Central Bank in Ethiopia to introduce microinsurance policy
Addis Fortune, 21 June 2011
National Bank of Ethiopia (NBE) is looking into offering microinsurance coverage to small income individuals as well as Micro and Small-scale Enterprises (MSEs). The planned new policy differs from conventional insurance.
The microfinance institutions, MSEs, and NGOs will be the policyholders on behalf of the individuals who are members of the associations. The institutions will collect irregular premiums from the certificate holders who are individually insured through their associations.
This will decrease the cost of the insurance as the insurer would offer the same kind of protection to more than one individual at a time, according to Mesfin Eyasu, microinsurance officer at United Insurance.
The planned microinsurance coverage should have social protection schemes subsidised by the government for those who cannot afford to buy a policy, according to Wolday Amha (PhD), director of the Association of Ethiopian Microfinance Institutions (AEMFI).
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Fonkoze initiates catastrophe recovery product in Haiti
Microfinance Focus, 16 June 2011
Following disastrous rain and flooding in Haiti recently, microfinance institution Fonkoze rolled out its catastrophe recovery product 'Kore W' to help clients and their families recover from the calamity.
Under this coverage, affected clients receive a cash payout of 5,000 Haitian Gourdes (USD 125) to meet emergency needs like food, water, and temporary shelter. These clients will also receive a reimbursement of the balance of their existing loan, and a new loan when they are ready to restart their business.
Fonkoze’s client have been purchasing this coverage with their loans since January this year which included detailed training on the types of occurrences that would trigger a payout from losses incurred by rain, wind and earthquakes.
Since a series of devastating hurricanes struck Haiti in the fall of 2008, Fonkoze has developed natural disaster coverage at affordable prices. Fonkoze has founded ‘Microinsurance Catastrophe Risk Organisation’ (MiCRO), a risk transfer vehicle launched in March 2011 to manage it own risks. Global reinsurer Swiss Re is also a founding partner of MiCRO.
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Swiss Re joins Ethiopian microinsurance project
Reuters, 10 June 2011
Swiss Re is to reinsure a five-year project that provides drought insurance for crops in Ethiopia, in a microinsurance programme developed by the World Food Programme (WFP) and Oxfam America.
The world's biggest reinsurer will commit USD 1.25 million to the project, which will cover the contract with farmers in Ethiopia as well as three future and yet to be determined countries.
The initial project will allow Ethiopian farmers to use labour to pay for a weather index-based insurance contract that will compensate if a severe drought event hampers crop growth.
National insurers Africa Insurance Company and Nyala Insurance Company will insure the crop contracts, while Swiss Re will provide the reinsurance for the project, which has been co-ordinated by the WFP and Oxfam America.
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Programme available for the 5th Asian Conference on Microinsurance
The organisers of the 5th Asian Microinsurance Conference, Asia Insurance Review, have made available the conference programme. The conference, which is entitled "Micro-Reinsurance: Defining the Future Commercial Opportunity in Microinsurance", will address what the organisers believe to be the next major advancement in the sector: The development of risk management and secondary risk transfer towards financial stabilisation and market development.
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Early findings from the MILK project on client value
Financial Access Initiative, 2 June 2011
Michael J. McCord, Project Director of MILK and the President of the MicroInsurance Centre, and Emily Zimmerman, a Research Associate at MILK have conducted an extensive landscape review of academic and practitioner studies that address the value issue.
They found that the existing literature provides only partial answers to the questions of when and how microinsurance may have value to clients and their families. They also found that studies have been concentrated in specific components of value and almost all studies look at health and agricultural insurance products, while life and accidental death and disability products make up the majority of microinsurance policies currently covering low-income people.
The following are some key lessons learned from the aggregating study information:
- Health microinsurance can increase utilisation of both routine services such as preventive outpatient care and high-cost, low-frequency services such as surgery.
- Agricultural microinsurance can boost farmers’ business investment and incentivise them to make riskier but more profitable business decisions.
- There is evidence, though limited, of improved health outcomes and quality of care as a result of health microinsurance.
- Benefits of microinsurance appear in some cases to differ by income level, gender, urban/rural residence, and age, but studies often do not flesh out the differences between client segments clearly.
- There is mixed evidence regarding the ability of health microinsurance to reduce expenditures or protect income. However, studies often fail to clearly describe the cost of insurance policies or to distinguish between routine and catastrophic shocks.
- There is a large body of work examining the various risk-coping tools (such as savings, emergency loans, informal risk-sharing arrangements, and gifts) used by poor households, but little concrete analysis of the role these tools play as alternatives or complements to formal insurance products.
- Methodological difficulties result from the many variables at play, the presence of adverse selection, and the infrequency of many insured events. These have limited the questions and product types studied, as well as the robustness and generalisability of the findings of some studies.
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Access to Insurance Initiative announces new Executive Director
Access to Insurance Initiative, 1 June 2011
The Access to Insurance Initiative (A2II) announced that Henry Yan will up the position of Executive Director of A2II. Henry Yan's background is in financial services consulting, specialising in insurance and microinsurance, pensions and investments. His career covers many developed and developing markets across Europe, Africa, Asia Pacific and the USA. He joins A2II having had wide experience dealing with regulations and regulators on pension and insurance matters. Henry is a qualified actuary and CFA charterholder.
In his new position, the Executive Director will lead the Secretariat of A2II and will be responsible for its day to day operations. He will take on responsibility for project management and engagement with the A2II’s global, bilateral and regional partner projects.
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