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Microinsurance and Social Protection for Workers in the Informal Sector in Indonesia: A Study of the Social Welfare Insurance Program (SWIP/ASKESOS)

  • Author(s): Sirojudin, Sirojudin
  • Advisor(s): Midgley, James
  • et al.

Contemporary social policy and development literature has recognized microinsurance as a new and promising avenue for extending social protection coverage to workers in the informal sector in developing countries. However, emerging research on the subject has focused narrowly on the roles of commercial insurance and community-based microfinance institutions and the relationships between the two. The roles of government in promoting community-based microinsurance have not been sufficiently examined.

Drawing from a case study by the Asuransi Kesejahteraan Sosial (ASKESOS), which can be translated as the Social Welfare Insurance Program (SWIP), this dissertation argues that government can contribute to the development of community-based microinsurance. In addition to the institutional aspects, this study also reveals that microinsurance can have social protections as well as social developmental effects. Initiated since 1996, SWIP was implemented under the sponsorship of the Ministry of Social Affairs of the Republic of Indonesia in partnership with Community-Based Organizations (CBOs). While the Ministry provides a social investment block grant and legal support, the CBOs are responsible for implementing SWIP at the community level. A qualitative case study design was used in which open-ended interviews were conducted with managers of 17 CBOs that implemented SWIP between 2003 and 2008 in West Java Province, Indonesia. Data collection procedures also included observations and document analyses.

This dissertation presents several key findings. The first finding suggests that SWIP has become part of a broader social protection reform in Indonesia during the last decade. SWIP policy emulates the predominant approach in the contemporary development and poverty reduction policies in Indonesia that emphasize local-level initiatives and community-based participations. Furthermore, contrary to other microinsurance models supported by private insurance corporations that utilize CBOs solely as marketing channels, the relationship between the Ministry of Social Affairs and CBOs is more dynamic and mutualistic in the form of creating two-levels of patron-client relationships. SWIP enables the Ministry of Social Affairs to recreate and sustain patron-client relations with CBOs on one level and reinforces patron-clients relations between CBOs with local communities on the other. Instead of avoiding elite capture, the implementation of SWIP leverages the privileged position of the CBOs within the community. Respondents also reveal that previous relationships between the CBOs and the Ministry of Social Affairs were more important in determining the CBOs' participation in the program than their expertise in running microinsurance activities.

Regarding social protection, eleven out of 17 SWIP managers perceived that SWIP was effective and somewhat effective. The remaining respondents believed that SWIP was not effective in reducing the risks and vulnerabilities of the members. Nevertheless, although the amount of benefits (sickness, injury and survivor) were considered inadequate, respondents believed that SWIP has enabled CBOs to promote social development through facilitating access to microcredit and saving programs and supporting members to invest in both human and social capital. These productive economic activities were supported by 50% of social investment block grant they received from the Ministry of Social Affairs. However, the relatively small size of the grant put several CBOs in a difficult situation because the return on their investments barely covered administrative costs associated with running SWIP.

The study recommends that SWIP needs to pay more attention to the organizational and financial capabilities of the CBOs as well as on the size of the social investment block grant if it is to enhance both its social protection and social development impact. Effective use of participatory evaluation at the local level could provide useful insights, particularly when linked to wider national level outcome studies. It is also important that SWIP becomes more fully integrated with national efforts to expand social protection to the population as a whole and to address the challenges facing informal sector workers in the country. In turn, these programs need to be implemented and integrated with the government's antipoverty strategy.[]

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