MR Microinsurance_2012_03_29.indd - International Labour ...

Microinsurance and climate change
Morsink et al. (2011) identifi ed several of these meso-level index schemes,
covering both the idiosyncratic risks of clients and the aggregated risks of
aggregators. Th e emergence of these eff orts, in Burkina Faso, Ghana, Haiti,
India, Mali and Peru (see Box 4.5), indicate an increasing interest in such an
approach to protecting the poor, to expand the scope of who can be covered,
beyond farmers, to include microentrepreneurs and other low-income groups.
Although most meso-level schemes are relatively new, their potential for viability
and scale seems quite promising.
Box 4.5 MiCRO (Microinsurance Catastrophic Risk Organization), Haiti
Hard facts
Start: 2011
Scale: Meso
Model developers: Local insurance providers and MFIs, such as Fonkoze
Funding: Inter-American Development Bank (IDB), UK Department for Inter- Inter-
national Development (DFID), Mercy Corps, Caribbean Risk Managers Ltd,
Guy Carpenter & Company, LLC, Swiss Agency for Development and Coopera- Coopera- Coopera-
tion (SDC)
Risk carrier/Reinsurer: Swiss Re
Risk covered: Rainfall, wind speed or seismic activity
Number of clients: 55 000 Fonkoze microcredit clients
Cover: Reimbursement of Fonkoze loan in the event of natural disaster. A lump
sum of US$125 is provided if home or premises are destroyed, or all or most of
their business stock is lost as a result of a natural disaster.
Distribution channel: Fonkoze loan offi cer
Context
Following Following the 2008 2008 hurricane season in in Haiti, Fonkoze realized that sustaining
MFI operations would become diffi cult if natural disasters were to be recurring.
Fonkoze actively started looking for fi nancial protection against natural disasters
and started organizing MiCRO to help Caribbean (especially Haitian) MFIs
protect their clients against damages from natural disasters. Besides providing
cover at the meso level, the innovation combines parametric cover based on rain-
fall, wind speed or seismic activity, plus an assessment of actual losses on the
ground by the loan offi cers. If there is basis risk – if the payout based on the para-
metric trigger is not suffi cient to cover actual losses – then MiCRO will cover the
diff erence, up to US$1 million per year.
Th e importance of this fi nancial protection protection was illustrated by the earthquake
in Haiti on 12 January 2010, which killed more than 200 000 people and left the
country in a shambles, with future generations even more vulnerable to risk. For
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