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MiCRO and Fonkoze insurance payout will help Haitians rebuild businesses after Tropical Storm Isaac

Haiti, August 30, 2012

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First-of-its-kind insurance product allows microentrepreneurs to weather storm’s losses and rebuild

Haiti, 30 August 2012 – Microentrepreneurs who lost merchandise or their homes during Tropical Storm Isaac now have a resource to rebuild. The reinsurance company Microinsurance Catastrophe Risk Organisation (MiCRO) will make a significant payout to Haiti’s largest microfinance institution Fonkoze following Tropical Storm Isaac. Fonkoze will use these funds to pay a fixed sum of Haitian Gourdes 5,000 (USD 125) to hundreds of female microentrepreneurs who lost their homes or inventories due to the storm. The amount of the payout, which is determined by a combination of weather-related triggers and actual losses on the ground, will be finalized in the next few weeks.

“This week’s events have once again demonstrated that MiCRO can bring the benefits of the global insurance market to the poorest of the world’s poor,” said Milo Pearson, Chairman of the Board of MiCRO. “Through our partnership with Fonkoze we are helping Haitian microentrepreneurs manage their risk and protect their assets against catastrophic loss. Bringing this insurance product to the people of Haiti means that small business owners can accumulate assets and protect themselves against losing everything in a natural disaster.”

MiCRO enables Fonkoze to provide its members with an innovative catastrophe recovery product known as Kore W, which will provide payouts to hundreds of affected Haitian women. The Kore W program also allows these small businesswomen to cancel their outstanding loan balance and, when they are ready, take out a new loan to capitalize their business, further accelerating recovery. The recipients of the insurance funds are women, many of whom earn less than USD 2 per day selling small goods at local markets, and their homes or inventories have been destroyed or heavily damaged by the storm.

LEARN MORE: Inside microinsurance, an interview with James Kurz on our sister blog Global Envision

This week’s payout was triggered by Tropical Storm Isaac, which raged through Haiti last weekend, killing at least 24 people, damaging or destroying thousands of homes, and knocking out crops and electricity grids. The storm was particularly destructive in Haiti’s south. Small business owners, who too often have little or no protection for their wares, were severely impacted by the storm’s high winds, flooding and mudslides.

The payout will mark another critical step for MiCRO, a reinsurance company formed in March 2011 by Fonkoze and the global humanitarian agency Mercy Corps with the support of the UK’s Department for International Development (DFID) and Swiss Re, a leading global reinsurer. MiCRO offers its clients a unique hybrid insurance product: a set of weather-related triggers corresponding to wind speed, rainfall and earthquakes that offer a timely payout, combined with coverage for additional funding to the extent that the triggers do not reflect actual losses on the ground.

The hybrid policy allows Fonkoze’s members to access disaster insurance for the first time. “For many years, I watched women entrepreneurs struggle to climb the ladder out of poverty, only to be knocked down time and time again by catastrophic losses from hurricanes or earthquakes,” said Anne Hastings, CEO of Fonkoze. “Now for the first time, MiCRO has made it possible for those women to quickly recover their losses, rebuild their source of income, and avoid a potential poverty trap.”

Fonkoze made Kore W available to nearly 55,000 clients starting in early 2011. Microentrepreneurs pay for insurance coverage through a partially subsidized premium at the outset of each new loan cycle. Once damage to business assets or homes of each Fonkoze microentrepreneur has been established, the payout and debt forgiveness kicks in. In the company’s first year, MiCRO has provided $1.64 million in payouts that Fonkoze has used to provide funds to nearly 6,800 Haitian women.

About MiCRO
The Microinsurance Catastrophe Risk Organisation (MiCRO) is a specialty reinsurance company that designs and delivers insurance solutions for low-income microentrepreneurs, primarily through microfinance institutions. MiCRO was founded in 2011 by Fonkoze, Haiti’s leading microfinance institution, and Mercy Corps, a global humanitarian agency, with support from the UK Government’s Department for International Development (DFID). MiCRO’s strategic partners include Swiss Re, a leading and highly diversified global reinsurer; Caribbean Risk Managers Limited (CaribRM), the risk analytics arm of CGM Gallagher Group, the Caribbean’s largest risk intermediary; and GC Micro Risk Solutions (GC Micro), a division of the world’s leading risk and reinsurance specialist Guy Carpenter & Company, LLC. www.microrisk.org

About Fonkoze
Fonkoze is Haiti’s largest microfinance institution (MFI), with 46 branches serving almost 60,000 borrowers and 290,000 savers in every region of Haiti. Fonkoze is one of the best known MFIs worldwide for its innovative approaches to reaching the poorest and helping them take the first steps out of poverty. Fonkoze’s website address is www.fonkoze.org.