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Initial Assessment Guide (v1.41)

This document is intended as a guide for Consultants requested to assess the capacity building needs of

microinsurance providers.

INTRODUCTION

Developing innovative and sustainable microinsurance products that deliver valuable services to the

low-income market requires the right capacity in terms of knowledge, skills and resources. Often,

microinsurance providers lack certain capacity along the value chain illustrated below2.

To help organizations overcome the many challenges they face as they implement microinsurance

initiatives, the Microinsurance Innovation Facility (‘the Facility’) offers a range of capacity building

support focussing on microinsurance-specific issues. However, effective Capacity Building relies on

accurate evaluation and assessment of many issues including local infrastructure, market conditions,

and even ability for a concept to take root. This document provides guidance to the reader for

conducting an initial assessment of a microinsurance provider with the aim of building an effective

capacity building action plan.

PRIMARY GOALS OF INITIAL ASSESSMENT

When considering a microinsurance (MI) provider’s request for Capacity Building support from the

Facility, an initial assessment of the environment, organization and MI activities is required to ensure

the best allocation of scarce resources. The primary goals of the initial assessment are: 1 Version 1.1 is authored by Lisa Beichl and Version 1.3 reflects the contributions of Donna Swiderek, Henry Yan,

Claude Bussieres, Arman Oza, John Wipf, Chialee Wong, Michael J. McCord, Manoj Pandey, Prince Rajbhandari and

Mary Yang.

2 Partly drawn from information included in Hansen, Morton T., Julian Birkenshaw, “Innovation Value Chain”

Harvard Business Review, June 01, 2007. Prod # R0706J-PDF-ENG

Demand Assessment

Evaluate Issues including: marketneed, size, market

readiness, scalability, etc.

Idea Generation: analyze market

data, brainstorm, develop idea,

discuss in focus groups

IdeaImplementation: design prototype, pilot test, analyze

results, refineproduct and

processes, roll out

Idea Expansion: adapting tested

concepts into othervenues and

communities, analyze and refine

details

Innovation or new product development

Perform gap analysis of skill sets required and those available to define areas for Capacity Building: Identification of skill sets or infrastructure required, project management, product development, pricing, accounting, fincnance,

sales/marketing, distribution, claims, fraud/abuse control, growing a portfolio, etc. Compare the local infrastrucure withthe required skill sets. The Gaps point to Capacity Building Opportunities

Capacity Building

Market Need Identified

Step 1: Develop or introduce a concept

Step 2: Identifyneeded skill sets and infrastructure required, perform a Gap Analysis, develop CapacityBuilding plan

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1. To conclude that market conditions exist to support the MI development as well as verify that

the organization is capable and keen to leverage Capacity Building to further MI activities that

fall under the Facility’s mandate

2. To identify the organization’s challenges related to its MI activities

3. To identify specific interventions that can effectively help the organization overcome its

challenges, then prioritize these interventions based on impact, sequencing and ease of

implementation

The initial assessment process is dynamic and relies on the consultant’s ability to evaluate the

environment, the organization and its MI activities. This guide highlights key information the Facility

requires to determine the Capacity Building support to be offered to help the organization meet its MI

objectives.

INITIAL ASSESSMENT

The 3 components of the Initial Assessment process are Due Diligence, Diagnostics and Capacity Building

Plan Development.

1. Due Diligence

The aims of the Due Diligence, which starts with the gathering of sufficient information for an analysis to be conducted in 3-5 days, are:

Understand the potential client, their capabilities, the market, current and potential products and the general environment.

Provide a Recommendation as to whether the Facility should support the organization with Capacity Building interventions

The Facility will support selected MI providers in obtaining advice, a mentor/coach, a MI fellow,

experience exchange, training and/or other resources to assist it in the Capacity Building process. The

Consultant can view this as similar to a decision to make a business investment in the developed world.

Though the framework and environment may be very different, the principles are essentially the same.

The assessment also needs to consider softer factors such as:

Does the organization show commitment to meeting the unique needs of its client?

How will improving the organization’s capacity enable them to provide better insurance services?

How will improved capacity help the organization reach more low-income clients? 2. Diagnostics To complete the picture of the organization’s MI activities, Diagnostics goes a step further beyond Due Diligence. Diagnostics considers the organization’s activities, structure, culture and environment that it operates in (i.e.) partnerships, regulators etc., to identify MI specific challenges.

3. Capacity Building Plan Development

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This component identifies the interventions that can effectively and optimally address the MI specific challenges uncovered through the Diagnostics. An initial holistic plan is created to serve as a road map for the organization to fulfill its Capacity Building objectives. The following matrix outlines goals, tools and outputs in the Due Diligence and Diagnostics process:

Table 1: Mapping of Steps (extracted from Appendices A, B, C and D)

Due Diligence

Step Objective Remarks Tools Outputs

1 Verify objectives of the initial assessment with the Facility

In some cases, the Facility may have objectives (and specific questions).

