MILK Discussion Note #3: Counting Lives Covered: Getting it Right
Keeping an accurate count of covered lives is important for measuring the scale and impact of a microinsurance program, and different approaches can lead to drastically different counts. Documenting covered lives and policy counts is also important because these counts form the basis of two key indicators that are used to evaluate insurance programs: revenue per life (or policy) and expenses per life (or policy). The microinsurance industry does not currently have a consistent approach to counting lives covered, and inaccurate or inconsistent reporting creates a multitude of potential problems including difficulty in determining fees to third party vendors, calculating commission to agents and brokers and payments to reinsurers as well as making assessment of risk and profitability difficult. In the following brief MILK proposes an approach to counting policies and covered lives, for use with all types of products (life, non-life, and health). We welcome and encourage your feedback on our suggested approach.
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