Reinsurance, risk transfer, and enterprise risk management are vital to the short- and long-term viability of microinsurance and microfinance operations (collectively MFIs). Most MFIs lack sufficient access to meaningful risk transfer solutions. This lack of access hampers market expansion and product diversification. It also threatens the financial solvency of existing and potential new MFIs as well as that of millions of existing and potential low-income clients.
GC aims to create the infrastructure for an innovative multiline micro-reinsurance risk-pooling facility, enabling MFIs to obtain cost-effective and efficient risk transfer solutions that would otherwise be difficult for them to obtain independently. The facility will aim to structure efficient reinsurance products that are both affordable and effective for MFIs and profitable for reinsurers. Tailored solutions devised in tandem with GC will help MFIs address current needs and attain future goals, improve institutional stability, increase product capacity, enhance product penetration, and stimulate product innovation. Such solutions will also provide MFIs with access to commercial market expertise. Broadly, an active micro-reinsurance market will promote macro- and micro-level innovation, and increase awareness of microinsurance among (re)insurance practitioners worldwide. It also will improve overall microfinance service penetration and quality by increasing the available capacity for - and the stability of - existing and new products.
The framework for the facility will be developed over a 12-month time period and implemented primarily with a focus on the Americas (though it will be open to deployment in other regions on an ad hoc basis). The facility will aim to structure efficient reinsurance products that are both affordable and effective for MFIs and profitable for participant markets.
Project beneficiaries will likely fall into one of the three following general categories:
Guy Carpenter expects its risk placement and advisory services to enable an estimated 8 million low income persons to obtain essential new and/or improved microfinance products (including insurance) within five years.
Guy Carpenter & Company, LLC (GC) has been active for 85 years as a specialist in risk and reinsurance. With 50 offices worldwide, the company offers reinsurance solutions for clients across the globe for a variety of risks, including agriculture, life, accident and health, political and natural disasters, property and workers compensation.
"Guy Carpenter is fully committed to delivering risk management solutions to clients throughout the world. With more than 150 million people in emerging economies having access to credit, it is essential that the insurance and reinsurance communities work together to respond to this emerging risk management need."
Peter Zaffino, President and CEO, Guy Carpenter
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