List of objectives of initial assessment

2 Review available data The consultant will be provided with information already collected by the Facility.

Application

Score sheet

Recommendation sheet

List of questions

3 Identify additional data required and collection method

Collection methods can include desk research, conversations with local specialists and on-site investigation

Appendix A: Information Gathering

Chart of additional data required and collection method

4 Collect additional data Appendix A: Information Gathering

Notes of the additional data collected and gaps in information

5 Analyze all information Assess the readiness of the environment and organization to address the issues for which the MI activities have been structured. This requires interaction with local stakeholders and the organization itself.

Assess whether the MI activities will effectively address the market issues identified

Appendix B: tools for analysis – PEST, SWOT, MI Activities analysis

Short report including conclusions

6 Assess application against selection criteria

Based on the information collected and the analysis done in steps 4 and 5, determine whether the organization meets the selection criteria.

Appendix C: Due Diligence Sheet

Short report including recommendation and supporting evidence

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Diagnostics

Step Objective Comments Tools Outputs

7 Identify organization’s

issues related to its MI

activities

Appendix D:

Diagnostic

framework

Appendix E: Skills

Gap Identification

Framework

List of MI-specific

challenges and

major general issues

Capacity Building Plan Development

Step Objective Comments Tools Outputs

8 Recommend specific

interventions

Suggest interventions that are

the most effective in addressing

each of the MI-specific issues

identified. Interventions can be

those available at the Facility or

offered by the rest of the MI

community.

Appendix D:

Diagnostic

framework

Chart presenting MI-

specific challenges

with their respective

interventions

9 Draft action plan This will be an action plan owned

by the organization, regardless of

whether it is ultimately selected

for support. The organization is

expected to drive the execution

of this plan.

Appendix F:

Action plan

template

Action plan to

address MI-specific

challenges and

consulting needs

10 Obtain organization’s

commitment to

contribute required

resources

The success of capacity building

effort requires the partner

organization to commit certain

resources. If the organization

does not have access to these

resources or cannot contribute

them to the capacity building

efforts, then the benefits would

not be realized.

Memo from

organization setting

out the required

resources to carry

out the MI activities

and specifying the

resources the

organization is

committed to

provide

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APPENDICES – FRAMEWORK AND TOOLS FOR ANALYSIS APPENDIX A: Information Gathering (Donna Swiderek, Henry Yan and Claude Bussieres) APPENDIX B: Tools for Analysis (Lisa Beichl)

APPENDIX C: Due Diligence Sheet (Mary Yang)

APPENDIX D: Diagnostic Assessment Sheet (Lisa Beichl, Arman Oza, John Wipf, Chialee Wong) APPENDIX E: Skills Gap Identification Framework (Lisa Beichl and Mary Yang) APPENDIX F: Capacity Building Plan Development Guide (Michael J. McCord, Manoj Pandey, Prince

Rajbhandari and Mary Yang)

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APPENDIX A: INFORMATION GATHERING

This section supports Steps 3 and 4 of the Due Diligence process from Table 1 on page 3 of the guide. It discusses the information to be collected to feed into the subsequent analysis. It is presented in the form of some key questions: the When, How, Whom, What and But-What-If of Due Diligence. 1. When? Information already collected by the Facility should be reviewed thoroughly. The Consultant should conduct as much desk research as possible before the on-site visit. Prepare for the on-site visit but be flexible and adapt to the situation on the ground. 2. How? Information can be collected through a variety of means:

Interviews with key staff, customers, etc

Shadowing staff in their day-to-day functions

Other Implicit means such as observations

Physical data in hard copy or soft copy form

Public records from sources such as the regulator’s office

Desk research conducted prior to the on-site visit 3. Whom? Depending on the type of capacity building support requested, the Consultant could approach any of the following parties to collect data:

Client, that is, the MI provider – management and key staff members in the organization from various departments

Intermediaries – sales agents such as brokers, banks, mobile phone providers, community groups

Policyholders – current and potential market (possibly also markets no longer served if helpful)

Suppliers – insurers, reinsurers, suppliers of infrastructure to the MI provider, health providers

Competitors where possible

Regulators and law makers

Community and industry groups – religious groups, community elders, microfinance providers and related bodies

4. What? The suggested information to be collected is covered in the table below. It is important to hone in on the key people/items that need to be examined in order to make a solid recommendation in a short amount of time (3-5 days). The challenge is to obtain reliable information so that you can make an honest evaluation. Organizations will naturally put their best foot forward for the consultant and anything can look good on paper. The task is to get past the salesmanship and obtain data for an objective unbiased recommendation. Essential components include:

Institutional characteristics: takes initiatives, track record of producing results, transparent

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Alignment of MI with mission, values, objectives and internal stakeholder interests, supported by internal stakeholder buy-in

Viability and sufficient scale

Possession of key ‘assets’: financial resources to complement Capacity Building efforts and basic foundation skills to implement and operate (focusing on product development, business process implementation and improvements, MIS, marketing, sales and customer care)

Ability to leverage Capacity Building: finite set of Capacity Building needs to be fulfilled

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Information needed for the subsequent analysis varies by the type of organization. The table below suggests other potentially relevant items to gather. It is by no means an exhaustive list; so, the consultant can pick and choose from this table relevant items to add to the list of pertinent data requirements. Reviewing the Analysis Tools in Appendix B and the Due Diligence Sheet in Appendix C can help to develop a better list of information that needs to be gathered for each unique organization.

