How Microinsurance Works in the Philippines

Earlier in the year we took action to ensure the UK prioritised Microinsurance as a good way of protecting the poor from the ravages of climate change. Al Jazeera has recently produced a short report on micro crop insurance in the Philippines which is a great way to see micro crop insurance in action.

The product they are showcasing is from MicroEnsure, the world’s leading provider of microinsurance products. It illustrates just how it is possible to protect smallhold farmers and allow them to invest in their farms without fear from destructive weather.

At its most simple, a micro  crop insurance is based on an objective, measured parameter, for example how much rain falls at a weather station. Farms near the weather station are assumed to have had similar weather, so if there has been insufficient rain then an automatic payout is triggered as the crop will be damaged.. The same thing happens in this typhoon product, except here the trigger is how violent the typhoon is and how close it passes by a farmer’s farm.

The key thing about weather indexed crop insurance is that you do not need to send someone to the farm to verify a loss: the payout is automatic. This makes it fast, efficient, cheap to administer, and eliminates most of the possibilities for fraud that can exist with more traditional products.

Micro crop insurance is a powerful tool in the fight against rural poverty and we would like to commend MicroEnsure on developing and promoting such a great product.


One response to “How Microinsurance Works in the Philippines

  1. Pingback: “Build social goals into microfinance fund” parliamentary group tells DFID « RESULTS UK – News and Views

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