Micro coverage a big help for Mexico's poor
A new plan to promote microinsurance could have a ripple effect in the region.
from the July 13, 2007 edition
Page 3 of 3
In a report looking at microinsurance in the world's 100 poorest nations, his group counted 246 microinsurers, not including government providers of social security, with 78 million people covered. Not all of the policies are addressing the needs of the populations they serve, however: Mr. McCord says too many are credit life plans that just pay off loans, not give money to the families of the deceased.
But many say that a focus on the poor is the first step toward financial inclusion. "There is debate over how much this is poverty alleviation, or stabilization of income," says Robert Annibale, the Global Director of Microfinance at Citigroup in London. But everyone aspires to get ahead. "For the vast majority it takes time, and going through the many stratas, they should be able to protect themselves and their families through insurance."
Since it launched three years ago, Seguros Azteca has sold 11 million policies. They have also exported the plan to other countries, such as Panama and Peru, and are working toward covering Mexicans working in the US, who send $20 billion in remittances home each year.
Mr. Honsberg says that microinsurance can help change the cultural mind-set of poorer Mexicans who might not be accustomed to preparing for finanical risks. Instead, when disaster strikes, they are forced to improvise: pulling their children out of school to work, selling a piece of land, or heading to the US.
On a recent day, Claudia Olvera stood in line to make a loan payment on a washing machine and heater that she purchased at Elektra. Last month, when she checked out, she was asked if she wanted to buy life insurance coverage for the course of her loan payment, 51 weeks. Clients can choose coverage ranging from $1,500 to $9,000. When they decline a window pops up on the checkout screen: "Remind your clients that this insurance brings tranquility to them and their families."
Ms. Olvera, a single mother of three, didn't need a reminder. She took out a policy for $1 a week. "What if something were to happen to me?" she says.
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