MiCRO, innovation at work to expand traditional insurability boundaries
MiCRO has developed an innovative and holistic risk management set of strategies against natural disasters, based on index insurance and a value-added program that makes the solution appealing, affordable and profitable. Esfuerzo Seguro, the first natural catastrophe index insurance product in Central America covering business interruption, was officially launched in November 2016. It covers the clients’ business interruption caused by drought, excess rain and earthquake. Additionally, MiCRO developed its own calculation platform (MiCAPP). MiCAPP’s processes are done automatically, with no human hand involved. It is an independent software platform that can also be accessed via a web-graphic interface to download all the reports generated in each policy period duration.
1. How does MiCRO make it happen?
MiCRO’s solution is:
- Appealing: through coverage for relevant perils, tailored payouts, value-added services and financial education;
- Affordable: through an index-based system using remote sensing and a proprietary IT Platform (MiCAPP);
- Profitable: through scalable channels and insurable interest, in addition to strategic distribution and product bundling.
2. How does MiCRO’s ‘innovative’ product look like?
Esfuerzo Seguro, the first natural catastrophe index insurance product in Central America, covers the clients’ business interruption caused by drought, excess rain and earthquake. Esfuerzo Seguro is currently being offered by Aseguradora Rural to clients of Banrural in Guatemala.
In addition to the index insurance, clients receive information and incentives to help them adopt measures that reduce risk and strengthen resilience against natural disasters. This is made possible thanks to the support of several organizations, especially the Coordinadora Nacional para la Reducción de Desastres de Guatemala (CONRED), with whom MiCRO partners to promote resilience to natural hazards in the country.
Esfuerzo Seguro was designed and implemented in the context of the Central American Disaster Microinsurance Expansion (CADME), a program executed by MiCRO with the support of the Swiss Development Agency (SDC), the Multilateral Investment Fund (MIF) managed by the Inter-American Development Bank (IADB), the Australian Aid, Swiss Re, Mercy Corps, and KfW through its Climate Adaptation Platform (CAP), a truly public-private partnership.
MiCRO and its local partners have just finished the 12-month pilot phase of Esfuerzo Seguro. The product had more than 3,000 clients by February 2018, and the program has now entered the expansion phase. Although the product was designed to protect clients against severe natural hazards, it also makes rather small payouts for moderate events. As such, almost 50% of the total clients have already received at least one payout, due to events triggered by drought and excess rain.
3. How does MiCAPP work? How do partners and clients know when a covered event occurred?
MiCRO’s calculation platform (“MiCAPP”) continuously monitors and extracts data from predetermined scientific sources (e.g. NASA, USGS), unpacks the scientific data files and calculates them using complex algorithms to match the readings against predetermined levels, and issues a loss report when a triggering event is detected.
This loss report is then matched by the insurance company with the local specific client’s data in the affected location(s), which determines the individual and total loss amounts for the event.
MiCAPP’s processes are done automatically, with no human hand involved. It is an independent software platform that can also be accessed via a web-graphic interface to download all the reports generated in each policy period duration.
Additionally, by providing direct technical assistance and product development to a wide range of partners, MiCRO is building and developing local capacity at different levels, a key element that will enable the offer of different index-insurance products in the market over time, and allow consumers to choose the products that fit the most to their needs and particularities
4. What comes next for MiCAPP?
MiCAPP’s team is constantly searching for new technologies to improve performance, transparency, accuracy and costs. One of these projects is to implement blockchain technology within MiCAPP to improve transparency and traceability for the entire claims processes, and therefore open unlimited integration possibilities to improve operation, regulatory and client experience. MiCRO is currently looking for partners interested to participate in the expansion projects for MiCAPP. See website (http://www.microrisk.org/) and social network pages to keep informed of news on how MiCRO will unlock new possibilities for distribution and payouts using technology.
What makes MiCRO so “special”?
MiCRO is a fully focused “micro-reinsurer”.
MiCRO fills the gaps between global and local markets.
MiCRO offers solutions for a broad target market, not limited agro clients.
MiCRO applies cutting-edge technology to expand insurability boundaries.
MiCRO developed its own calculation platform (MiCAPP).