According the Financial Access Initiative, it is these risks that require immediate financial means to recover from their impact:
• Life threatening decease or death
• Loss of income
• Fire or loss of property (house)
• Bad or failed harvest or death of livestock
• Fraud and loss of cash money
The above mentioned risks, to which the low-income people at the base of the pyramid are exposed to, when combined with the lack of access to financial services are hindering their economic development. The management of these risks should therefore receive a strong priority.
Risk management through micro services
Micro pension and micro insurance are easily implementable tools for risk management, which have a strong impact on the ability of low-income people to provide for themselves. There are many Dutch organizations and institutions which possess great expertise in this area. This expertise is united in both the WorldGranny Pension & Development Network (PDN) and the Micro Insurance Association Netherlands (MIAN).
PDN and MIAN’s operations are based on a unique organizational model, called social consultancy, in which professionals from the Dutch financial sector are voluntarily deployed on a project basis. Within the social consultancy model, the knowledge, expertise and best practices of both organizations are laid out so that they are broadly employable.
Cooperation P&D Network and MIAN
By cooperating closely and combining expertise, PDN (micro pensions) and MIAN (micro insurance) aim at accomplishing an actual break through in the area of micro services by providing inclusive financial products as a tool to manage risks. Both organizations have a strong desire to contribute, through the use of their specific competences, to the improvement of the economic and social emancipation in disadvantaged people in emerging economies. The consultancy and tools that both organizations are able to provide enhance each other when they are jointly put at the disposal of the people at the base of the pyramid.
In September 2010, PDN and MIAN sent their first combined delegation to Georgia, in order to assist the local Micro Finance Institution ‘Crystal’ with the development of a micro insurance product. Crystal currently offers only micro credit products, which it specifically aims at the low-income and rural population of Georgia. Both are groups to which the established financial institutions in Georgia do not provide service to.
For these client groups Crystal wanted to develop a micro insurance product, which would combine excellent risk coverage with low premium installment, and which would contain a savings and / or pension element. By combining the expertise of both organizations, PDN and MIAN were able to provide a quick-scan on Crystal’s possibilities for entering the Georgian insurance market.
In cooperation with the International Labour Organization (ILO), an analysis was made of the Georgian economy, society, culture and insurance market, as well as a scan of Crystal’s organizational capacity. The outcome of the analysis showed there is a strong demand for a health and / or agricultural insurance product. Based on this outcome, PDN and MIAN developed a market and product strategy together with Crystal.