Insuring women-owned businesses against natural disaster


December 1, 2011

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I have been in Haiti for a mere 36 hours and have already waded through a river, trekked through rice fields, climbed mountains and stumbled upon a buzzing open market in a remote village in the Central Plateau.

I was spending the day with the director of our economic recovery program and staff from Fonkoze – Haiti's leading microfinance institution. We were visiting women entrepreneurs who've borrowed money from Mercy Corps' microfinance partner. Each is protected by Haiti's first-of-its-kind insurance policy that gives them a safety net in the case of a natural disaster.

Haiti's economic growth depends on small-scale entrepreneurs. Because of their limited means, they assume huge risks, and there's little or no financial protection if something happens -- like an earthquake -- to shut down their business temporarily. They and their families would enjoy greater financial security if they were insured.

To address this need, Mercy Corps partnered with Fonkoze and other public- and private-sector funders to establish the Microinsurance Catastrophe Risk Organisation (MiCRO) in March.

MiCRO’s initial product offers women micro-entrepreneurs protection against the economic aftermath of severe natural catastrophes, such as hurricanes, floods or earthquakes. The insurance costs 3 percent of the loan value, and is rolled into the loan. (The typical loan is between $200 and $250.)

MiCRO’s key innovation is the type of insurance it offers: a new loan product that blends both parametric and basis risk options. In this case, that means the remaining balance on the loan is forgiven and a fixed payout -- $125 U.S. -- is provided for rebuilding purposes.

Throughout the day we met with eight women, most of whom sell rice, beans, sugar and clothing at local markets. Each graciously opened their homes to us and shared their stories about how the payouts helped them to begin rebuilding their lives again.

Rose Marie buys sugar and rice in Port-au-Prince, and then sells it to women in her village of Kolonbye. The 42-year-old lost all her merchandise in the heavy rains that pounded the region in August, and used the insurance payout to purchase new supplies. “I lost everything in the rains," she told me. "Thankfully because of this coverage I was able to continue my business right away.”

As of November 15, 2011, a total of 5,385 Fonkoze borrowers across Haiti have received USD $1.5 million in insurance benefits during the 2011 hurricane season. (Click here to read more about this.)

Today I saw the power of this insurance product to help people and communities get back on their feet. As we loaded back into the car, I left with a smile on my face. It may just be another day at Mercy Corps, but what a wonderful day it had been.