ILO offers grant to micro-insurance firms

By Winsley Masese

Insurance providers keen to develop products targeting low-income markets can now apply for an innovation grant from International Labour Organisation (ILO).

The micro-insurance innovation facility seeks to increase the availability of quality insurance for developing world’s low-income families to help them guard against risk and overcome poverty.

Launched last year, with funding from the Bill & Melinda Gates Foundation, the facility has been providing grants, supporting capacity building, conducting research and disseminating good practices.

It endeavours to promote the development of valuable insurance services for large numbers of low-income households and enterprises.

Since it was launched, the facility has provided innovation grants to 34 organisations that are experimenting with improved products, alternative institutional models, or consumer education strategies.

The grantees include a range of different fields, including international and local NGOs and cooperatives, as well as insurance companies and associations.

This round of grants, whose deadline in March 2, will support insurance against any type of risk, but priority has been given to products with great demand like agriculture, health, life and property. The innovation grant ranges from $25,000 (Sh1.9 million) to $600,000, (Sh15 million) with each funding decision based on each project type, cost of inputs, and length.

The grant places special emphasis on health micro-insurance, but also welcomes applications for projects focusing on high-impact products and innovative distribution channels.

Providers that can provide better insurance products but need their capacity to be strengthened can receive support, which includes consulting services, training and study tours.

"Micro-insurance is a profitable market and we would love to invite as many people as possible to try to make this market as competitive as possible. Competition is going to be what is important to forming a real market at the bottom of the pyramid.’ said Brandon Mathews, Head of Micro-insurance, Zurich Financial Services.

Affordable products

"Studies highlight that low-income people are willing and able to pay to protect their family or business, but they generally cannot access affordable products that would meet their needs," he explained.

On the supply side, insurance providers often lack the know how to reach this market and need to experiment to develop sustainable business models.

"The grants are there to support those risk takers, cover their start up costs and harness lessons learnt," says Craig Churchill, team leader of the ILO’s Facility

Investing in micro-insurance, according the Facility’s grantees, added benefits to their regular business line, including a diversified risk portfolio, ability to serve new markets, enhanced reputation, and market intelligence.