The Mumbai shoreline

Pioneering insurance solutions to address poverty and resource scarcity in India

India is expected to surpass China as the world's most densely populated nation by 2025. While the projected economic outlook for 2012 is a respectable 8 percent, the biggest part of the population still belongs to the low income segment. In addition, the country is suffering from depleting land and water resources, and the widespread hunger problem could grow worse unless serious steps are taken.

Interview with Ivo Menzinger, Swiss Re Managing Director Global Partnerships Asia
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Swiss Re’s Global Partnerships unit deals exclusively with the risk management and risk transfer needs of public sector clients worldwide. This unit, the first of its kind within the reinsurance industry, systematically supports governments, development banks, non-governmental organizations and microfinance institutions through the provision of risk and capital management expertise and a broad range of risk transfer solutions, including micro-re/insurance.

A tool for narrowing the financial gap

During the India Economic Summit 2011 in November, Global Partnerships Chairman Michel M. Liès said that insurance is a highly underestimated instrument in many emerging markets, and that too few are aware of its power to support economic growth and stability where it is most needed.

To illustrate his point, he said that Swiss Re is involved in many pioneering projects in India that can contribute to addressing the food and water security issues.

Giving farmers a better life

"While still at a nascent stage, Swiss Re is already a reasonably large player on the microinsurance front. We are very proud of our role as a key development partner with the private Indian insurance sector to offer weather-index solutions to low income farmers," said Ivo Menzinger, Managing Director Global Partnerships Asia, who was also present at the Mumbai event sponsored by the World Economic Forum.

He explained that these policies pay out as soon as a few weeks after harvest should the levels of rainfall and/or temperature deviate from climatology standards. Fostered by government subsidies, the weather insurance market in India has continued to grow and currently covers around 3 million farmers, with premium levels superseding USD 100 million.

Life & health solutions for the poor

Swiss Re brings its expertise to bear on the life and health side in India. Menzinger emphasised that this also encompasses microinsurance, citing a government-sponsored life savings treatment scheme in Tamil Nadu Province, India. The scheme aims to provide health insurance coverage to the economically weaker parts of the population. Through an innovative and customized reinsurance structure, Swiss Re is able to cater to a range of different needs within the programme.

Water credits for safe drinking water and sanitation

In addition to its insurance activities in India, Swiss Re partners with various NGOs through its corporate citizenship team. A recent and very innovative project launched in partnership with aims to bring safe water and sanitation to impoverished parts of India. "Looking at the water situation, more than 130 million people in India currently lack access to safe drinking water, while over 800 million do not have adequate sanitation. As one small step to address this challenge, this first of its kind program offers water credits in Bangalore and Hyderabad," said Menzinger.

The programme aims to bring clean water, improved sanitation, and hygiene education to about 7,600 people by February 2012. Specifically, the water credits will allow 1,300 households to gain access to critical financial services such as micro-loans to pay for the construction of a water connection and / or toilet within their homes.

Attacking from two fronts

"In disaster prone countries like India, catastrophes and pandemics can have a huge impact on economic development, holding back the affected region for years,” Liès said.

“Relief and reconstruction costs often falls on government shoulders, and sometimes funds are not readily available. Pre-event financing should therefore be part of every country’s risk management strategy,” he continued.

“That is why we're increasing our efforts, particularly in emerging markets, to help countries better absorb the financial consequences of catastrophic events and make them more resilient at both macro and micro level.”

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