Microinsurance Conference - Final

Wow, I am back in the States now. Was just too busy to finish blogging from Dakar. That was a good thing. The second day I met even more people interested in our Ghana project including a number of people getting ready to begin work there. So I really feel like we have a lot to offer them and see some very realistic possibilities for partnerships.

The second day featured a presenter who is working on an indexed-based insurance product like ours except for livestock in northern Kenya. What I loved about his project was that he was educating the prospective customers of the product about insurance through and insurance game. That really made me a great idea to develop a game to help explain insurance and our product too in Ghana.

Also saw some presentations on the demand for microinsurance in general and learned that there was an inverse relationship between perceived need for microinsurance by a household and remittances received (money sent to them from a family member outside the community). Evidently, that family member is viewed as their "insurance" if something goes wrong. (I guess it would be interesting to find out if that family member sending the money to their family back in the village feels the same way).

Overall, we saw that indexed-insurance, like what we are working on, still has a lot of work to be done, including figuring out how to sell it, and at what level to sell it to: Government or government bank (Macro level), rural banks or microfinance institutions (Meso level, or individuals (Micro level). My opinion is still that the meso level has the best potential. But I spent the last few hours of the conference running several different ideas passed people on alternative product and am interested in beginning to work on that. I just shared the idea with our team on campus and think it has potential and could eliminate some of the problems of a "traditional" indexed-based insurance product. Will see after we start crunching the numbers if that will work. Stay tuned.

The other thing I got from the conference was just how well health insurance seemed to be developing. Still lots of challenges but growth was impressive and programs were working well passed there pilot stages now. It was interesting that almost all the health insurers were mutuals.

The day concluded by looking at intersection and synergies of microfinance institutions and microinsurers. Currently most microinsurance is delivered through them, but there was a stated need to move beyond that, while at the same time continuing to improve how MFI's work with microinsurance.

I still have to get through all my business cards and return emails for people I met there who want to exchange ideas or work together. Overall, it was an incredible experience and well worth my time.

Faithfully Submitted,
Jim

Microinsurance Conference Dakar- Day 1

The photo is of the conference center auditorium at the hotel here is Dakar. It is an impressive facility that resembles the U.N. delegates conference area.There are headphones to use to translate for the audience members, as many of the speakers and conference attendees speak different languages.

There are about 400 people at the conference, from all over the world.

Today's plenary sessions covered the background of microinsurance and the potential impact.
Some key points include:
^Millions of low income families in the world are unprotected from risks of accidents and illnesses. Insurance to working poor and low income households is only about 2 percent.
^About 130 million people in the world have been thrown into poverty as a result of the latest financial crisis.
^Microinsurance is just one tool for helping the poor. They still need investments in education, and health insurance is underutilized tool.
^The working poor deserve security, equity, dignity, and social justice. This includes access to health care, education, and child care.
^Microinsurance can promote the working poor to efficient manage their risk
^Poverty intervention needs to foster interaction with private industry it cannot be just governments.
^Education and regulation of microinsurance is important because this is an uneducated population. Requires close cooperation between the industry and regulators
^Never give up on more financial inclusion

Some of the challenges include:
^Only about 2 percent of the poor have some kind of insurance protection.
There is a:
^Lack of market confidence in the product. There have been examples of insurers not providing the service or payments expected.
^Lack of education of populace on insurance
^Need for regulation that ensures good behavior and solvency but does not hamstring innovation
^Need for risk management services in addition to insurance (but insureds may not be able to afford so there is a need to coordinate with NGO's and governments offering these services).
^Need for a lot more partnering to help move microinsurance forward.
^Need for better-designed and delivered products.

Perhaps the best part of the day was all the great contacts I made and people I met. I am just so impressed (and quite honestly humbled) by the talent and commitment of the people working in this area. I met with people who had authored articles I had read and relied upon for our research, and met some other people who were working in providing funding and technical support. It truly is inspiring as they are so authentic and mission focused. People who just "get it", who understand the interconnectedness of humanity and need for developing sustainable solutions.

