The Microinsurance Catastrophe Risk Organisation (MiCRO), a specialty reinsurance organisation established to provide the backing for microinsurance products through microfinance institutions in Haiti, has received $1.96m in funding from the IFC (International Finance Corporation), a member of the World Bank Group. The award includes a $1.7 million performance-based grant and $260,000 in technical assistance from the Global Index Insurance Facility (GIIF).
MiCRO has been in operation in Haiti since early 2011 when founding partners Swiss Re, Guy Carpenter subsidiary GC Micro Risk SolutionsSM (GC Micro), Caribbean Risk Managers Limited (CaribRM), global relief and development agency Mercy Corps and Fonkoze, Haiti’s leading microfinance institution established the reinsurer. Since then it has provided the backing for tens of thousands of microinsurance policies sold alongside Fonkoze’s microloans.
The MiCRO backed insurance products are parametric trigger based meaning that they payout promptly when weather events or natural disasters exceed certain levels of severity. The aim of the scheme is to provide a way for small business people and micro-entrepreneurs to recover after catastrophes and continue making payment on small business loans they’ve received, rather than their businesses failing and loans ending up in default.
The funding will help MiCRO continue to provide a weather-index insurance product which will be distributed through Fonkoze. Over the next three years 70,000 Haitians, mainly women, are expected to be insured through the program.
“In Haiti, entrepreneurs at the base of the pyramid, and women in particular, must be given the opportunity to generate income for their households, grow their businesses, create jobs, and build assets,” said Ary Naim, IFC Representative in Haiti. “With this innovative product, IFC hopes to have a strong impact, preventing natural disasters from wiping out the hard work of thousands of Haitian entrepreneurs to get out of poverty.”
“MiCRO and Mercy Corps are committed to developing innovative solutions that help the world’s poor be more resilient to the threat of natural catastrophe and the effects of climate change,” said Steve Mitchell, Acting Chairman of MiCRO’s Board and Vice President of Financial Services for Mercy Corps. “MiCRO is the result of a partnership of leading global organizations committed to this vision.”
“There is tremendous potential in Haiti. By working with IFC and our local partners we can provide much-needed insurance that helps Haitians unleash economic growth,” said Javier Niño Perez, Head of the EU delegation in Haiti. “GIIF has supported projects in African countries such as Kenya, Rwanda, and Senegal; in South Asian countries, such as Sri Lanka and Bangladesh; and an additional 20 countries jointly with the World Bank. This project in Haiti is an important step toward developing sustainable local markets for insurance that helps the poor protect themselves from natural disasters and weather-related risks.”
These weather-index insurance schemes continue to demonstrate the application of alternative risk transfer techniques in developing regions of the world. As these schemes expand and become more common place they will eventually have to move beyond being supported by funding and become commercially viable. This is a challenge that microinsurance has yet to overcome and it will be crucial that the global reinsurance markets work with the schemes to enable them to continue providing their valuable weather covers.