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David Dror

Chairman and Managing Director of the Micro Insurance Academy

BACKGROUND / Academic and professional background

– PhD in Economics and Management (Summa cum Laude / mention très honorable avec félicitations du jury). Université Claude Bernard Lyon 1, Lyon, France
– DBA (Magna cum Laude) in Health Services. St. George University, London & Japan
– Active Labor Policy Development Diploma. International Institute for Labour Studies, Geneva
– MBA in Business Administration. Hebrew University of Jerusalem, Israel
– BA in Liberal Arts. State University of New York, Buffalo, USA

– 2007-present: Micro Insurance Academy as Founding Chairman, (www.microinsuranceacademy.org). I advise the Trustees (in India) on the objectives, mission and vision. I act as the head of the organization, its representative to the outside world and its spokesperson.I aksi ensure effective operation of the management in conformity with the highest standards of corporate governance; I preside over meetings of the senior team and conduct its business in an orderly fashion;

-2010 onwards: as Managing Director MIA India, I lead & guide strategy, ensure smooth operations and effective decision-making.

-2004-present: Academic and teaching engagements:

    •  Erasmus University Rotterdam, Netherlands: 2009-2014: Principal investigator in a large EC-FP7 project; 2005 – 2011: honorary professor (health insurance in low-income countries); 2004 visiting professor: health economics
    •  Clermont-Ferrand University /CERDI, France: 2005-2010: professeur invité in Health Economics; 2003, 2004 external lecturer
    • Lyon-1 University /LASS, France: 2002-2004 Associate Director of Research in Health Systems

– 1982-2003: ILO as Senior (diplomatic rank) social security specialist, (stationed in Geneva Headquarters): analysis, design and implementation of health insurance within the context of social security / Social Protection / Health systems. Development and testing (both theoretically and with field evidence) of the concept of Social Re, linking reinsurance to grassroots mutual schemes. Management of international teams and international projects. For nine years I managed the in-house health insurance scheme of ILO and ITU.

ACHIEVEMENT / What is your project, initiative, start-up, company all about?

I am the founder and Chairman and Managing Director of the Micro Insurance Academy in India (MIA). MIA brings insurance solutions to the world’s most vulnerable populations. Whether supporting the implementation of health insurance in rural India or developing a microinsurance resource centre in Cambodia, or assisting in the development of an Insurance Vector of a large MFI in Nepal, MIA promotes community engagement, capacity building and empowerment. MIA runs innovative microinsurance projects around the globe.

Background: When I was still the senior health specialist with the ILO social security department (ILO is the UN specialized organization with competence in social insurances), I observed that years of assistance to developing countries did not increase the accessibility of people to insurance, or increase awareness to its benefits. The business community was at loss as to how to market insurance ‘where it could not be sold,’ and most low-income countries surrendered to simplistic explanations such as ‘the poor are ignorant and cannot understand insurance’ or, ‘in the informal economy people are too poor to pay premiums for meaningful insurance products.’

Breaking away from the established top-down model of insurance interventions, I realized that a dramatic change was necessary, and offered a new model for extending health insurance to uninsured rural poor people, which I named ‘microinsurance.’ Since 1999, when microinsurance was first suggested by me, the term has become generic for protection of low-income people that are not usually served by mainstream commercial and social insurance schemes. The recognition that there is business to be made had transpired, but the frontiers of microinsurance could not expand without solid replies to two basic conceptual issues: business process re-engineering and financial sustainability. I have been the leading pioneer to address both of these issues.

LOCATION In which city, country, part of the world do you conduct your activities?

MIA is active in Asia (Bangladesh, Cambodia, India, Nepal, and Vietnam) and Africa (Cameroon, Malawi, Nigeria, Rwanda, and Tanzania).

IMPACT/ What is the positive economic, social, political, environmental…of your activity, project, initiative, start-up, company?

The main problem in rural India, Nepal, Bangladesh, Pakistan, Indonesia and most of Africa is that commercial insurers are not offering insurance to rural or very poor population segments. Simply put, there is almost no supply. The logic for this scarcity of supply of insurance is that premiums would at best be low, acquisition and admin costs high. The scope for profit is low and the opportunity cost of directing sales efforts towards urban and more solvent persons much more attractive (as there are still many uninsured even in urban and in the emerging middle class). Therefore, neither agents nor underwriters are interested.

Second key issue is that most of the insurance products that are offered (in limited supply) are calculated based on national data, ignoring the huge variance in frequency and severity of risks across districts. In most cases, the premiums are overpriced even when very cheap, and/or the risks covered are not those that the local community considers its first priority.

When a product is not very relevant and too expensive, obviously there is less demand for it. This is true not just for insurance.

Third big issue: most rural poor do not trust outsiders, and the rules for transacting with external parties are different from transacting with local people. The transaction with externals is characterized by having a final exchange of goods/services against final payment, as the assumption is that any follow-up with the outsiders is unlikely or difficult/expensive. Now, insurance sold through agents (who by definition are outsiders) does not really offer any tangible and final benefit at the time of premium payment; all people get is a promise to pay if/when certain conditions occur. Most rural poor do not trust that they can enforce such a contract, and therefore their logical choice is to not get into it.

MIA has turned the business model by 180 degrees, to overcome these three fundamental issues: the design of the package is done by local groups through a structured process we developed and piloted and brought to a certain degree of perfection (described in several publications we produced and that we can gladly share with you); the pricing is done based on local data that we collect, to reflect local frequency and severity of risks, AND our costing model does not add profit margins that normally can take up to 30% of the premium), with the result that the entire premium covers the risk rather than agent commissions or insurer profits or acquisition costs. Admin costs are kept at a minimum, since the local community identifies trusted locals whom we then train to deal with all the admin of the insurance, whose wages are much lower than what insurance companies load on to the premium.

Thirdly, we enhance people’s trust that they can enforce the contract by helping local communities launch and operate mutual aid funds. The insurance contract is therefore part of local life.

This is how we affect change in attitudes that enable rural poor for the first time to consider risk mitigation and insurance as relevant for them, express solvent demand, and be able to access the local supply of insurance. Each community members is thus both insured and insurer of sorts.

MIA does all the technical support in catalyzing this change, and developing locally relevant packages at locally relevant premiums. The work we do requires a team of highly qualified people, and we obviously have to pay them competitive salaries. However MIA does not charge the local communities anything, as that would make the insurance too expensive and thwart the entire outreach.

In short, MIA is the change maker, and the catalyst of solvent demand; the community becomes the market-maker when it enables its members to join the community-based health insurance scheme.

QUOTE/ A saying, quote or reference phrase that tells something about you

Helping vulnerable and deprived communities in low-income settings manage risks from the ground up.