How microinsurance helps protect vulnerable communities

Underserved populations are gaining a safety net for unexpected events through low-cost insurance.
“Traditional personal insurance is mainly about insuring lifestyle. Microinsurance insures the basic livelihood and health of financially and economically vulnerable people. It empowers the underserved.”
– Krishnan Venkatachalam,
Head of Microinsurance at AIG
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A daily struggle

It’s not easy to be a maize farmer in Zimbabwe. Food insecurity is a constant risk. The inability to get credit means farmers don’t have access to resilient agricultural supplies, such as the seeds and fertilizer needed for a good harvest in the African nation’s hot climate.

Too much rainwater can inundate a crop, ruining a harvest for the community.

Too much rainwater can inundate a crop, ruining a harvest for the community.

Maize-growers in Zimbabwe have to contend with a fragile agricultural ecosystem.

Maize-growers in Zimbabwe have to contend with a fragile agricultural ecosystem.

Not enough rainfall can cause a harvest to fail entirely, resulting in food shortages.

Not enough rainfall can cause a harvest to fail entirely, resulting in food shortages.

“What they produce they also consume. Not being able to produce may mean families have little food on the table.”
– Joan Lamm-Tennant,
CEO of Blue Marble Microinsurance
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Designing a meaningful solution

To ensure a good harvest, farmers in Zimbabwe need access to financial loans, but they may not be able to get them without insurance coverage that protects against common risks. If they cannot gain access to financial support, farmers are forced to find alternate sources of income.

Enter Blue Marble, a consortium of nine major insurers collaborating to develop socially impactful microinsurance ventures. Blue Marble designed its first pilot program to address the problem in Zimbabwe.

“Joining forces with the other eight Blue Marble consortium companies puts us all in an even stronger position to offer meaningful, enduring protection for individuals, families and communities around the world.”
– Gaurav D. Garg,
Chairman of Blue Marble and CEO of Personal Insurance at AIG
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Gathering the right resources

Traditionally, a major challenge in microinsurance was creating programs that were enduring, scalable, sustainable and economically viable. Recent technological advances have made it possible for an imaginative group of insurance partners to tackle that challenge. For example, experts from Blue Marble analyzed 25 years of weather pattern data to better understand the compressed growing season caused by climate changes. This allowed for the design of parametric-based – using parameters like rainfall or temperature – insurance protection against drought.

“Thanks to advancements in technology and data science, new models of collaborative partnership and closer public-private partnerships, we can now deliver efficient, effective and meaningful insurance solutions to the underserved.”
– Gaurav D. Garg,
Chairman of Blue Marble and CEO of Personal Insurance at AIG
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Partnering locally

Blue Marble rolled out the protection program by partnering with local farmers’ cooperatives, financial institutions, seed suppliers, produce buyers and insurers.

“All the fieldwork we do helps us create deep understanding. And that lets us come up with an innovative solution that’s embedded in their existing system.”
– Joan Lamm-Tennant,
CEO of Blue Marble Microinsurance
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Creating peace of mind

By bundling parametric drought insurance with access to credit, the program gave financial institutions the confidence to provide farmers with loans. Farmers were then able to obtain the agricultural products needed for successful harvests. That meant they no longer had to worry about food shortages.

“It gave them a lot of confidence. Financial institutions were ready to give them loans. Basically, we were able to help farmers get back to farming.”
– Krishnan Venkatachalam,
Head of Microinsurance at AIG
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Protecting livelihoods

The Zimbabwe venture was selected as the microinsurance partner of the U.N. World Food Program’s R4 Rural Resilience Initiative, which helps vulnerable families increase their food and income security, reducing the risk to their livelihoods. Building on the program in Zimbabwe, Blue Marble and AIG have also been able to design an innovative approach to low-cost, accessible coverage for coffee farmers in Colombia. As microinsurance expands, it brings greater financial security to the underserved, helping them support their families and contribute to their local communities.

Lower risk and more successful harvests can enable farmers to sell some of their surplus products instead of only subsisting on them.
Lower risk and more successful harvests can enable farmers to sell some of their surplus products instead of only subsisting on them.
Fewer financial losses can raise the standard of living for the maize-growers, their families and their extended communities.
Fewer financial losses can raise the standard of living for the maize-growers, their families and their extended communities.
Rather than having to migrate to cities for low-wage labor, agrarian workers can stay local, keeping the community intact.
Rather than having to migrate to cities for low-wage labor, agrarian workers can stay local, keeping the community intact.
“There is nothing micro about microinsurance for the people whose livelihood depends on it.”
– Krishnan Venkatachalam,
Head of Microinsurance at AIG