WHOM WHAT

MI Provider Partners/Suppliers3 Policyholders4 Regulator/Law Maker Competitors/Community5

Environment View of MI as a viable business Outside Influences outside of

the organization’s control that can impact its MI activities

View of MI as a viable business

View of MI Regulation affecting MI: financial, insurance, tax, exemptions for low-income market

Attitude of regulators toward MI

Reporting requirement Cultural issues related

to dealings with regulators

Insurance penetration in country

Competitors’ range/ scope/market share

Competitor offerings similar to that of the MI Provider

Capacity building experience of competitors

Institution Mission, values, core business, goals, strategy, history

Legal status/structure Organization chart Target market:

geographical/gender coverage Financial strength of

organization Audited financial reports with

reconciliations between departments

View of MI provider Services provided and

method of delivery Amount of focus/time

spent on insurance. MI Provider’s dependency

on the partner/supplier Cost effectiveness of

relationship Challenges

View of MI provider View of MI provider Any past legal/bad

practice claims Any awards for service

View the MI provider (general and relative to competitors)

3 Partners include intermediaries or distribution channels such as brokers, banks, mobile phone providers, community groups; suppliers include insurers, reinsurers, suppliers

of infrastructure to the MI provider, health care and technology providers

4 Current and potential market (possibly also markets no longer served if helpful)

5 Community and industry groups – religious groups, community elders, microfinance providers and related bodies

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WHOM WHAT

MI Provider Partners/Suppliers3 Policyholders4 Regulator/Law Maker Competitors/Community5

Execution: examples of demonstrated leadership, results and effective response to changes or surprises

Governance Competitive edge and growth Mandate related to MI and

board involvement MI business plan or details on

activities Financial and other resources

committed to MI Existing partnerships and

suppliers

Human Resources

Commitment to MI Management capabilities Key staff: skills, Experience

with MI/low-income markets, potential for knowledge transfer

Staff assigned to MI activities Compensation and incentive

system

Depth of understanding of insurance by the partner

Compensation and incentive system

Product Product development process Reports (by product): product

summary, budgets, KPIs, comparison of actual to expected, reinsurance, fraud, adverse selection, other risk observations and explanation of results

Depth of understanding of the specific product offering by the partner

Needs of target market Affordability of product Value of product to

customer

Regulatory approval process and status of MI products

Product saturation

Business Processes

Back office activities Audit and business controls in

place Mechanisms for claims

Interface between partner/supplier and MI provider

Customer understanding of claims procedure

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WHOM WHAT

MI Provider Partners/Suppliers3 Policyholders4 Regulator/Law Maker Competitors/Community5

controls: adverse selection, moral hazard, fraud or abuse

Mechanisms for issues identification and continuous improvement

MIS System, skills, backups Data capture, information

management and report generation capabilities

Technology supporting information tracking

Marketing Marketing strategies, methods and media used

Consumer education approach, efforts and results

Customer understanding of products

Sales Staff understanding of products

Sales targets and results

Customer feedback on access to insurance services

Customer Care Mechanism for receiving and addressing customer concerns

Common reasons for delays in claims processing and for claims rejection

Customer feedback on service

Other Key lessons from past MI experience

Hypothesis as to what works in MI

Donor support (existing and potential)

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5. But What If….? The assumption is that since the organization wants the Facility’s support, they will do everything possible to assist in the assessment process. Despite the best intentions, things can and do go wrong. Meetings with key parties should be organized, if possible, before the on-site visit, recognizing that a number of inhibitors may arise once the Consultant arrives. These inhibitors include:

Key personnel may not be available at the agreed time due to conflicting meetings, other priorities, cultural reasons, etc

Some parties may be unwilling to speak or impart information for a number of reasons (e.g., less senior staff may not have or feel that they have insufficient seniority)

MI provider staff may feel that if they forward certain information to the Consultant this may negatively affect the application

The weather, transport, public and religious holidays and other logistics issues In some cultures, direct confrontation will not help. The Consultant will need to be creative and lateral about how to get stakeholders to meet and/or provide information. Here are some pointers:

Gentle persuasion and/or repetition of the request or its purpose may help.

Approaching the most senior staff member, or indeed the most junior staff member, may be effective. In some cases, approaching a secretary, assistant, or attaché may help.

Trust between the Consultant and MI provider staff needs to be established. Through group meetings and one on one meetings, it can be communicated that it is, at this initial stage, acceptable that the house of the MI provider is not fully in order and that the Capacity Building is more suitable for a MI provider that knows its weaknesses than a MI provider who puts on a show and or is not fully aware of its weaknesses.