I am so grateful I have had the opportunity to meet with them, and I hope work with them in the future.

Well, looking forward to the next conference day.

Faithfully submitted,
Jim

Microinsurance Conference 2009- Dakar

Nov. 2, 2009

Well, it’s hot and beautiful here in Dakar, and nice to leave behind the cold rains.

I began my travels early on Saturday driving to Chicago. I finally arrived in Dakar at around noon on Sunday (6 p.m. in Dakar) I've attached the view from my room

I am incredibly jet-lagged, exhausted but thrilled to be here. I have already made some important contacts, and gained valuable insights.

One of the things I noticed is that people working in this “space” are now using the term Financial Inclusion more than microfinance or microinsurance. I like that and it aligns with some insights that I have had about our Ghana project, to the point that I am retitling the paper from a study on weather-indexed insurance in Ghana to Enhancing Sustainable Access to Capital For Farmers in Ghana Through Indexed Insurance.

First of all, I think it better depicts the scope of the project as we considered much more than just the weather-indexed product through our interviews with farmers, banks, and other stakeholders in Ghana. It also better describes what the goal of such a product should be, sustainable access to capital for farmers in Ghana. Increasing insurance isn’t the goal by itself because insurance is just a mechanism for allowing that, and micro-insurance may not even be the best tool as insurance at the meso (financial institution ) level, or macro (governmental) level might even work better to achieve that goal. It is even broader than agricultural risk management which considers both pre and post loss actions which could be done to reduce the risk of farming and make farming a more attractive activity for loans from banks and microfinance institutions. And enhancing sustainable capital via agricultural risk management through alternative crop production, dry season crops, better inputs, better technology, and better education certainly should be helpful, but without the ability to get capital these actions are still of limited value. Also, access to capital from loans by governments and NGO’s is certainly welcome, they should not be categorized as “sustainable” access, as the donors may not have the financial capability or will to always provide those loans, thus a more sustainable access to capital is required. Enhancing financial capital for farmers might include development of a financial market where farmers could purchase hedging instruments to help provide access to loans. But even enhancing the financial markets is incomplete if the regulatory environment and government policies militate against capital access. For that reason, political voice and power should also play a role in access to sustainable capital.

I plan to pass along this insight of refocusing the goal to be sustainable capital access to some people here who are more knowledgeable about these things than I am to get their response.

Hopefully, will have a few more insights tomorrow. Back to working on the paper. Would like to get this finished by the end of the month.

Jim

Microinsurace Conference in Dakar

I am traveling to microinsurance conference in Dakar.


I looked at the list of attendees and I am looking forward to meeting a lot of the other people, whose work I've seen, but never met.

Hope to get some new ideas, and make some new contacts to further help in the development of a product that helps deal with agricultural risk in Africa. With climate change this is becoming a huge issue, and each day the research shows more and more the effects of climate change on Africa.

We have completed the first phase of analysis. The correlations with rainfall and crop yield in northern Ghana were not as strong as I was expecting but we used data from last 15 years which is the most variable time period. However, the reality is that that time period might reflect better the next 15 years as opposed to data over the past 50 years, which other correlation studies in other countries use.

Anyway, thanks to Mukthar Mahdi, Genevieve Amamoo, and Alsliddin Odilov for all their hard work over the past few fews on the analysis.

For the other team members on the project, I will keep you posted on the contacts I make and info. I learn from the conference.

Later,
J

Presentations

October 19, 2009


The project is moving along nicely. We now have data from 40 different weather stations and have run correlations between rainfall and crop yield for maize, rice, millet, sorghum, and yams.

