to offer premiums for as little as US$ 5 per person/per year. Other products protect families from the death of a breadwinner. Crop, livestock and asset insurance products are also being developed.

By the end of 2008, nearly 350,000 people were covered by these policies in Pakistan.

ALSO SEE:
Aga Khan Agency for Microfinance
Pakistan

2008 AKAM Annual Report (200901)
Language: English
Size: 4.93 MB