We've reported recently on the big win/win proposition that microinsurance can offer insurance carriers, on the one hand, and vast numbers of people who operate on what has historically been an informal economic level without the opportunity and stability afforded institutional financial relationships. Insurers exploring microinsurance have focused on adaptations of standard protection products that might be thought of as very low-income versions of personal lines and business owners' policies. This week a new dimension was added with the announcement of the Microinsurance Catastrophe Risk Organization (MiCRO), incorporated March 17, which a statement from co-founder Swiss Re describes as an insurance facility to empower Haiti's micro-entrepreneurs to protect themselves against the economic aftermath of severe natural catastrophes.
Swiss Re's partners in the MiCRO initiatives are Caribbean Risk Managers Ltd. (CaribRM), the risk analytics arm of CGM Gallagher Group; GC Micro Risk Solutions, a division of broker Guy Carpenter & Co.; Fonkonze, Haiti's leading microfinance institution; and Mercy Corps, a international humanitarian organization for relief and development. Swiss Re characterizes MiCRO as a:
…viable, long-term insurance platform [that] will enable Haiti's informal sector to recover more quickly after natural catastrophes, with potential expansion to protect Haitians from other kinds of risks in the fguture. The distribution and structuring of MiCRO's tools offer Haiti's informal sector the opportunity to create a foundation for long-term economic stability and development.
MiCRO's partnership reflects the way that insurance and microfinance institutions can work together, as well as NGOs such as Mercy Corps. As discussed in a recent I&T article by Pranav Prashad, grant officer with the Microinsurance Innovation Facility (MIF), the target customers of microinsurance are people above the lowest levels, where government "safety net" measures or subsidies may be the most appropriate services.
A similar point is made by Mercy Corps' regional program director Phil Oldham, about helping low income people to enter the formal economy and stabilize their autonomous economic status rather than simply make them the object of charity:
With catastrophe insurance for microfinance entrepreneurs, we are offering Haitians a financial service that they previously didn't have access to. It's an important step in brining unbanked Haitians further into the formal sector and builds on Mercy Corps' work to introduce new financial services through mobile banking and small and medium business development, to better protect the economic stability of Haiti's poor.