Good afternoon. It's an honour to be present today at this committee hearing. The study is very important.
I will describe MicroEnsure's work, which I believe is a good example of how an organization is able to work together with both public and private sector partners to pursue important development objectives.
The mission of MicroEnsure is to protect the poor in developing countries against a variety of risks by using insurance. The poor do not have anything to fall back on. They don't have savings. They don't have a government safety net. A death or illness in the family—which is effectively an economic unit—or a calamity such as a fire or natural disaster can have huge ramifications. The insurance that we arrange is designed to meet their needs and is priced to be affordable and to provide value to those paying for it.
MicroEnsure has operations on site in five countries—the Philippines, India, Ghana, Tanzania, and Kenya—and we are active in others, including Rwanda, Mozambique, Malawi, and several in the Caribbean. In total, we have arranged for 1.6 million insurance policies that cover 3.3 million people.
The business model for MicroEnsure has three main components: the front office, which distributes the products; the risk carrier, which covers the risk; and the back office. For the front office, the insurance is distributed through a series of partners, including microfinance institutions, agriculture, banks, community groups, and, more recently in Ghana, Tanzania, and Kenya, mobile phone companies. Through these partners, we are able to provide low-cost access to insurance products for the poor.
Now, we're not an insurance company and we do not directly carry any of the risk. Instead, we work with insurance carriers that are licensed and regulated in the countries we are operating in. Due to the nature of the risk and the service levels we require, we also work with reinsurance companies. In some cases, we are connected through our own cell captive.
As the back office, we design products, train staff, and educate clients, but also we administer the programs and pay claims on behalf of the insurers. The five operating companies that I mentioned earlier are locally incorporated and licensed as either insurance agents or brokers and earn commissions on the insurance premiums that are generated.
Either locally or in our head office, we will fill the gaps between what our partners and insurers can do and what must be done for the products to work. As an example, we have our own administration systems that keep track of who is insured and who the beneficiaries are. We generate invoices on behalf of the insurance company and we also pay claims out of that system to those who qualify. Because we are focused on this market and have the volumes involved, we can do the administrative work more cheaply than a typical insurance company can.
We presently have a portfolio of products. However, not every product is offered in every country, depending upon what the need is, the partners we are working with, and what gaps we are able to fill. In general, though, we are delivering the products I will now describe.
We're delivering life insurance both for the primary insured and for his or her family members.
In terms of health insurance, while there are several variants, at its most comprehensive we are providing in-patient hospital coverage in both India and Tanzania.
There are many calamities that are disastrous for poor families and their small businesses. We offer property insurance packaged together with a microloan to help to offset the cost of replacing inventory if a small business is affected by a fire, a storm, or even political insurrection.
We offer weather index crop insurance. MicroEnsure is a leader in the development of this product. It insures farmers against too much or too little rainfall during a growing season. Because of our expertise in this product, we are often sought out to provide technical assistance. At present, we have technical support projects in Zambia, Tanzania, Malawi, and four countries in the Caribbean, including Jamaica, Grenada, St. Lucia, and Belize.
Funding for these projects comes from, among others, the International Finance Corporation and BMU, the environment ministry of the German government. These projects provide technical training for local staff in how to implement these products and how to develop and distribute it through small farmholders.
Earlier in its development, MicroEnsure did work on a few projects funded by CIDA through grants to Opportunity International Canada. However, since 2007 funding to develop and expand has been generously provided by the Bill and Melinda Gates Foundation. The Bill and Melinda Gates Foundation has allowed us to research opportunities and to test different approaches; some of them have been successful, while others have not worked out quite as well as we would have liked. Opportunity International is the parent body for MicroEnsure, and it has also encouraged the company to innovate in this area.
Thank you for your attention. I would be pleased to answer any questions that you might have.