Deepening Financial Inclusion

India but also Sub Saharan African countries have a large financially excluded population living in poor sanitation and hygiene conditions. Their hygiene (or their lack of it), financial exclusion and poverty most likely reinforce each other. Their living conditions imply that they could fall sick frequently. In the absence of a health care financing mechanism, this implies costs in the form of medicines and loss of working time and income. Illness is a cause for defaults on (micro) loans. Thus this increases the lending risk for any financial institution. Now suppose that such people could borrow for safe sanitation, would there be financial institutions willing to issue these loans and if so at what cost? This was object of discussion in the two earlier papers. Now what if this borrowing and sanitation usage can be incentivised by offering a micro health insurance that rewards good behaviour (sanitation usage). This is of great interest to insurance companies as the number of claims is likely to come down and make it a more commercially viable proposition. This paper serves to highlight lessons learnt in conceptualizing, designing and implementing micro health insurance for the poor and hygiene deprived segments of society in India and Kenya.