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Development and Sustainability of Emerging Health Insurance Markets: Evidence from Microinsurance in Pakistan


  • Yi (Kitty) Yao

    () (Department of Actuarial Science, Risk Management and Insurance, School of Business, University of Wisconsin at Madison, Madison, WI, U.S.)


Despite widespread interest in expanding insurance at the bottom of the economic pyramid, the viability of emerging microinsurance programmes is questioned because of their high loss ratios and doubts about their sustainability. The purpose of this research is to derive implications for the viable provision of products for emerging microinsurers by investigating the degree of sustainability of a micro health insurance programme in its early years of development. Using data from a micro health insurance programme in Pakistan, this paper analyses how claim rates evolve as households renew their policies and finds that households that have larger claims during the policy period are more likely to renew their policies for the next period. Although on the surface that pattern is consistent with adverse selection and decreasing sustainability, it was found instead that when compared with households buying the insurance for the first time, renewed households have significantly lower claim frequency and total claim amounts. Taken together, these results may suggest that there are forces affecting insurance demand for renewed households that may lead to an improved risk portfolio.

Suggested Citation

  • Yi (Kitty) Yao, 2013. "Development and Sustainability of Emerging Health Insurance Markets: Evidence from Microinsurance in Pakistan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 38(1), pages 160-180, January.
  • Handle: RePEc:pal:gpprii:v:38:y:2013:i:1:p:160-180

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    References listed on IDEAS

    1. Elizabeth Savage & Glenn Jones, 2004. "An Analysis of the General Practice Access Scheme on GP Incomes, Bulk Billing and Consumer Copayments," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(1), pages 31-40, March.
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