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APPENDIX B: TOOLS FOR ANALYSIS This section supports Step 5 of the Due Diligence process from Table 1. The analysis should naturally flow from the information gathered in Steps 3 and 4. A review of the analysis tools and the criteria in the Due Diligence sheet should be done when preparing the list of information to be gathered so as to ensure that the list is complete. Tools Suggested for Analysis:

1. Environmental analysis: PEST (political, economic, social and technological issues) 2. Organizational analysis: SWOT (examining strengths, weaknesses, opportunities, threats) 3. MI Activities Analysis: Assessing the relevance and viability of the organization’s various MI

activities. 1. Environmental Analysis A PEST analysis (Political, Economic, Social and Technological) is typically undertaken to evaluate the environment prior to a SWOT analysis. It provides an alternative approach to assessing a business environment. A PEST analysis assesses a market (including competitors, past experience in similar endeavors, viability of the concept in the market) from the perspective of the MI provider and its MI project. Focusing on the PEST groupings may aid in the early identification of potential obstacles to success. PEST Analysis

Political: could include issues including environmental concerns, legislation (current and prospective), levels of corruption, health concerns, presence of other similar initiatives and other social protection programmes

Economic: trends and tendencies, taxation today and prospective, seasonality and weather issues, market and trade cycles, interest rates and perception of insurance

Social: lifestyle issues, demographics, education level, degree of poverty, changing consumer attitudes and opinions, level of support in the media (or not),

Technological: what infrastructure exists and how successful it is, level of funding, level of sophistication, innovation, global technology and availability

Example: A PEST analysis may highlight low technological capacity in a market. If an Organization wants to undertake a project with strong technological support (e.g., introduction of telemedicine), the gap between current available technology (that is supported) and an advanced technology like telemedicine would need to be well defined. The barriers to effective execution and maintenance would need to be addressed.

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2. Organization Analysis A SWOT analysis is typically introduced during the strategic planning process to evaluate Strengths, Weaknesses, Opportunities and Threats faced by the Organization. In the Due Diligence process, the SWOT analysis is completed focusing on evaluating the motivation and current capacity of the organization as well as how it can potentially leverage Capacity Building to meet its MI objectives. SWOT Analysis

INT

ERN

AL

Strengths: the attributes of the organization in its

environment that will support the goals of

Capacity Building. These could include: strong

market demand, effective team leadership,

capabilities in the organization, access to

marketing/distribution channels

Weaknesses: the attributes of the organization in its environment that could obstruct meeting the goals of Capacity Building. These could include: lack of supporting internal infrastructure, poor management, low internal capabilities, lack of resources, poor morale, low cash flow

EXTE

RN

AL*

Opportunities: identification of conditions in the environment that can leverage the organization’s strengths along with Capacity Building external to meet its MI objectives. Specifically: growing market interest/demand, new and inexpensive technology to support, niche opportunities, seasonal or weather influences

Threats: identification of conditions in the environment that would impair the organization’s ability to leverage Capacity Building to meet its MI objectives. These could include: tight job market, economic downturn, lack of trust in insurance, no evidence-based market demand

*there may be some overlap between this section and the PEST analysis, but examining the same issues from a different angle

Example: Continuing the example above, if an organization is interested in telemedicine, a SWOT analysis may show that while this is the right product, there are weaknesses: poor connectivity, organization’s lack of direct experience in the technology (requiring significant ongoing support), need for new processes and systems (requiring significant upfront investment), customers’ lack of exposure to technology and questionable sustainability in the current environment. - Based on the expectations above, identify relevant skill-sets with the organization, provide your

input on which skill-sets are needed and consider long-term strategy for continued professional development. Discuss if there are differences

- When the relevant skill-sets are agreed upon with the organization, identify the responsible parties in the Organization and organize interviews with these persons to verify that they have sufficient capabilities and interest to undertake the work and effectively receive knowledge-transfer

- Discuss the potential longer term implications to the organization of Capacity Building and Knowledge Transfer

- If this is a one-off6 capacity building effort, discuss methods to share the knowledge with the rest of the community affected by the project.

6 A “one off” effort refers to consulting assignments that bring specialist expertise not available locally (ex.

Weather index specialist) into an environment to provide short term assistance without necessarily establish a

longer term relationship.

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3. MI Activities Analysis The goal of this analysis is to assess whether the organization’s MI activity is relevant for its target market in the environment in which it will operate and whether it can be viable. Goals Sample Considerations

REL

EVA

NC

E

Assess whether the MI activities:

1. Solve a priority issue faced by its targeted low-income market

2. Fit with the current state of market development

- Are the organization’s mission, values, goals and strategy aligned? Does its MI strategy and activities support its overall mission, values, goals and strategy?

- Has the organization carried out sufficient research to demonstrate the continuing relevance of the MI activities for its target market?

- Are the MI activities the most suitable among alternative solutions? - Are the benefits of these activities greater than the costs? Is there

sufficient scale that makes MI worthwhile? - Some projects mainly focus on providing the poor access to e.g., health

care and have virtually no insurance component. While these types of projects reduce the vulnerability of the poor, they do not fall under the mandate of the Facility and therefore, cannot be funded by the Facility at this time. Document any concerns related to this point.

