Opportunity International’s Micro Insurance Agency to Develop Life, Health and Crop Insurance

February 6th, 2008

Feb. 6, 2008 – Opportunity International, one of the world’s largest microfinance organizations, today announced it has received a $24.2 million grant from the Bill & Melinda Gates Foundation. The funding will help Opportunity International’s subsidiary, the Micro Insurance Agency, greatly expand its insurance products to the poor in Africa, Asia and Latin America and will enable the world’s first stand-alone microinsurance agency to enter 11 new countries and provide life, health and crop insurance to 21 million poor people by 2012.

Microinsurance includes a range of products that can help the working poor manage economic hardship such as flooding, drought, hospitalization, or a death in the family. Workers in the developing world are more likely to experience hardship that can make it impossible to rise out of poverty, yet less than three percent of people in the world’s 100 poorest countries have any type of insurance to protect them from financial shock.

“Opportunity International is a trusted partner and the Micro Insurance Agency has great leadership and experience in this nascent industry,” said Priya Jaisinghani, program officer at the Bill & Melinda Gates Foundation. “They are committed to testing different insurance products, methodologies and delivery systems all over the world, while helping to protect the poor from the severe financial consequences they face in their daily lives. The foundation is optimistic about the potential for microinsurance, and we have a lot to learn about products and services that will truly provide value to people living in poverty. We hope this grant will have tremendous impact by combining learning with doing.”

The funding is part of the foundation’s Financial Services for the Poor initiative, which is working with partners to develop and employ innovative ways to bring a wide range of financial services, including microinsurance, to people living in poverty throughout the developing world.

“The Bill & Melinda Gates Foundation grant will enable us to rapidly scale up the agency so we can offer insurance to poor people who have never enjoyed the basic protections that insurance provides,” said Richard Leftley, president of the Micro Insurance Agency. “We are grateful that the foundation has acknowledged our capability to design, test and develop affordable insurance products that will give the poor a measure of economic security that doesn’t exist in the developing world today.”

An estimated 2.5 billion poor people worldwide have no access to insurance, Leftley explained. Only 0.3 percent of the poor in Africa have any insurance, and in 23 of the poorest 100 countries in the world, there is no identified microinsurance activity. “In some African countries, there is much education to be done because there isn’t even a word for insurance in the local languages,” Leftley said.

Opportunity International began offering microinsurance in 2002 and established the Micro Insurance Agency in 2005. Currently, the organization has 675,000 life, credit or crop insurance policies covering 3.3 million poor people in 10 African and Asian countries. Among its early innovations, the microinsurance pioneer developed a viable life insurance product in Uganda that includes coverage for persons with HIV/AIDS. In Malawi, a crop insurance program protects farmers from severe drought that caused starvation in their villages only a few years ago.

Will Enable Growth and New Products Including Health Insurance
The Micro Insurance Agency has developed innovations and technology to create affordable insurance products for individuals and groups of the poor. A typical life insurance policy costs about $1.50 per month and pays a death benefit for the head of household, spouse or child. “This keeps the economic shock of losing a family member from sending a working family back into poverty,” Leftley explained. The life insurance product is so popular that about 40,000 new clients are signing up per month in the Philippines and 12,000 per month in Ghana.

In Malawi, the agency has successfully tested crop insurance for farmers in a country that frequently experiences drought. The insurance is combined with a loan that enables farmers to obtain higher quality, drought-resistant seed and fertilizer. The two-year pilot has been so successful that the World Bank, which provided initial funding, has selected the Micro Insurance Agency to expand crop insurance throughout Sub-Saharan Africa in the coming years.

The Bill & Melinda Gates Foundation grant also will enable the agency to expand into health insurance. “Health insurance is the most critical need of the poor and the most limited today. Few products exist and most are prohibitively expensive or are based on complicated models used in the developed world,” Leftley said. “Our plan is to develop affordable and easy-to-use health insurance, and to enable 2.4 million people to gain access to healthcare services as we test, refine and roll out new products over the life of this grant.”

The Micro Insurance Agency acts as an insurance broker and is working with many large international insurance companies that underwrite the policies. The organization has developed breakthrough efficiencies in its back-end administration that make the insurance affordable and enable payment of claims in an average of six days.

Third Bill & Melinda Gates Foundation Grant to Opportunity International
This is the third significant grant from the Bill & Melinda Gates Foundation to Opportunity International since November 2005. The first two awards – $7.6 million in grants and a $10 million program related investment loan – are funding rapid expansion of the organization’s banks for the poor and technology innovations in Africa. The total amount provided to Opportunity International by the Gates Foundation is $41.8 million.

February 6th, 2008