May 31 2009 |
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PlaNet Finance to launch micro-insurance schemes
The UAE-based PlaNet Finance Group plans to introduce micro-insurance schemes in the region to reduce the impact of the crisis on micro entrepreneurs who have outstanding loans.While the organised banking system has been severely hit by the financial crisis as individual and corporate customers fail to repay huge amounts of loans, the micro finance sector has been relatively unaffected. Even big insurance companies such as Allianz are interested in providing insurance to the poorest members of society.
Speaking to Emirates Business, Sawsen Ayari, Microfinance Expert and Programme Manager, PlaNet Finance UAE, said the agency is planning to expand its micro-insurance schemes across the Middle East and North Africa (Mena).
Through PlaNet Guarantee, a company specialised in the distribution of micro-insurance products, the group intends to spread micro-insurance facilities in several Mena countries. The company has a tie up with the global insurance company Allianz and successfully implemented a micro-insurance scheme in Egypt.
The current global financial crisis has created a situation to expand microfinance to other institutions in the region, Ayari said. The group is also working closely with leading pharmaceutical companies such as Pfizer.
Under PlaNet Finance's tie up with Allianz , it is providing micro insurance schemes for the first time in Middle East in Egypt, where premium rates are as low as $1 and cover loans of $1,500 (Dh5,509) to $2,000 availed by micro entrepreneurs, Ayari said.
"The global financial crisis has not directly affected microfinance institutions because they operate in areas not directly linked to global finance. Some entrepreneurs in travel and tourism may be hit, but it will take some time before micro entrepreneurs in the region can be affected. Such insurance schemes will insure their loan repayment capacity."
The group has microfinance institutions in Afghanistan, Egypt, Syria, Oman and Jordan.
Another company in the field, First Microfinance Foundation (FMF), successfully tested the first micro insurance scheme in the Mena region in Egypt, where it introduced credit life insurance to micro entrepreneurs. The FMF currently provides death and disability insurance to its clients.
Allianz Life Insurance covers the entire loan portfolio of the microfinance firm against a premium, which is paid upfront at each new loan disbursement.
Each new client is insured against death and disability, in case of which, the FMF gets 110 per cent of the initial loan amount and keeps the outstanding amounts to pay back the unpaid installments. The remaining balance is paid to the client's family in case of death due to disease or accident or to the client in case of permanent total disability.
About 100 loan officers of FMF are trained on death and disability insurance for the benefit of the company's 14,000 clients.
PlaNet Guarantee is targeted at people who do not have access to traditional insurance. Such clients also are not beneficiaries of social protection mechanisms to protect themselves against different risks such as health and natural catastrophes.
It works closely with the microfinance institutions that have strong presence on the ground. The company also works closely with insurance and reinsurance groups, health professionals and development agencies.
PlaNet Guarantee, which also acts as an insurance broker, works for the promotion of micro-insurance schemes around the world, with schemes running in 10 countries. It also provides consultancy service to microfinance institutions.
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