VIA

BIL

ITY

Assess the long-term viability of the MI activities

- Does the organization have a vision and the intention to aim for financial sustainability of the MI activities? Does the financial status and strategy of the organization support its intention?

- If the activities have accumulated some history, examine the performance indicators

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APPENDIX C: DUE DILIGENCE This section supports Step 6 of the Due Diligence process from Table 1. Due Diligence Summary Selection Criteria Analysis* Findings Issues to be resolved

1. Client and market issues

Is the organization committed to reducing the vulnerability of low-income households?

SWOT

Does the organization consider the needs, preferences and characteristics of the target market, including both men and women?

MI Activities, PEST

2. MI Operations

Do the organization’s MI operations strive to be viable? MI Activities

Does the organization have the potential to serve a large number of people? SWOT

3. Organization’s capabilities

Does the organization have sufficient internal resources, time, expertise and management commitment to benefit from capacity building support? Has the organization identified concrete funding sources to implement the MI Activities?

SWOT

Is the organization financially viable and stable? SWOT

Has the organization provided consistent information with an appropriate level of detail and demonstrated sufficient transparency?

SWOT

4. Clear impact of capacity building

Has the organization identified required skills and gaps to understand where the greatest capacity building needs lie?

SWOT

Can the organization leverage capacity building to deliver on its MI potential? SWOT

5. Strategic relevance

Do the organization’s MI activities fit under the mandate of the Facility? MI Activities

Does the organization contribute to the Facility’s diverse pool of partners in terms of geographical, product, and institutional model diversity?

SWOT, PEST

RECOMMENDATION TO THE FACILITY

*Refer to Appendix B.

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APPENDIX D: DIAGNOSTIC ASSESSMENT SHEET Assessment Areas Analysis* Findings Issues to be resolved

1. Organizational alignment and culture

a. Is MI the right business for the organization?

How have the mission and values of the organization appear to permeate the work environment? If not, why? Give examples.

How was the decision to work with the poor taken? How has this decision been accepted by the various levels of the organization?

How do the organization’s MI activities support its mission, values and goals? Do the mission and values seem conducive for a company that is going into MI? Cite some evidence.

Is the company committed to developing products that serve the true needs of the poor? Or is it more of an opportunistic move to expand market share in the long run? Please explain.

Organizational

b. Is there internal support for MI?

What is the impact of the interests/buy-in of the various stakeholders (board, management, staff, external parties) on the organization’s MI activities?

How does the existing organization structure affect the MI activities?

How does the existing compensation and incentives structure affect the productivity of the staff with respect the MI activities?

Organizational

c. Are the organization’s MI goals attainable?

Has a detailed business plan for MI been prepared? Does it make sense, is it viable and scalable?

What are the expected returns for MI in the short and the long term? How long it will take to recover investment? What is the tolerance for taking losses in this new market?

What are the risks associated with the MI activities and the corresponding mitigation strategies?

Does the MI provider offer a focused range of products or is it stretching itself by trying to be everything to everyone?

MI Activities

2. Environment and infrastructure

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a. What are the regulatory obstacles and how is the organization overcoming these obstacles?

Environmental, MI Activities

b. What are the gaps in organizational infrastructure that inhibit the organization from meeting its MI objectives?

What changes to the organization’s infrastructure have to be made to pave the path for this initiative?

Is the organization capable of making these changes?

Is the current MIS system acceptable? If not, changes are required?

Organizational, MI Activities

3. Organization’s capacity

a. How has the organization performed in the projects (both MI and others) it has undertaken in the recent past? Please analyze specific examples.

Organizational

b. Is some staff specially trained on MI? What is the MI experience of the dedicated staff? Does staff really understand the difference in servicing requirements between commercial and MI products?

Organizational

c. Is the organization collaborating effectively with its partners? What contracts or MOUs are in place to guide the relationships? What are potential conflicts? Analyze past experiences.

Organizational

d. Does the organization generate adequate financial reports and have appropriate systems and controls in place?

Relate the organization’s past experience with fraud. What controls have been incorporated to deal with these risk points?

How is the organization evaluating the performance of its MI product?

Organizational

e. Considering the skill sets required to succeed in the organization’s MI activities, what is the extent of the skill sets available for:

Project Management: who are the individuals taking on this role and what are their strengths and weaknesses in this area?

Product Development: How was the product developed? What is the decision making process for product development? Is the initiative a defensive or a proactive move? If the product needs modification how will the organization handle it?

Data collection and retrieval: how is data collection and processing handled? Who are the individuals taking on this role and what are their strengths and weaknesses in this area?

Organizational

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Accounting and Finance: who are the individuals taking on this role and what are their strengths and weaknesses in this area?

Marketing/Sales/Distribution: this area usually includes managing sales network, communicating product changes, dialoguing with sales network on product needs. Is the organization reaching the target market effectively and addressing the market’s specific needs? Have they established or can they establish trust with the target market? Were market studies performed? Who are the individuals taking on this role and what are their strengths and weaknesses in this area?

