European Microfinance Week 2015

PRESENTATION

Arvind ASHTA introduced the theme and the participants, referring to the University Meets Microfinance award given to Veronika BERTRAM-HÜMMER. He found the publication, dealing with index-based insurance after disaster, of much relevance among the many new publications and tools on microfinance having become recently available.

Bertram-Hümmer presented the results from an impact evaluation of an index-based insurance on households’ disaster recovery. She explained that index insurance only disburses money if a regional index, which is exogenous and publicly observable (e.g. regional precipitation), passes a pre-determined threshold. Her study focusses on the Index-based Livestock Insurance in Mongolia, a rather successful case of an index insurance product which generated a high demand already during the pilot stage that allowed scaling up to the national level. Bertram-Hümmer showed the positive impacts of index insurance payments after a ‘once-in-50-years’ winter disaster in 2009/10: Insured herding households had a significantly larger herd size one to two years after the disaster than comparable, uninsured households. Due to the insurance payments, the insured households were able to receive credit more easily and to afford not to sell off their livestock during and after the disaster.

Anaar KARA continued with a presentation on agricultural and health insurances aiming to break cycles of poverty and stabilise the revenues of low-income populations and promote well-being of farmers. While index-based insurance can be based on different datasets, she showed how PlaNet Guarantee’s insurance solutions have a positive impact on the players in the value chain including the smallholder farmer, banks/MFIs, agribusinesses and input dealers. These positive impacts can range from mitigating climate impacts, promoting investment to stabilizing income. She then provided examples of how this has worked in the Sahel region, where they assessed insurance needs for the entire value chains in Mali, Burkina Faso, Senegal and Côte d’Ivoire. They developed insurance indexes, and then engaged in partnerships with local partners for the distribution of the insurance schemes. She concluded with some quotes from clients in such schemes. When asked by a Rabobank Foundation representative in the audience on the definition of proper premiums and contracts, Kara said that cost is indeed a challenge and PlaNet Guarantee would like to see longer reinsurance contracts as one way to bring costs down. 

Maria Livia DE RUBEIS had just come back from a study on mutual health schemes, in the context of the Zina project in Madagascar. This project aims to improve and achieve sustained access to health care services for informal workers (borrowers of MFIs and farmers), as well as to enhance synergies between public and private actors. De Rubeis analysed the operations of three different Mutual Health Organisations (MHOs) in different regions of Madagascar, which are run under the coordination of a central platform based in Antananarivo. The study aimed to compare the results and differences in coping with different shocks. She explained that differences in consumption patterns and healthcare services costs, as well as in clients’ financial capabilities, determine the choice of the health services to be covered under the mutual scheme and the amount of the premiums. Phase 3 of the project runs up to 2018. By expanding areas and services it is expected to ultimately contribute to the National Health Strategy. When asked whether the approach is replicable in other countries, De Rubeis responded that the use of a platform that centralizes some of the costs of the mutual schemes can be advantageous when field missions to the implementation zones (which are strongly needed) do not impact the platform’s budget. Regarding sustainability, she believes that this is slowly being achieved through the scaling up of subscriptions.

DISCUSSION

The audience then asked the panellists about the potentials for upscaling. According to Kara, this is certainly possible considering the apparent demand, but it also depends on pricing. She agreed that the joining of insurances with credit systems is a good start; this is a product they are currently offering. The meso insurance market offers further potential for scale. As for agricultural input systems, it is an area PlaNet Guarantee is working on. The audience also thought there is good potential in this area.

On the question if people were buying more livestock with the insurance disbursements or with credits, Bertram-Hümmer said that this has not been analysed. She also mentioned that it is also not clear why people drop out of a scheme. The latter question cannot be answered with the data at hand and would require more specific investigation.

The audience also wanted to know if less rain is affecting the schemes in the Sahel region. Kara responded that this will be defined by the design of the indexes. Ashta asked whether the insurance schemes performing better had more health centres. Kara concluded that this has not been analysed, even if the insurance schemes show better absorption capacity against shocks.