MILK Brief #15: Doing the Math - Catastrophe Insurance in Haiti


MILK Brief #15: Doing the Math - Catastrophe Insurance in Haiti

Each hurricane season in Haiti threatens to erase the fragile progress made since the 2010 earthquake, and small business owners are among the most vulnerable. MILK partnered with the microfinance institution Fonkoze to explore the value of its Kore W catastrophe insurance in helping clients cope with the consequences of a flood. The product, which is mandatory for Fonkoze borrowers, covers any outstanding loan balance, provides a cash payout of USD125, and pre-approves clients for a new loan. We interviewed insured (some of whose claims were rejected and some approved) and uninsured small business owners in the wake of a 2011 flood to understand the costs they incurred and how they coped. We find that while the insurance payout covered only a small portion of the total losses, in combination with continued access to credit it was instrumental in helping clients to begin the recovery process. Long delays in claims payment (which Fonkoze has since begun to improve but remain long due to the product's design) led clients to undergo difficult financing strategies while waiting for the insurance benefit.  Nonetheless, the Kore W product helped many clients to avoid selling assets as many of the uninsured were forced to do. 

File Name: MILK Brief #15 - Catastrophe Insurance in Haiti.pdf
File Type: application/pdf
Download: 800 times
Created Date: 01-11-2013
Author: Barbara Magnoni and Laura Budzyna
Publisher: MicroInsurance Centre at Milliman.

Quote of the Day

"I was stranded in New York City during the 2003 blackout, and for the next two years, I carried a small flashlight in my backpack. The flashlight did not cost much, but its potential to help in another blackout was obvious and to use it I needed only to press a button. For microinsurance to be accepted on a massive scale, it cannot cost much, its value must be obvious, and it must be simple to use." -- Brandon Matthews | Head of Microinsurance, Zurich Financial Services

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