Claims: how are claims managed including data collection and attention to fraud and abuse? Are there servicing standards in pace with respect to timing of claims settlement? Analyze examples of fraud and abuse detected and how it was resolved, or not.

f. Where do the greatest capacity building needs lie? Organizational

g. How can the organization leverage capacity building to deliver on its MI potential?

Organizational

4. Impediments to successful Capacity Building

a. Are there sufficient internal resources to internalize additional expertise and implement actions related to the Capacity Building plan? A critical component of a successful Capacity Building effort is designating and training “champions.” As recipients of Knowledge Transfer, these champions will institutionalize the capability. Similarly, a critical component of a successful Consultation with a MI consultant is designating an internal “driver.” This individual would be responsible for working with the consultant to complete the assignment and implementing the recommended actions.

Is there a dedicated resource / team to take charge of the MI initiative? Does this team have the right profile? What is the authority level of this resource / team?

What is the plan for ongoing MI training for the staff?

Organizational

b. What may be the main obstacles to successful Knowledge Transfer: Interest, lack of understanding, capability, poor infrastructure, too many other issues to resolve, etc?

Organizational

c. Can the organization measure the impact of the capacity building? Organizational

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d. What other resources are needed for successful Capacity Building? Organizational

OTHER COMMENTS

List the top 5 issues that need to be addressed by the organization.

*Refer to Appendix B.

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APPENDIX E: SKILLS GAP IDENTIFICATION FRAMEWORK

MI development activities can be categorized loosely into three stages once the demand has been identified correctly7:

1. idea generation: this stage is weak if the idea is not suitable to the environment or does not address the problem identified

2. idea implementation: this stage is weak if the organization does not have the infrastructure, the skills or the resources to convert the idea into reality

3. idea expansion or replication: this stage is weak if outreach cannot be extended either through expansion or replication of the MI activities

You may face challenges in any aspect of defining demand, generating ideas, implementing them or

even expanding into other venues. Regardless of your stage of product or idea development, you can

increase your chances of project success by strengthening the weaknesses in required skills.

MI can be provided by one single institution or a consortium of ‘partners’ including two or more of: the insurer, the reinsurer, the delivery channel, outsource service providers on for example actuarial and legal, consumer education which may be carried out by the insurance commission or an insurance association. Where the assessment is related to a consortium, an in-depth analysis should be carried out on the main applicant organization with a lighter assessment conducted on the partners’ skills gaps. The ease with which an assessment can be conducted on the partners’ quality or abilities in MI depends on several factors such as the type of relationship between the partner and applicant institution, the role of the partner, how closely they work with each other and the level of trust. In some instances, conducting any assessment of depth may be difficult. Nevertheless, to the extent possible, it is important to help the applicant organization understand where risks related to its partners’ capabilities exist and ways to mitigate these risks.

7 Partly drawn from the innovation value chain approach created by Hansen, Morton T., Julian Birkenshaw,

“Innovation Value Chain” Harvard Business Review, June 01, 2007. Prod # R0706J-PDF-ENG

Demand Assessment

Evaluate Issues including: marketneed, size, market

readiness, scalability, etc.

Idea Generation: analyze market

data, brainstorm, develop idea,

discuss in focus groups

IdeaImplementation: design prototype, pilot test, analyze

results, refineproduct and

processes, roll out

Idea Expansion: adapting tested

concepts into othervenues and

communities, analyze and refine

details

Innovation or new product development

Perform gap analysis of skill sets required and those available to define areas for Capacity Building: Identification of skill sets or infrastructure required, project management, product development, pricing, accounting, fincnance,

sales/marketing, distribution, claims, fraud/abuse control, growing a portfolio, etc. Compare the local infrastrucure withthe required skill sets. The Gaps point to Capacity Building Opportunities

Capacity Building

Market Need Identified

Step 1: Develop or introduce a concept

Step 2: Identifyneeded skill sets and infrastructure required, perform a Gap Analysis, develop CapacityBuilding plan

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Framework for Skills Gap Assessment This framework highlights the skills required in MI.8

Comparing the skills necessary in the MI work flow against locally available capacity, whether the capacity resides internally within the MI provider’s institution or can be outsourced to an accessible service provider, can help identify skills gaps.

8 DFID Core Competency Framework

Domain

Technical

Foundation

Domain

Technical

Foundation

Foundation Skills These are competencies that any functional organization must have: Collection of information Analytical skills Decision making Business planning Working with others Communicating with others Human resources Management Project management Problem solving

Domain The competencies necessary to apply commercial insurance skills to microinsurance are usually acquired through experience. These competencies can be summarized as: ‘Working well with people having different ethnic, social, or educational backgrounds; understand the concerns of members of other ethnic and gender groups; base impressions on a person's behaviour, not stereotypes; understand one's own culture and those of others and how they differ; respectfully help people in these groups make cultural adjustments when necessary. Showing understanding, friendliness, and respect for feelings; assert oneself when appropriate; take an interest in what people say and why they think and act as they do.’

