The MIA proposes that microinsurance units follow a mutual model of community-based  microinsurance, in which members play an active role in their insurance, based on the concepts of self-help, self-management and self-responsibility. We extend this model by applying the following principles:

Many micro insurance schemes today work along exclusion rather than inclusion: exclusion of certain groups such as the elderly and young children, exclusion of pre-existing medical conditions including maternity, or unintentional exclusion of the poor by demanding premiums that exceed their ability to pay.

Exclusion usually leaves the most vulnerable groups unprotected, and the whole community suffers as they continue paying for the weaker members out of pocket when need arises. Existing schemes that include weaker members (or "bad risks" often discriminate against them by applying individual risk ratings, thus making membership unattractive by way of higher premiums. In our community-based model, we apply a community risk rating rather than an individual risk rating, and work along inclusion rather than exclusion. This allows for a better diversification of the risk, better equity, and a lowering of overall costs.

En-bloc Affiliation

Individual affiliation with micro insurance is often synonymous with adverse selection, as people who expect to be ill sign up and those that do not expect to be ill opt out. In this situation, actual costs quickly exceed the cost of the (random) risk covered and make the product unattractive or unsustainable.

En-bloc affiliation of entire communities overcomes this challenge by enlarging the pool of members and diversifying the risk amongst all in the group whether individuals are likely to experience an illness or not. This has the benefit of lowering costs while reducing adverse selection. In our approach communities (which can also be SHGs, Cooperatives, etc.) are only eligible for microinsurance if joining “en-bloc” (all the members, along with all their entire households), which helps ensure a better risk diversification, along with a more holistic protection for all, especially the weaker elements (women, children, the elderly, people with disabilities etc.) who may have otherwise been excluded.

Responsiveness to Local Needs

Different communities have different health care needs and vary in their willingness to pay for insurance. Furthermore, willingness to pay is strongly affected by the relevance of the offered package. As a result, much of the low penetration of micro health insurance in India today is due to a lack of flexible policies from which to choose. For poor communities, a benefit of genuine self-administration is the ability to determine the most appropriate benefit package based on their needs. Through the use of our field-tested tool CHAT, we enable poor communities to develop local solutions to local healthcare challenges.