Challenges

The product is designed to help low income and vulnerable population faster recover from the losses caused by natural disasters such as drought, excess rain or earthquakes. Several challenges need to be addressed to implement innovative insurance products. Nevertheless, awareness about the benefits and the need for insurance is increasing and slowly helping to mobilize demand, the offer is being enabled by technological advances and sophisticated methodologies to expand the traditional (and very limited) insurability boundaries. There is also a very favorable environment recognizing the importance of financial inclusion to combat poverty, which underpins a constructive dialogue with public and private entities needed to bring insurance solutions to the market. As a result, the main remaining challenge is "the human factor", which MiCRO addresses each time as a change management project, helping all involved parties understand the urgency of changing the status quo, showing what technological advances allow us to do, and showing the way how to get there...

Primary target

Which group does your product/service primarily target?

Description of Innovation

Esfuerzo Seguro , meaning "Safe Effort", protects the productive activity of vulnerable and low-income segments of the population against business interruption caused by earthquakes, droughts and / or severe rainfall. The occurrence of any of those events automatically triggers payouts that gradually increase depending on the severity of the event. Covered are directly the micro and small entrepreneurs, who receive the payouts directly together with an SMS message letting them know about the reason for the credit on their bank account. First index-based microinsurance strengthening resilience of most vulnerable against NatCat events

Results

The product is designed to make significant payouts after the occurrence of severe catastrophes, but makes also less significant payouts in case of moderate events to add tangibility and for educational purposes supporting the overall goal to better manage natural risks, where risk transfer (insurance) is only part of the equation. As such Esfuerzo Seguro has annually triggered more than one payout per client in average. Other interesting indicators at a regional level as of Dec 2021 are: 50% of women policyholders, 8 days in average reporting ocurrence of events, 81% of policies are non-subsidized, 58% loss ratio, 45k active policies.

Lessons Learnt

Achieving scale is critical and, as such, special attention needs to be paid to the selection of partners, especially to those who are critical to grow the business. More specifically, MiCRO focuses on alignment of interests (motivation, double bottom line goals), reach to target population, and capacity.

Do not surprise regulators, engage them early in a collaborative and constructive dialogue.