4 These skills

can also include:

Understanding of developing countries and low-income markets

Listening to and communicating with low income markets

A flexible and positive attitude

Sound knowledge of socio-economic conditions of low income markets

Excellent knowledge of development principles, concepts and techniques.

Technical Skills

These are skills necessary to operate an insurance programme: Accounting Finance Actuarial Fraud control Adult training IT/MIS Audit control Legal Brokering Marketing Claims administration Operations Effectiveness assessment Reinsurance Expenses control Research Feasibility analysis Sales Financial systems control Underwriting Market research and analysis

22

Identifying Needs Developing the Solution Implementing the Solution Monitoring and Evaluation

Tasks Skills Tasks Skills Tasks Skills Tasks Skills

Assess

environment

Research

Feasibility analysis

Project

planning

Business planning skills

Project management

Educating

consumers

Communications

Adult training

Effectiveness assessment

Produce

reports

Accounting

Understand

target market

risks and

considerations

Understanding of developing countries and low-income markets

Market research and analysis

Product

development

Legal

Finance

Actuarial

Marketing

Sales

Underwriting

Train staff Communications

Adult training

Experience

analysis

Analytical skills

Finance or actuarial

Pricing Actuarial Conduct

marketing

Marketing Implement

solutions

Project management

Contract

design

Legal

Fraud specialist

Communications

Sell product Sales

Brokering

Management

processes

design

Claims control

Expenses control

Financial systems control

Audit control

Collect data IT/MIS

Process

design

Operations Provide

customer

service

Communication

Claims

processing

Fraud control

Claims administration

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Framework of Supporting Activities

Tasks Skills

Set MI strategy Management Conceptual thinking, leadership and innovation, creating and maintaining a professional environment

Develop project Business planning Concrete project planning, building achievable milestones

Engage necessary skills and resources Human resources Ability to gauge interest and skill sets, retain solid employees, maintain professional working environment, training

Manage project Project management Strong multi-tasking experience, motivator, detail orientation

Implement efficient operational processes Operations Experience developing work flows (informal or formal) and monitoring results

Manage risks actively Reinsurance Awareness of risk types, management techniques, fraud and abuse and methods to control

Manage performance Audit Ability and interest in identifying and tracking variances, developing ideas to manage

Sample Product Types and Sample Skill Sets

9

Health Insurance Crop Insurance Livestock Insurance Others

Tasks Skills Tasks Skills Tasks Skills Tasks Skills

Health care

provider

management

Medical doctor

Pharmacist

Understanding of local medical delivery and gaps

Designing weather

index

Climate science Product design Veterinarian science

Offering Islamic

insurance

Takaful

Health claims Fraud control

Detail oriented

Product design Agronomy Risk-carrier +

delivery channel

partnership

Partnership formation and maintenance

9 This list provides an overview of some skills that map to specific products which may or may not apply to your specific microinsurance activity

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APPENDIX F: CAPACITY BUILDING PLAN DEVELOPMENT GUIDE

This section presents: 1. A suggested list of characteristics that a good Capacity Building plan should have. This suggested list of

characteristics is not final and is open to improvements based on further discussions and experience. 2. An approach to filtering the issues to be resolved through Capacity Building. The filters are presented as a

set of questions that would help the consultant better understand the Capacity Building challenges and their priority so as to develop an optimally suited set of solutions. The list of questions provided in this document is neither exhaustive nor final but is rather a sample of what may be asked during the suggested filtering process.

3. A summary of the steps to take to design an optimally suited Capacity Building plan and a suggested

template for the plan. 1. Characteristics of a Good Capacity Building Plan Following is a set of suggested characteristics that a good Capacity Building plan should have:

A. Manageable: A good Capacity building plan should be manageable. This means that:

It should be within the executable managerial and financial capacity of the organization and the organization should have the necessary expertise within to implement the changes.

The organization should be able to measure the effectiveness of the plan. B. Identifies the issues and prioritize them: A good Capacity Building plan should target the critical issues

that it seeks to address. It should aim to first address the critical issues associated with the core operations of the organization before moving to address the supporting operations. The reason is that an organization can benefit from supporting operations only when it has better control over its core operations which include sales, distribution, claims servicing and staff and client education.

C. Completes the process gaps: A good Capacity Building should identify the gaps that exist in the processes

of the organization and suggest possible measures to plug these gaps and increase process efficiency. D. Makes financial sense: A good Capacity Building plan must make very good financial sense. That is,

The plan should be cost effective for the organization and suggest measures that are within the financial resources of the organization.

The potential return should out-weight the required investments. It should be financially prudent i.e. it should consider the organization’s ability to meet its short term

expense and claims obligations as well as its future obligations. E. Fits with the institution and the Market: A Capacity Building plan should

Fit in with the organization’s culture and the social norms. Be in accordance with the regulatory setup. Reflect the nature of the market in which the organization works. Be coherent with the market’s awareness towards the product, its affordability and design Consider the local culture and ways of doing business and should adjust its role and functions to the

local situations without compromising the insurance fundamentals.

