Waada sells hospital cover for Rs1.50 a day, and its price tables show how little room that leaves

Waada sells insurance by the day. Its cheapest hospital cover costs Rs1.50 a day before tax and pays Rs1,000 for each day a customer spends in hospital. The money is taken from a prepaid Zong balance a few rupees at a time, and the price tables Zong publishes for the plans show how little premium sits behind each policy. Waada's website reports 11,819,148 active policy holders.

Waada Digital is a Karachi insurtech that Ishaq Kothawala founded in 2020. It sells through telecom and banking partners, among them Jazz, Telenor, Ufone, PTCL, Zong, Khushhali Bank and Ubank. On Zong, prepaid customers aged 18 to 65 can buy three plans: personal accident, hospital cash and life. EFU Life Assurance underwrites them and pays valid claims. Waada administers the policies and runs the technology, and Zong only facilitates the offer. Waada's own site adds a fourth product, mobile phone insurance, and describes the range as 100 percent Shariah compliant.

A premium sized for a prepaid balance

Zong prices every plan per day, from Rs1.50 to Rs20, before sales tax of 19.5 percent, or 16 percent for SIMs registered in Islamabad. At the higher rate the Rs1.50 plan costs about Rs1.79 a day. A customer may hold one policy per product on a single CNIC but several products at once. The most the page allows is the top accident tier at Rs20, the top hospital tier at Rs15 and the top life tier at Rs12.50. That is Rs47.50 a day, or Rs17,337.50 over a year, before tax.

Collection follows the habits of prepaid users. The deduction is attempted several times a day, and if the full amount is not there, up to 50 percent of the plan price may be taken instead. Missed days are not carried forward, and no more than one day's premium is taken in a day. Cover then follows what was paid. Benefits for a month equal the fees collected the month before, divided by the fees due, multiplied by the full benefit, so a customer who pays for 18 days of a 31 day month gets about 58 percent of the benefit the next month. In the magazine's reading, that suits people whose balances run low, because cover shrinks in step with payment instead of lapsing, and it stops the insurer carrying the full risk on part of a premium.

What the hospital table implies

The hospital cash table allows a simple test of how much room the premium leaves. At Rs1.50 a day, a year of cover costs Rs547.50 before tax. A hospital day pays Rs1,000, so an average of 0.55 paid hospital days per policyholder a year would use up the whole premium. The ratio is the same on every tier: Rs15 a day buys Rs10,000 for each hospital day. Intensive care days pay double the ordinary rate. Payment is capped at 30 days a year, which puts the largest possible claim on the lowest tier at Rs30,000, about 55 times a year's premium.

Other terms narrow the exposure further. Sickness is not covered in the first 15 days after enrolment. A second admission for the same reason within 30 days of the last is not covered, and pregnancy and its complications are excluded for the first nine months. Elective treatment is excluded too. A claim needs a signed statement, the hospital's record of admission, discharge, diagnosis and treatment, a physician's statement and a copy of the CNIC. The same 30 day limit applies to a single consecutive stay. Waada's site reports 15,009 settled claims, and Zong says around 90 percent of claims are settled within 72 hours of receiving the documents. Those conditions, as much as the headline benefit, decide how often the cover pays.

Accident and life plans

The accident plan scales in the same way. Rs2 a day buys Rs200,000 for accidental death or permanent disability, Rs100,000 for temporary disability and Rs20,000 towards funeral costs. Temporary disability means an accident that keeps the customer from working for at least 45 days, and permanent disability must appear on the page's list of covered conditions. At Rs20 a day the same benefits are ten times larger, with Rs2 million for accidental death, for Rs7,300 a year.

The life plan can be checked like the hospital one. Rs2.50 a day buys a death benefit of Rs100,000, or Rs912.50 a year, which is 0.91 percent of the sum insured. If nothing else came out of the premium, it would pay for about 912 deaths among every 100,000 policyholders in a year. In practice commissions, the telecom partner's share, claims handling and Waada's own costs come out of the same premium. Waada has not published those splits, or its revenue or loss ratio, so the tables set a ceiling on what claims can cost and not the margin.

Why a telecom is the channel

Zong announced the partnership on 11 November 2021 and said it gave Waada access to more than 40 million customers. A partner that bills customers every day solves two problems a conventional insurer solves with agents: finding the buyer and collecting the premium. A premium this small leaves little room for an agent's commission or a monthly invoice, and the magazine's view is that this is why the policies are priced in single rupees.

In November 2022 Waada bought MicroEnsure Pakistan, a unit of MIC Global, in an all stock deal whose value was not disclosed, and announced a $1.3 million seed round. The partner list has since grown beyond Zong to the other mobile networks, PTCL and two banks.

The underwriter

EFU Life's board authorised consideration of buying all of Waada Digital's shares on 29 June. In October the deal was dropped by mutual agreement with Waada Digital. EFU Life is still named on Zong's page as the underwriter, which matters because the underwriter, not Waada, pays the claims.

Zong's terms also say that Waada may cancel any subscription at any time, with or without notice, and may change prices and terms with notification. For a customer paying Rs1.50 a day, that is the contract.