Guy Carpenter have been awarded a grant by the Microinsurance Innovation Facility to allow them to develop a reinsurance facility for microfinance operations. Using the grant Guy Carpenter will create the infrastructure for a reinsurance pooling facility dedicated to microfinance risk transfer solutions. This will enable microfinance initiatives to access the global reinsurance and risk transfer markets in a much more cost effective way than if they tried to use the normal market access routes.
Access to risk transfer solutions are still hindering development and growth in emerging economies. Some schemes such as the weather risk management initiatives in India and Africa are easing this for small farmers and the like but they don’t cover a wide enough spectrum of these emerging economies just yet. Hopefully this initiative can help to pave the way for a wider range of microinsurance and risk transfer options for businesses in these more impoverished regions of the world. By making reinsurance and risk transfer solutions available to these microinsurance firms we expect to see many more options for weather and natural catastrophe hedging created for the emerging market economies. Once the volume of micro-risks transferred gets to greater levels it is highly possible that this new facility will utilise the capital markets to transfer risks through securitization.
You can read more about Guy Carpenters micro risk solutions on their website here.