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Pricing of Microinsurance or Rate Making

In: Health Microinsurance Implementing Universal Health Coverage in the Informal Sector

Author

Listed:
  • Alexander S. Preker
  • David M. Dror

Abstract

In commercial insurance, it is common practice to charge each individual the premium that reflects that person’s estimated contribution to the risk pool. However, in microinsurance, community rating is applied, whereby every participant pays the same premium, irrespective of age, gender, health status, or claims history. This methodology is challenging in terms of pricing the package and maintaining an equilibrium between high-risk and low-risk individuals. The reality in microinsurance practice is that the price determines the package, rather than the other way around. This chapter provides a detailed guideline on context-dependent pricing.

Suggested Citation

  • Alexander S. Preker & David M. Dror, 2020. "Pricing of Microinsurance or Rate Making," World Scientific Book Chapters, in: Health Microinsurance Implementing Universal Health Coverage in the Informal Sector, chapter 5, pages 65-89, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811208539_0005
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    More about this item

    Keywords

    Microinsurance; Health Insurance; CBHI; Community-Based Health Insurance; Health Financing; Insurance for Poor; Universal Health Coverage; Rural; Education;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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