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World AIDS Day: How Does Microinsurance Make an Impact?

By Lydia Baldridge Meier

Today, Dec. 1, is World AIDS Day. 2.4 billion people around the world live on $2 a day or less and of those only 80 million people have access to microinsurance. In areas where HIV/AIDS is prevalent, people often cannot afford the healthcare they desperately need.  

Campaigns manager Lydia Baldridge Meier interviewed Richard Leftley, the president of MicroEnsure, Opportunity’s microinsurance intermediary. She asked him to look back on his work and how it impacts those living with HIV/AIDS.  

Opportunity’s first efforts at developing insurance were directly related to the AIDS pandemic in Africa–tell us about those initially identified client needs.

In 2001, I found myself sitting with one of our borrowers in rural Zambia. The lady was trying to explain the risks she faced and she fetched a Chutes & Ladders board from her hut. She told me that the loans Opportunity had provided were like ladders but she challenged me as to “where was Opportunity” when disaster struck and forced her down a chute. In Zambia at the time, life expectancy was just 36 years old and our clients told us that they experienced a death in their wider family once every two years. The cost of a funeral equated to between three to six months of a family’s disposable income which was having a huge effect of knocking people back into poverty. The AIDS pandemic was robbing the poor of their hard fought-for gains and it was for this that we initially started to work on insurance for the poor.  

Talk about why credit life and funeral products help Opportunity’s ability to form Trust Groups in areas highly affected by HIV/AIDS.
The Trust Group methodology that forms the backbone of Opportunity’s lending relies upon members of the group guaranteeing each other. These clients don’t have collateral but they can promise to pay back the loan of a delinquent member of their group. In areas with low life expectancy and high rates of HIV we found that this mutual guarantee was quickly eroded because members understandably were reluctant to include women who either had AIDS or were suspected of having AIDS. By providing insurance against the death of the borrower, the group no longer had to worry about paying back the loan of a deceased group member and as a result we saw that these women that had AIDS could be included back into the groups and be provided with loans.  

Today, MicroEnsure works in nine countries and provides millions of people in poverty with a wide array of insurance products. How has the evolution reflected your team’s growing understanding of the needs of the poor?
We started with life insurance but soon realized that the poor faced significant risk. We soon added coverage for disability and critical illness. Then followed coverage for their microenterprise against potential fire or natural hazards and even for political violence. Then we realized that the poor faced issues with the changing climate so we introduced weather index crop insurance and protection for livestock, which is often used as an informal savings. Finally, we addressed the risk of healthcare which remains the poor’s number one concern in terms of risk.  

Do you still feel today that insurance has a role to play in helping communities cope with the effects of AIDS?
The cost of funerals remains a major risk for the poor and this has only been exacerbated by the AIDS pandemic so clearly we have to be there to stand alongside our clients; that’s what we are called to do.  

About Richard Leftley

Richard Leftley joined Opportunity International in 2002 as insurance product development manager. Richard previously worked for Benfield Greig Ltd., the world’s largest independent reinsurance brokerage group. Richard was responsible for the African account.  

Richard pioneered the introduction of insurance products within Opportunity. Richard also led a team of specialist consultants providing technical assistance to Opportunity in all areas of lending, savings, insurance, money transfer and client impact monitoring.  

In 2005, Opportunity International launched MicroEnsure to provide a larger number of clients with access to insurance products; as president, Richard has expanded the reach of the organization and is setting its strategic direction.

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