In many developing countries worldwide, a neglected, but rapidly growing, epidemic has effectively shifted the scale past its tipping point. Road injuries kill more people than AIDS; with a combined death toll from all unintentional injuries of 3.5 million people in 2013, road accidents are quickly rising as one of the top causes of death globally. Whilst developed countries have progressed from the ideation to the prototyping stage of solving universal motoring problems with the advent of self-driving cars, the same cannot be said for the rest of the world. The incidence of road accidents continues to increase at an exponential rate – in 2012 alone, 90% of these deaths occurred in low to middle income countries, home to 81% of the world’s population and 20% of the world’s vehicles.

In most developing nations, healthcare coverage is hardly inclusive; many existing health insurance products are specifically structured to exclude the coverage of catastrophic illnesses, leaving trauma survivors exposed to the magnified economic and social costs of road accidents. This equation is far from being balanced: start with an exponentially high population growth rate in extremely dense areas, multiply it by a high factor of motorized vehicles, add on poor transportation infrastructure, high barriers to healthcare services… and you’ve achieved a breeding ground for an alarming rate of accident-related deaths and crippling disabilities. Further, road accidents can lead to severe impoverishment for economically disadvantaged urban citizens owing to a combination of high medical expenses and lack of a wage earner, plunging entire families into financial distress. These factors make adequate financial coverage for accident victims a critical constituent of a country’s resilience infrastructure.

IIX’s has designed a Buffer Fund for Accidents (BFA) that seeks to address this need by providing an innovative mechanism that not only provides much needed access to capital to the families of road accident victims, but is also structured such that the Fund becomes self-sustaining after a period of time and can be used by the city for perpetuity. As such, the BFA is designed to help countries strengthen their inherent resilience to provide economic security to even the poorest segments of society. Structured as a component of a broader health insurance program for the urban poor, the BFA seeks to cover the cost of diagnostics, emergency transportation, emergency care, acute and long term treatment, and hospitalization for victims – coverage of which is usually excluded as it significantly drives up insurance premiums. The loans provided by the BFA aim to make healthcare affordable and repayment fair to the patient.

IIX has designed the BFA to achieve the optimal outcome whilst balancing the constraints of affordability, broad coverage, and sustainability [Figure 1]. Using these three pillars to structure the lending framework, IIX aims to widen the fund’s loaning profile by providing access to healthcare according to need, instead of access according to ability-to-pay (ATP). This structure allows healthcare financiers to leverage a $9 million donor-provided subsidy to set up the fund, and achieve large scale financing of healthcare services for the poorest segments of a community. By lending at point of care to road accident victims, the BFA is projected to provide access to 1.1 million underserved individuals on a 5-year rotational basis. Keeping the sustainability factor in mind, IIX has designed the BFA to eventually move away from dependency on philanthropy. Since donor funding is finite, the fund will evolve to become self-sustaining by charging a higher interest rate to patients than the rate on the concessional funding used to set up the BFA.

Innovative financeFigure 1: IIX’s Buffer Fund Balances Affordability, Broad Coverage and Sustainability

IIX can tailor the features of the BFA to suit factors unique to each region, including required eligibility criteria, interest rate charged on loan, anticipated default rates and funder appetite and preferences. The structure allows healthcare financiers to leverage modest subsidies to set up the fund to achieve large scale financing of healthcare services for the poorest segments of a community. As such, the buffer fund presents one of the most innovative solutions for rapid reduction of Out-of-Pocket (OOP) spending and increased financial protection for the poor, and merits increased focus by philanthropic and institutional donors. IIX’s commitment to pursuing bold, innovative aspirations enables us to unlock the value of development dollars, and design game-changing products that have the capacity to make waves in the urban resilience landscape – going a long way toward rebalancing the scales for underserved populations around the world.

Tammy Tan
Business Development, IIX