by Meredith May. Stanford Social Innovation Review, Fall 2010
Microinsurance is a small insurance policy that can be sold to a poor or low-income person in an emerging market. It is the next frontier in the microfinance movement.
Today more than 150 million low-income people in developing countries are improving their families’ futures through microloans, according to the World Bank. As workers grow their microbusinesses, they want insurance. All it takes is a flood, a feudal war or the death of a breadwinner to wipe out bank accounts. But more than 90 percent of people in the world’s 100 poorest nations do not have access to insurance.
LeapFrog Investments, the first for-profit private equity fund dedicated to providing microinsurance was incorporated in 2007. The fund has ties to some of the world’s most influential leaders including Grameen Bank founder Muhammad Yunus and former President Bill Clinton.
The LeapFrog team’s plan was to ask big investors to chip in, so the fund could invest in small organisations that already were providing affordable microinsurance to cover health, life and property protection in Asia and Africa. LeapFrog found, on average, that microinsurance policies cost $1 per month and provide $250 in benefits to customers.
LeapFrog founder, Andy Kuper, says microinsurance provides a safety net, but it also gives the insured the confidence to take business risks they might otherwise avoid. Insurance provides a floor for taking risk and feeds innovation.
LeapFrog aims to insure 25 million with mini-policies. In December, 2009, LeapFrog announced its first investment AllLife in South Africa to provide life insurance to people previously regarded as uninsurable, HIV patients and diabetic clients. They promise to manage their health, by heeding text, email and phone reminders about doctor visits and medications, and provide the insurance company with copies of their blood reports. There are now 5,000 clients whose monthly premiums range from under $20 to $100, depending on their age and gender.
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