ARTICLE - HAITIANS GET INSURANCE PAYOUTS

HAITIANS GET INSURANCE PAYOUTS
(Caribbean 360) -

The largest microfinance institution in Haiti pays out more than US $1 million to poor clients through natural disaster insurance designed to protect vulnerable borrowers.

PORT-AU-PRINCE – In response to heavy rains this spring, Fonkoze reimbursed more than US$1 million in damages and loan reimbursements for 3,800 borrowers in the first-ever payout of its innovative natural disaster insurance for poor Haitian clients.

After some 12 inches of rain fell in parts of Haiti, causing damage to clients in 13 of Fonkoze’s 46 branches, eligible borrowers received cash payments of US$125 each to repair their homes and recapitalize their businesses and had their loans repaid for them through the insurance product Kore W, Haitian Creole for “Reinforce You.” Fonkoze realized the extent of the need for disaster insurance for its clients after Haiti’s January 12, 2010 earthquake.

Fonkoze is both the first client and a founding partner of the insurance company MiCRO (the Microinsurance Catastrophe Risk Organization), which brings together a group of stakeholders to offer micro-insurance throughout the world.

The insurance policies offered through MiCRO combine both parametric and basic risk options, allowing for fast and flexible products that can be catered to organizations’ specific needs. Fonkoze paid most claims within 60 days in its first event.

Micla Pierre, a 30-year-old client in Fonkoze’s program “Ti Kredi,” or “Little Credit,” said she used the grant and loan reimbursement to buy new merchandise for her business, which allows her to support her family.

“If you were restrained financially after losing your merchandise due to a natural disaster, Kore W gives you a chance to move forward little by little until you become self-reliant,” said Pierre, who lives in one of the affected areas in the south.

The idea of catastrophic micro-insurance is to address the vulnerability of the poor. Fonkoze offers not just loans but a host of financial products for people who don’t usually have access to such tools. One of those is protection from disasters like floods, hurricanes, and earthquakes, unfortunately familiar events in the Western Hemisphere’s poorest nation.

“It means nothing to help our clients build their assets if they have no way to protect them against sudden loss in a natural disaster,” said Anne Hastings, CEO of Fonkoze.

Fonkoze took advantage of its existing infrastructure in Haiti, including 46 branches and more than 2,000 credit centers, to implement the insurance. When Fonkoze received notice that the rainstorm was big enough to trigger an automatic payout from reinsurer Swiss Re, branch directors and loan agents made contact with center chiefs to assess the damage. Fonkoze’s small borrowers, who are all women, are organized into borrower groups that work through community solidarity.

Facilitators met with the women during credit centre meetings and together they determined the damage to each other’s homes and businesses, relying on mutual trust for accuracy.