Insurance brings security for Haiti’s poor

In Haiti, one of the most catastrophe-prone and poorest countries on earth, insurance coverage may prove to be a boon for both individuals who have lost everything, and for the economy in general.

Fonkoze, MEDA’s partner microfinance institution in Haiti, introduced the new financial service to its 55,000 loan clients in March. In June, thousands in the south-west region of the country were able to quickly get back on their feet after disastrous rain and flooding.

“It’s a parametric insurance product,” says Julie Redfern, MEDA’s vice president financial services. “The coverage provides an automatic payout after a ‘trigger’ event – wind, rain, earthquake, hurricane or flooding. Fonkoze staff were developing it when the earthquake hit last year, and used donor dollars and education to clients then to demonstrate what they would have gotten if they had the coverage at the time – a cash payout, their current loan repaid and a new loan provided.

“Haiti seems to have a catastrophic event every year,” says Julie. “This insurance will help them recover more quickly. The flooding in June met the criteria for a major catastrophe in some districts, thereby constituting a ‘trigger’ event, which meant insured clients could get a payout within a few weeks of confirmation that they had lost their home or their business or both.

The new insurance, one of the first of its kind globally, allows Fonkoze to better plan for such events instead of being reactive in a relief situation.