Providing a Safety Net to Ten Million People

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Richard Leftley, CEO of MicroEnsure, writes about the experiences that helped lead to the development of a safety net for the most vulnerable and how far they have come in fulfilling their Commitment to the Campaign.


- Image courtesy of MicroEnsure

Image courtesy of MicroEnsure

Join us in Mexico for the 17th Microcredit Summit in Mexico this September 3-5.

Richard Leftley will be joined from leaders in the microinsurance sub-sector for a workshop on microinsurance.

http://17microcreditsummit.org/


Over the years many of the microfinance leaders that I have met have told me of that one chance interaction that changed the course of their lives and resulted in them embarking on a journey to help millions of people be transformed and lifted out of poverty.

My moment was in the summer of 2001 in a village in Northern Zambia; one of the ladies I was talking to had become frustrated by my ignorance as to why she had experienced such a seeming boom and bust in her fortunes. From among her few possessions she produced a child’s Chutes & Ladders board and she explained that she was just trying to work her way out of poverty. She had succeeded earlier in her life having lived in an apartment in the capital and driven a car, but here she was back in the village with seemingly nothing to her name.

She explained that the microfinance loans she received helped accelerate her out of poverty like the ladders in the game, but then she looked at me and explained that no one was there when disaster struck causing her to slide back into poverty just as the chutes in the game return you to your starting place. What is today MicroEnsure was founded a few months later in partnership with the team at Opportunity International.

Twelve years later it is a real pleasure to make a Campaign Commitment to join with other microfinance leaders to help lift 100 million people out of extreme poverty; our contribution will be to provide a safety net to 10 million people in 15 countries so that they do not slip back following the death of a breadwinner, sickness of a child or following a natural disaster.

At the beginning of 2014 when we made this Commitment MicroEnsure was serving just 4 million people, but I am pleased to report that by the end of May we had enrolled 8.2 million customers (a growth of over 200%) and we are well on our way to matching or even exceeding our commitment by the end of the first quarter 2015. This rapid growth has come not only from our MFI partners but most significantly from the mobile network operators that we have partnered with in Africa and Asia some of which are signing up in excess of 250,000 new clients each and every week.

The breakthrough in working with telco’s (telecommunications providers) came when we stopped trying to sell insurance through them but instead realised that we could dramatically affect customer loyalty to the telco; let me explain. You see, none of us wake up wanting to buy insurance and if you are poor the idea of a product that you may need at some time months or years from now really makes no sense in the present.

However we know that our clients do wake up worried about what would happen if their husband died, their kids got sick, or a disaster struck. We also knew that telco’s are suffering from low customer loyalty with most subscribers using multiple SIM cards to make prepaid calls. We simply combined answering clients’ fear with the need of the telco’s for increased loyalty and in doing so we convinced the telco to give their loyal subscribers free insurance in return for spending more airtime on their network. The subscribers were happy to do so because their fears were being addressed for free in return for simply making more of their calls on one network. Everyone wins.

Interestingly we have also used this same idea to significantly drive the mobilisation of deposits in MFIs across Africa. Most deposit accounts have tiny balances that are loss-making for the MFI yet we know that the poor save money in a myriad of ways. It just seemed obvious to us that offering interest to depositors was simply not attractive enough to give customers a reason to choose the bank over  informal savings mechanisms. So we tried giving away free insurance if you saved.  As you saved more – $50, $60, $70 – you earned more free insurance coverage. We were delighted to see 200% increases in deposit rates clustered around these targets.

Achieving our goals will not be simple. We continue to rely upon partnership in order to provide our services and we are always on the lookout for MFIs, telco’s and others that provide services to the mass market. We would love to hear from anyone who wants to join with us on this mission. This kind of rapid growth also requires capital and we were delighted to announce last month that AXA and Sanlam Insurance Companies joined Opportunity, IFC, Omidyar Network and Telenor as investors in MicroEnsure bringing together key strategic partnerships with the funds required to continue scaling.

I often dream of returning to that village to find the Chutes & Ladders lady. I have no idea what I would say to her, but I would love the chance to simply say thanks for starting us out on this journey. I wonder if she knows she was the spark that has helped 10 million people like her find a safety net against the chutes they find along their own journeys out of poverty?


MicroEnsure announced their Campaign Commitment as:

  • MicroEnsure commits to reach 10 million clients with insurance services by the end of the first quarter of 2015.
  • MicroEnsure commits to expand its current reach into 15 countries by launching work in 5 new countries by the end of the first quarter of 2015

Join MicroEnsure and State your Campaign Commitment

Join MicroEnsure in the global coalition to help 100 million families lift themselves out of poverty – state your Campaign Commitment at mycommitment@microcreditsummit.org

Need additional guidance in formulating your own Campaign Commitment? Refer to our Commitment Development Toolkit.

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