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Rural Microinsurance Helping the poor weather the storm. Richard Leftley President & CEO Microensure. 2009 RBAP-MABS National Roundtable Conference May 12-13, 2009 Hyatt Hotel and Casino Manila. The poor do not buy insurance. The poor face huge risk

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rural microinsurance helping the poor weather the storm

Rural MicroinsuranceHelping the poor weather the storm

Richard Leftley

President & CEO


2009 RBAP-MABS National Roundtable Conference

May 12-13, 2009

Hyatt Hotel and Casino


client demand chutes ladders
The poor face huge risk

They seek to mitigate risk often informally

Informal mechanisms are poor value and insecure

Insurance is safety net

24% entering hospitals left below the poverty line in India

Client Demand: Chutes & Ladders
supply from insurers is available
Supply from insurers is available
  • Commercial insurance companies are interested in this market
  • Life & property insurance is available from local insurers
  • Crop and health harder to secure locally: need global reinsurers
introducing microensure
Introducing MicroEnsure
  • Started working on microinsurance in 2002
  • MicroEnsure established in 2005
  • Currently serving 3,500,000 lives globally
  • Gates Foundation grant; $25m over 5 years
      • Expand into 11 new countries
      • Serve 25m people by 2012 – life, health, crop
current footprint
Current Footprint

















what s needed to make it work
What’s needed to make it work?

Risk Carrier

Front Office

Back Office

microensure model
MicroEnsure model

Front Office

Rural Banks, MFI’s etc

NGO’s / Aid Agencies – such as child sponsorship

Retail – e.g. mobile phone kiosks

Risk Carrier



Cell Captives

Mutual Benefit

Back Office

IT Systems

Claims mgmt

Product Design





so what products do the poor want
So what products do the poor want?
  • What forces unplanned spending on the poor?
    • Funerals
    • Medical emergency
    • Fire or natural disaster
    • School fees
    • Weddings
    • Crop failure in rural areas
life insurance
Life Insurance
  • Mortgage Redemption – protects the lender
  • Borrower dies or is disabled during a loan period. The mortgage redemption pays off the outstanding loan plus interest to the lender.
  • Term Life – excellent for funerals
  • Normally loan linked and can provide a fixed sum insured upon death of borrower, spouse, children or parents.
  • Investment products – provides a saving return
  • Return of premium plus interest upon maturity – can be problematic to collect the premium over 5 year term
saturnina santocildes iloilo
A 57 year old widow fought for her children

Took 15 loans, the last was P9,000

She died after extracting her tooth

The P100,000was split between the children: The youngest remain at school, the oldest started a business; one bought a cow

Saturnina Santocildes, Iloilo
property insurance products
Property Insurance Products
  • Philippines first micro housing product launched last year(BahayAsenso)
    • Protects the house against fire and all natural calamities
    • Provides cover for death arising from an accident
    • Provides evacuation benefit to cover costs
  • Sold in units of P50,000; maximum of three units per borrower
weather index products
Weather index products
  • Demand from small hold farmers for inputs
  • Agri-Agra law could unlock significant funds
  • Rural banks are worried about climate risk
  • Traditional insurance has issues; claims payment
  • Solution is weather index products
      • Quick and transparent claims trigger
      • Index available for a range of risks
philippines index products
Philippines Index Products
  • Drought for rice farmers
    • Too little rain triggers a payment
    • Rainfall measured at an existing rainfall gauge
  • Typhoon for rice farmers
    • Farmers location captured with GPS
    • Index uses windspeed and distance to measure impact
  • Excess rain (in development)
  • Pest & Disease available from PCIC
livestock insurance
Livestock Insurance
  • Protects against death of the animal
  • Biggest issue is the cost of controlling fraud which boosts pricing
  • MicroEnsure working on new technology which reduces fraud and price
health insurance products
Health Insurance Products
  • High demand due to frequency of use
  • Admin cost restricts us to in-patient cover
  • Out-patient addressed in normal cash flow
  • Needs to be a cashless facility – requires TPA
indian micro health product
Indian micro health product
  • Provides P22,500 cover for family of four
  • Service provided on a cashless basis
  • In-patient only cover
  • Costs P350 per year for family of four
  • Pre-existing and maternity from day-one
  • Working with SML – over 1.7m families
why introduce micro insurance
Why introduce micro insurance?
  • Provides a competitive advantage in an increasingly competitive lending market
  • Reduced risk for clients leads to lower PAR
  • Additional revenue opportunity for the rural bank from fee income
  • Provides access to new markets (e.g. farm input lending)
how to choose the right product
How to choose the right product?
  • Start by understanding client demand, clarify what is already available and what do regulations allow?
  • Balance these three requirements
  • Be realistic about operational capability
  • Internal & external needs differ
balancing the conflicts
Balancing the conflicts
  • Lower premium = lower commission
  • Better / cheaper products might attract additional borrowers
  • Revenue from insurance will always be lower than from lending
  • Insurers needs to make much?
  • Its all about the client – right???
what s the bottom line
What's the bottom line?
  • Revenues from insurance are low
    • Range from P3 – P50 per policy
    • Global average is P12 per policy
  • Whilst this is incremental income, there is a cost associated with administration
  • Complex products require investment or an able partner who can deliver
communicating staff training
Communicating: Staff training

Loan officers need to understand products

Loan officers train clients

MicroEnsure uses its own training teams to educate branch staff

There is no cost to the rural bank

  • The poor want to mitigate risk
  • Insurance reduces lending risk and generates revenue
  • Demand for; health, life, property, crop
  • Needs to be a partnership model
  • Back office is key in reducing transactional cost and providing good service
  • Thank you for your attention, more information:
  • www.
  • richard.leftley @
  • william.martirez @