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Insuring Haiti's small businesses

Haiti, April 19, 2011

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Late last month, a number of businessmen, journalists and community organizers gathered in Port-au-Prince to witness the launch of the Microinsurance Catastrophe Risk Organization (MiCRO). MiCRO is an innovative, donor-capitalized organization built to bring insurance to a class of people who often find themselves outside of the system – the poor.

More specifically, MiCRO links the global reinsurer Swiss Re with local microcredit bank Fonkoze in order to provide insurance to small business owners. This is only the first step — MiCRO hopes to reach more of the uninsured in Haiti by partnering with other organizations in the future.

Catastrophic insurance is especially important in Haiti, an island country that sits on a fault line. Every time an earthquake, hurricane or even a tropical storm hits the country, citizens experience economic losses. This is especially true of small business owners, who lack access to formal financial institutions.

Fonkoze, Haiti’s leading microcredit institution, has been working on a solution to this problem since the 2008 hurricanes. As such, they were in a unique position to use the devastating 2010 earthquake as an opportunity to test their fledgling product.

Mercy Corps, recognizing the significance of this work, funded a catastrophic loss microinsurance pilot program for 500 women. These women were treated as though they had been insured during the earthquake. Their debts were cleared, they were given 5000 Haitian gourdes (about US$124) for immediate family needs and they were offered a new loan.

The program was an unmitigated success. The women were able to meet their family’s needs and even began rebuilding their businesses.

Roselaine Baptichon was one of the program participants. “Out of the 5,000 gourdes I received, I spent 1,800 gourdes to immediate needs of my family and 3,200 gourdes for business restart. I bought a sack of sugar and a sack of rice. I had to find a way to make this money last for a while.”

The pilot program revealed valuable information about how a permanent insurance product would need to be structured and managed. This feedback enabled Mercy Corps and Fonkoze to partner with insurance professionals to begin working on the logistics of providing the service in a sustainable, pro-poor way.

And so, with the aid of Swiss Re, GC Micro Risk Solutions and Caribbean Risk Managers Ltd., MiCRO was born.