The Microinsurance Catastrophe Risk Organisation (MiCRO) facility, which was launched in April by a high-profile partnership of companies, is reported (by Microfinance Focus) to have been triggered in Haiti during recent heavy rain and flooding in Haiti. The facility provides a microinsurance product which utilises a parametric trigger to settle claims after specific catastrophes including rainfall, wind and earthquakes.
MiCRO was launched by a number of major players in the risk transfer sectors including Swiss Re, Guy Carpenter subsidiary GC Micro Risk SolutionsSM (GC Micro) and Caribbean Risk Managers Limited (CaribRM). Mercy Corps, a global relief and development agency is also a founding partner as well as Fonkoze, Haiti’s leading microfinance institution.
At launch MiCRO was described as a scalable, viable catastrophe microinsurance facility which once proven could be rolled out across developing countries around the world. The recent rain and flooding could prove the catastrophe facilities worth.
Fonkoze are a lender of micro-loans in Haiti, making loans to small businessmen and farmers to enable them to carry out their livelihoods. As part of the loan agreement Fonkoze’s clients have been purchasing affordable weather risk cover, they also received training on how the insurance policy worked and how payout was calculated using a trigger. Ensuring understanding of the claims paying process and the predictable nature of parametric policies is one of the key processes in sales of microinsurance weather policies.
Fonkoze, themselves are covered by MiCRO, meaning that the facility will be covering the cost of the claims. As well as paying each client the equivalent of $125 they also reimburse the clients loan to the balance and give them a new loan when they have restarted their business. It’s a very smart way to protect their own loans while providing an affordable, more ethical form of personal finance to their customers and ensuring that bad weather or disasters don’t push them into poverty.
Having a facility such as MiCRO available enables microfinance organisations to offer weather and catastrophe cover alongside their own products. The two complement each other and allow for finance to become viable, both for lenders and customers. We hope to see MiCRO branching out to other countries in the future to provide a secure platform from which microfinance can grow.
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