Community Managed Micro Insurance

Andhra Pradesh

Loan Insurance

The Self Help Groups in the State of Andhra Pradesh have created a history by covering about 95% of the rural BPL households. They have transformed themselves as a strong self managed front line Community Based Development-Oriented Financial Institutions. The key functions of those CBOs are social and financial intermediation on one hand and community development on the other hand with an emphasis on sustainable livelihoods. Over a period of 4 years an amount of Rs. 12000 Crores has been given as under the SHG Bank Linkage Program with ‘Pavalavaddi’.

In the light of bank linkage program with ‘Pavalavaddi’ huge amount of money is transacted by the SHG members in the name of total financial inclusion covering even the swapping of old debts. AP leads in SHG Bank Linkage Program with 35% of all bank loans given to SHGs in India. The bankers of AP comfortable and are testifying that the recovery rate is 99%. In this back drop, as a natural evolution of their financial inclusion, SHG women evinced interest in insuring the loans taken by the members from the Commercial Banks or from their own federations as a safety net against financial risks in the event of natural and accidental mishaps, to protect their children or family members from debt traps.

Objective

  • To protect the family members of an SHG member for financial risks, in the event of her death
  • To safeguard the institution of SHG from repayment burden, when a borrowing members dies
  • To ensure the perpetuity of the SHG, providing loan insurance to all the borrowing members
  • To ensure 100% repayment at all levels even in the turbulence time and to increase the size of loans to SHG members, by creating a confidence among the Bankers.

Conditions and premium

  • All SHG women taken SHG Bank linkage
  • Age between 18 to 69 years
  • Premium @ Rs. 4/- per every Rs. 1000/- Sum Assured amount

Benefits

In the event of unfortunate event resulting in death of the member, the claim amount will be used to repay her outstanding and also payoff her loan installments paid till that day.