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F. Gains commitment from the management/ has a Champion: A good Capacity Building plan should gain

the commitment from managers of the organization and ideally have a senior manager as its champion/key driving force. This could be achieved through involving the management of the organization in the planning process, creating a consensus among them about the steps suggested and convincing them about the plan’s effectiveness.

G. Reflects ability to continue with change / built capacity: A good Capacity Building plan should include

measures that would ensure that Capacity Building interventions become an integral part of the organization and that the organization continues to improve upon the capacities built. The organization should have a long term vision and the solutions suggested should reflect the same.

H. Phased: A good Capacity Building plan should be phased and well paced. The plan should be broken into

steps and phases for effective implementation. The plan should follow a structured and logical sequence to achieve the desired output.

I. Based on a good product: A good plan would work only if the underlying product of the organization is

good. No matter how good the capacities of an organization might be, viability would be a challenge if it does not have a good product that is meets the needs of the insured, satisfies the insured and is valuable to the insured. There should be a good product awareness, efficiency, quality and value attached to it.

J. Clarify roles and responsibilities: The Capacity Building plan should clearly define the aspects which need

to be owned and implemented by the organization and those to be facilitated by external parties. The plan is for the institution and it is only facilitated by the Facility.

K. Require some inputs from the company first: A good Capacity Building plan would reflect inputs and

insights from the organization so that it is relevant and effective for the organization. 2. Issue Filtering

Not all the issues identified can or need to be solved. Various filters can be used to separate out the issues that are the most critical and important to address. Below are sample questions that can serve as filters:

A. Core and non-core operations issues filter

Is the issue identified impacting its core operations, with a direct effect on the revenues (product design, marketing, sales and distribution management (including distribution partners), staff training, customer education, claims servicing) or non-core operations, with an indirect effect on the revenues (MIS, feedback and performance management, etc)?

Is the issue the disease or just a symptom?

B. Financial and Economic filters

What budget and financial resources can be allocated to Capacity Building interventions?

How does the issue at hand affect the revenues/costs of the organization’s operations? Will solving the problem lead to better outreach and hence revenues?

Does the issue at hand offer a chance to make the processes more cost effective?

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How does the issue at hand affect the organization’s per policy distribution and servicing cost?

Where has the organization been investing the most, why and with what results?

C. Regulatory filters

Does the MI activity comply with laws and regulations applicable in the market it operates in?

Is there a need to promote MI to policymakers and insurance supervisors in its own jurisdiction?

Does the issue at hand follow required procedure for policyholder protection?

D. S.U.A.V.E 1 filters

Does the issue at hand affect the turnaround time of the operations (claims servicing, decision making, etc.)?

Does the issue at hand affect the S.U.A.V.E. attributes (Simple, Understandable, Accessible, Valuable and Efficient) of the product and service? Are there opportunities for improvement?

How does the issue at hand affect the clients? What changes would make the overall service directly more valuable to the client?

Is the identified issue taking into account the history of the issue? (may not apply to all cases)

Is the issue at hand a call for simplification of processes?

E. Managerial Filters

Does the issue provide an opportunity to build managerial capacity in the long term?

Does the issue require innovation from the organization and if so, is the organization ready to innovate and think out of the box of traditional insurance?

Is the current issue arising from a lack of awareness of the fundamental differences between traditional Insurance and MI? Is the managerial capacity geared up for the same?

Is the issue at hand a pointer towards the field staff and field managers’ lack of understanding of the challenges of MI and low income clients?

What are the operations in which managerial capacity/ staff capacity have shown the most deficiency? Would the issue at hand make the organization more aware of its managerial strengths and weaknesses?

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The filtering process and the prioritization process can be visualized better with the help of the following diagram:

Capacity Building

Identified

Issues

Filters

Filtered Issues

Prioritizing and Sequencing

Micro-level

Meso-level

Macro-level

FINANCIAL AND ECONOMIC

REGULATORY

S.U.A.V.E

MANAGERIAL

Issue 1

Issue 2 Issue 3

Issue 4

Issue 5

Issue 6 Issue 7

CORE AND NON CORE OPERATION FILTER

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3. Designing the Capacity Building Plan

In summary, a Capacity Building Plan can be developed following these steps:

A. Gather more inputs from the applicant organization on the issues identified and to be addressed by the Capacity Building plan. B. Put the issues through filter questions and develop a Capacity Building plan/set of solutions to be implemented. C. Structure the plan on the basis of priority to be given to the various Capacity Building measures to be implemented and their time frames

and their expected outputs. D. Phasing every Capacity Building solution by breaking them into small steps in a way that it becomes easy for implementation by the

applicant. E. Check the resulting plan to ensure that it reflects the characteristics of a good Capacity Building Plan. The plan can then be represented in the form of this template:

Issue Priority/Sequencing Intervention Extent issue is resolved Notes Description

Requirements

Timing

Owner

Steps to implementation

Expected output

Expected outcome

Description

Requirements

Timing

Owner

Steps to implementation

Expected output

Expected outcome