malaiVadamalai Vattara Kalanjiam – A Case for Insurance

Vishalakshi, the Managing Director of Vadamalai Vattara Kalanjiam, a federation of 40 SHGs of poor women, had to take a decision regarding insuring the members of the federation. She had to choose from among the following two options:

* She can insure the members with Indian Insurance Company (IIC) under the social security scheme of the company, S-Salaam Zindagi. * The federation can offer its own insurance products.

S-Salaam Zindagi

A member is covered for Rs 10,000 for life cover and Rs 5,000 towards mediclaim reimbursement for hospitalization charges. The policy is in force for a year starting from the date of payment of premium. The premium amount is decided according to the age of the member (Annexure A). The policy covers members between 18 and 60 only. The federation will get a commission o f7.5% on the amount it will collect as premium.
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As different premiums will cause confusion to the members, Vishalakshi decided the best way to implement the policy was to collect a uniform premium from the members, pass on the premium calculated according to the age of IIC and keep the rest of the amount with the federation. All amounts accruing to the federation from insurance purposes, will be considered for premium while covering the members for insurance cover in future.

Vadamalai Vattara Kalanjiam Insurance Products

Vishalakshi decided to keep the following principles in mind while designing the insurance product.

A life cover of Rs 10,000 and a mediclaim cover of Rs 5,000 for reimbursement towards hospitalization charges will be offered to all members. The policy will be in force for one year only. All members will pay a uniform premium amount. Profits generated out of the insurance scheme will be used to provide better insurance products in the future.

The details of all members in the federation are in Annexure B.

Annexure C contains the details of the federation members who died in the past three years.

Vishalakshi was pressed for time, so she took a sample data of two groups shown in Annexure D as the representative sample of the federation to make quick calculations.

Questions: a. Arrange the member age data in a frequency distribution. b. Find the appropriate measures of central tendency – mean, median and mode. c. Calculate the premium to be paid to the insurance company. d. Find the appropriate measures of dispersion – variance and standard deviation.

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[ 2 ]. * This case let is prepared by Mr. Devanshu Chakraborthy while working as a team leader, MIS in DHAN Foundation. This is for problem solving and classroom discussions.