IDEAS home Printed from https://ideas.repec.org/a/pal/gpprii/v31y2006i4p739-761.html
   My bibliography  Save this article

Do Micro Health Insurance Units Need Capital or Reinsurance? A Simulated Exercise to Examine Different Alternatives*

Author

Listed:
  • David M Dror

    (arte de Frontenex 39b, CH-1207 Geneva, Switzerland.)

  • John Armstrong

    (arte de Frontenex 39b, CH-1207 Geneva, Switzerland.)

Abstract

The purpose of this article is to provide a technical discussion of capital loading that “micro health insurance units” (MIUs) must add to the premium to maintain financial sustainability. MIUs offer benefit packages and require prepayment, that is, they create a rudimentary community-based health insurance for poor people in low-income countries. We broke up the 2001 data set of a health insurer containing upward of 1.3 million insureds into 535 “virtual MIUs”; and running 1,005 iterations, we got a data yield of 537,675 virtual MIUs. Capital loading levels increased steeply with decreasing group size and higher confidence levels. The impact of group size remains strong even with groups of 25,000 plus, and is stronger than the impact of changes in confidence levels. We discuss options to correct size-related premium bias through government subsidies, and conclude that reinsurance is cheaper than capital loading and a preferable solution for governments compared to other alternatives. The Geneva Papers (2006) 31, 739–761. doi:10.1057/palgrave.gpp.2510107

Suggested Citation

  • David M Dror & John Armstrong, 2006. "Do Micro Health Insurance Units Need Capital or Reinsurance? A Simulated Exercise to Examine Different Alternatives*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(4), pages 739-761, October.
    • Handle: RePEc:pal:gpprii:v:31:y:2006:i:4:p:739-761
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/gpp/journal/v31/n4/pdf/2510107a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: http://www.palgrave-journals.com/gpp/journal/v31/n4/full/2510107a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Selim Mankai & Aymen Belgacem, 2013. "Interactions Between Risk-Taking, Capital, and Reinsurance for Property-Liability Insurance Firms," Working Papers hal-04141190, HAL.
    2. Selim Mankaï & Aymen Belgacem, 2013. "Interactions Between Risk-Taking, Capital, and Reinsurance for Property-Liability Insurance Firms," EconomiX Working Papers 2013-23, University of Paris Nanterre, EconomiX.
    3. Biener, Christian, 2013. "Pricing in Microinsurance Markets," World Development, Elsevier, vol. 41(C), pages 132-144.
    4. Selim Mankaï & Aymen Belgacem, 2016. "Interactions Between Risk Taking, Capital, and Reinsurance for Property–Liability Insurance Firms," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(4), pages 1007-1043, December.
    5. Sayem Ahmed & Md Zahid Hasan & Nausad Ali & Mohammad Wahid Ahmed & Emranul Haq & Sadia Shabnam & Morseda Chowdhury & Breda Gahan & Christine Bousquet & Jahangir A M Khan & Ziaul Islam, 2021. "Effectiveness of health voucher scheme and micro-health insurance scheme to support the poor and extreme poor in selected urban areas of Bangladesh: An assessment using a mixed-method approach," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-31, November.
    6. Pahnenko Olena M. & Lysenko Varvara S., 2014. "Micro-insurance as the Basis for Development of Voluntary Medical Insurance in Ukraine," Business Inform, RESEARCH CENTRE FOR INDUSTRIAL DEVELOPMENT PROBLEMS of NAS (KHARKIV, UKRAINE), Kharkiv National University of Economics, issue 1, pages 268-274.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:gpprii:v:31:y:2006:i:4:p:739-761. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.