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Mercy Corps, a global relief organization, has recently transitioned Aceh, Indonesia, from short-term emergency relief to long-term recovery through microfinance and microcredit solutions. The organization was initially involved in delivering emergency items, including food, hygiene supplies and building materials to the devastated coastal region of Aceh, Indonesia, in the wake of the massive earthquake on December 26, 2004, and the ensuing tsunami that destroyed cities across 13 countries and killed almost 230,000 people. [1]

Since its inception in 2005, Yayasan Mitra Dhuafa (YAMIDA), a microfinance institution (MFI) in Indonesia, has disbursed loans worth USD 2.2 million to more than 16,000 women in Banda Aceh, a region greatly affected by the tsunami that hit Indonesia in 2004 [1,2]. The MFI began with seed funding from the Grameen Foundation, a non-profit organization involved in microfinance [1,3]. The American Red Cross, a humanitarian organization, the Abdul Latif Jameel Group, a limited liability company based in Saudi Arabia, Nokia, a telecommunications company based in Finland, and the Deutsche Bank Americas Foundation, the philanthropic arm of the German financial services provider, all provided funding to the Grameen Foundation to help start YAMIDA [1]. The loans provided to the Banda Aceh women have been used to start new businesses as a way to recover from the tsunami [1]. YAMIDA began with one branch in Banda Aceh in September of 2005, and now has nine branches in the region [1].

Source: The Jakarta Post.

Source: Reuters

An article by Mr. Sunanda Creagh in the Khaleej Times has highlighted important tensions in the microinsurance sector. As noted by senior World Bank insurance specialist, Mr. Craig Thorburn, interest in microinsurance has grown dramatically in recent years. As reported in a previous Microcapital Story, the LeapFrog Financial Inclusion Fund recently raised USD 44 million for what was billed as the world’s first microinsurance fund. Commercial firms have recognized the profit potential of the microinsurance industry. The article observed that the Ugandan arm of global insurance provider AIG earns about 17 percent of its profits through microinsurance premiums from clients in Uganda.

The ‘Alert 1 Manggarai Protection Card’, a microinsurance product which protects against flood, has been jointly launched by Indonesian insurance company Asuransi Wahana Tata (AWT) , German reinsurer Munich Re and the German government’s Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH. AWT is Munich Re’s local partner in Indonesia. A feasibility study has been conducted by Munich Re and GTZ and the product will now be available in 23 sub-districts in Jakarta. The product is literally a small card costingUSD 4.70 and guaranteeing a single payment of USD 23.90 . ‘Alert 1′ is the designation given to a flood if water rises to a minimum of 950 cm at Jakarta’ Manggarai Water Gate. The product was principally designed by Munich Re although most of the logistics, including marketing and sales, will be handled by AWT. Munich Re will act as the re-insurer of the product. GTZ conducted a great deal of background research, including household surveys in the 23 sub-districts and focus groups, and conducted a microinsurance awareness campaign consisting of training material and a brochure. The Promotion of Small Financial Institutions program, supported by GTZ in Indonesia, will be responsible for supporting the product in the field. AWT’s President Commissioner, Rudy Wanandi, comments, “With the right partners, a defined product and through our wide network within the region we are able to reach people and explain our innovative solutions. It will raise the insurance awareness of society and bring more economic stability and social security to people who live in exposed regions.” Currently, 3 percent of poor people have access to insurance products in the world’s 100 poorest countries.

Souce: Financial Times

Bank Sri Partha, a local commercial bank based in Bali, was officially transformed into Bank Andara, an Indonesian microfinance wholesale bank, after raising USD 5 million in capital from social investors. Bank Andara will operate as a “bank of banks,” with a focus on assisting microfinance institutions such as cooperatives, rural banks, and rural credit agencies.

Microinsurance provider Allianz Life Indonesia has announced that its microinsurance client base grew 417 percent in 2008, from 42 thousand policyholders at the end of 2007 to 183.8 thousand at the end of the year. Its line of microinsurance products, dubbed “Payung Keluarga” (meaning “Family Umbrella”), generated a modest premium income of USD 82.5 thousand for the year, up 350 percent from USD 19.6 thousand in 2007. The significance is not the profit, but rather the increase in business volume. Payung Keluarga offers a range of life insurance products from basic credit life protection, which prevents microcredit borrowers from leaving debt to their family, to products that offer additional payouts to family upon the death of a breadwinner. Allianz Life Indonesia settled 76 microinsurance claims in 2008.