MICRO INSURANCE
The Next Revolution
in Financial
Services for the
Poor
Our Journey
• Opportunity International entered micro
insurance market in 2002
• Micro Insurance Agency established in 2005
• Currently serving 3,500,000 lives globally
• 5 year plan:
• Expand into 11 new countries
• Serve 25m people by 2012 – life, health, crop
Micro Insurance Agency footprint
ASIA
AFRICA
AMERICA’S
Mexico
Columbia
Honduras
Zambia
Malawi
Uganda
Ghana
Tanzania
Zimbabwe
Mozambique
India
Philippines
Indonesia
Our Model
Risk Carrier
BPO
Insurers - local and
multinational
Reinsurers - especially
on crop
Front Office
MFIs, SACCOs, Susu,
VSLA - from most major
networks
TPA - claims
management
Aid Agencies
Retail - white label,
mobile phone, kiosks
Back Office
Systems
Brokerage
Product Design
Training
Education
Insurance products
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Credit Life
Term life / funeral insurance
Livestock
Property insurance
Index based crop insurance
Package policy
Health insurance
Our Products - Malawi Crop Insurance
• Enables lending to
smallholder farmers
• Uses historical rainfall
index and weather
stations to establish
weather derivative
• Too little / much rain
triggers a payment
• Premiums included in
loan value
The Three Farmers of Mchinji, Malawi:
The True Impact of Crop Insurance
Malawi farmer Henry Kangwelema puts
meat on the table and sends his children
to school now that he has a crop
insurance policy from the Micro
Insurance Agency to protect his farm
from the devastating effects of drought.
Thanks to crop insurance from the MIA, Malawi farmer Gelesom
Chimpopi was able to get a loan to purchase high-quality seed
and fertilizer to greatly increase his crop yield
Our Products
Uganda “care” policy
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Death of borrower:
Death of spouse:
Death of child:
Disability / Critical :
Property:
Loan plus $830
$333
$166
Loan covered
Loan covered
• Cost: between 0.3% and 0.7% of loan
Our Products
Housing Insurance: Partnership with Habitat
Yudaya Nakazibwe now has
food to feed her family, a
steady income and is paying
her loan back at 2 bags of
cement a month.
Product Development
Challenges
Approach
Understanding the market
Market Research
Availability of data
Experts in the field (crop, health)
Finding the right distribution channels
Network with MFIs, NGOs,
humanitarian organisations, retailers
Lack of actuarial experience
Secure it
Challenges – Weather Crop Insurance
Availability of data & weather infrastructure in post conflict
countries
Mozambique: working with Universities that are likely to have
the data given that the government resources were
destroyed.
Rwanda: 100+ weather stations will need to have the data
gaps filled in through estimates derived from satellite data.
The weather infrastructure will need to be rebuilt.
Solutions are expensive and will need external finance
Challenges with Pilots
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Regulatory issues
Adverse selection
Insurance capacity
So what do we do?
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Ongoing analysis &
development
client education programmes
going the ‘extra mile’
innovate
Lessons Learned
• Data is not always reliable
• Insurance companies are interested if scale can
be reached
• Importance of efficient Back Office IT system to
minimise coverage, transaction and claims costs
• Importance of right distribution partners
• Process can take time in our markets
• Persevere and you will succeed
Common traps and mistakes
¨if only I’d known...¨
• The poor have very
different priorities
• Price is not the only
priority – service is
equally important
• Simple products
work best for the
poor
Conclusions
• There is both supply and demand for micro insurance
globally
• A gap in technical expertise exists, separating these
parties
• Those highest in demand, weather index and health
insurance, are the most difficult to administer