Key indicators of a sustainable Health Microinsurance Schemes (HMIS)

Indicator

Description

Benchmark

Administrative viability

Overall quality of monitoring

The HMIS must have established administrative procedures to monitor all aspects of its operations.

The ability to monitor various aspects of the HMIS is essential to managing the scheme.

Indicator T.9

Increasing over

the years to reach

100%

Functional viability

Renewal rate

The number of members renewing membership in the current period as a percentage of the cohort of members covered in the previous period. Care should be taken to ensure that this percentage is measured accurately.

High renewal rates indicate that members value service, are committed to fi nancing their health care needs, fi nd the premiums affordable and consider the services provided to be acceptable.

Indicator M.2

80%

Financial viability

Quick ratio

The HMIS must maintain suffi cient liquidity.

The quick ratio measures the scheme’s ability to meet short-term cash fl ow needs.

Indicator F.1

Greater than 1

Operating expense ratio *

All operating expenses should be measured (as discussed in the Guide). Total operating expenses divided by earned premium results in the expense ratio (F.4.1).

A low expense ratio will deliver greater value to clients, which should increase membership and renewal rates. A high expense ratio will require a greater sales effort to maintain the current client base.

Indicator F.4.1

Lower than 20% of premium

Claims ratio

Refers to the ratio of claims paid to earned premium.

If the level of coverage an HMIS provides is too low, it may have diffi culty retaining members.

Indicator F.5

Greater than 75%

Investment concentration ratio

Investments of HMIS funds should be diversifi ed.

Illiquid or poor asset diversifi cation can lead to bankruptcy. Indicator F.7

No more than 10% of scheme assets

held with any one institution

Economic viability

Net income

Net income should be determined after deducting all administrative expenses. Only permanent income from grants and/or subsidies is added to net income. An HMIS may start with a loss in the fi rst year, but this situation should diminish over time.

A break-even net income is an indication of sustainability. The organization should strive for effi ciency and for effective management.

Income statement, line Z

Break-even or a slightly positive net income

Institutional viability

Human resources / Net investment in training

Capacity-building of staff is a qualitative measurement; it should be based on assessing staff requirements and providing training to improve skills.

An organization that continually improves the skills of its staff will be more effective.

Indicator H.2

More than 3% of operating expenses used for training

Effectiveness

Utilization rate

Refers to the number of times HMIS benefi ciaries use a particular service in relation to the total number of benefi ciaries.

Indicator E.1

Rate should increase over the years

Penetration rate

Refers to the percentage of the target population covered by the scheme.

This indicator is used to measure the scheme’s effectiveness in reaching the target population.

Indicator M.5

80%-100%

Impact

Impoverishment rate

Refers to the percentage of patients who were impoverished (or had experienced a catastrophic health expenditure) at the time of enrolment in the scheme.

Part V, sections 3.1.5

Decreasing over the years

Population coverage rate

Refers to the percentage of the total population to whom the HMIS provides services.

This indicator is useful for measuring the real weight of the HMIS in its area of operations and the scheme’s effectiveness in reaching as many people as possible.

Indicator I.3

Increasing over the years