As a reminder the overview of the project can be found at:

http://www.katieschool.org/outreach/Microinsurance.shtml

Because of the complexity of the models we have decided to focus on northern Ghana (north of Kintampo Falls) where there is only one rainy season.
I have now had the opportunity to present twice this month on our project to two different groups. One was a nation-wide broadcast to a Chicago-based insurer, the other was for a group of Germans in town as part of the ISU Management Development Institute.
These speeches and presentations can be found at

http://connect.cob.ilstu.edu/groups/katieinsuranceschool/wiki/31d6d/Microinsurance_Trip_to_Ghana.html
Based on feedback that we got from a prospective reinsurer, we have decided to focus on maize, and look at significant deviations which could affect credit defaults for farmers. The ultimate product would be for banks and eventually microfinance institutions that loan money to farmers.
We are in the process of finishing up the analysis and doing the write-up.

Stay tuned,
Jim

Blog 18- First Blog Since June 2009 Ghana Trip

As I promised in my Ghana trip summary I would add to this blog as new developments occur that warrant updates. There have been a few fairly dramatic developments which have occurred with respect to interest of insurers and reinsurers in providing this product based on our data, but I will save that until the deals have been inked.

Following the President's visit to Ghana, I was interviewed by WJBC, the local CBS affiliate about out project in Ghana, and the role of ISU. A podcast of this can be found at:
http://wjbc.com/Tabid/7997/default.aspx?AID=7620
That is an overview of the program.

With this blog, I also wanted to leverage the opportunity created by President Obama's trip to Ghana to help us reiterate some of the points we tried to make with our project, and draw attention to the country of Ghana, its political stability, economic development, and its incredible people . As I stated at the beginning of the project, I also wanted to change perceptions of Africa of this endless visual of starving people looking for help, to an image of a vibrant world of commerce and modern technology, proud of its traditions but also embracing the modern world.

One of my purposes of blogging every day as I travelled was to illustrate that I could do it, and that an Internet cafe and technology was prevalent even in the farthest reaches of an African country. I also posted photos of the business people I met in their modern offices with their mission statements, value statements and employees of the month, just like we see here. I had included photos of shopping malls and cell phones. People in thatched roof huts using cell phones recharged from solar power.

I recently read Bono's op-ed piece in the NY Times on July 9th, entitled Rebranding Africa, and I thought, yes of course, that's what I meant. It's rebranding a continent. Changing misconceptions and showing how Africa can be a partner. Here is the link to his article.

http://www.one.org/r?r=200&id=1058-3926312-mPaZ7yx&t=3

As was covered in the news media, President Obama went to Ghana and made another stellar speech in Accra, Ghana. What resonated with me was that he wanted Ghana, and Africa not to be seen as some recipient of perpetual handouts, but instead "as a partner in building capacity for transformational change." From my encounters, that is what the people of Ghana want too. Something that is more sustainable than traditional foreign aid. That is why they embraced the idea of microinsurance so easily. Microfinance had worked well, this was just a logical extension.

In his speech he mentioned the need for farmers in Ghana to increase their own production, and for those who followed this blog, you will know that one of the major findings of this project is that insurance can be developed to help get farmers to produce more through managing their risks. One of the barriers preventing farmers from increasing their own capacity is the difficulty in managing the risks, and the natural consequence of this difficulty in accessing credit.

President Obama also mentioned that Africa has especially suffered the unfortunate consequences of climate change. (Climate change that the developing world has contributed substantially to). As you may have read in previous blogs, the farmers' traditional timetables for planting and growing have been disrupted, and this has increased their risks. But I believe that this risk CAN be managed. It isn't for all farmers, at all times, and in all regions, so a risk spreading mechanism like insurance can still work, and also as I mentioned, better dissemination of long range forecasts to farmers could also help them out.

Our purpose in developing this insurance product is to help manage the risks of crop loss associated with rainfall. Our likely first product will be for drought in the northern region (but future products may have triggers for both too much and too little rainfall, as flooding has become of problem in some regions). We will likely focus on the market of the banks and microfinance institutions first, in helping them manage their loss from loans to farmers, as the inability of farmers in African to get credit for new inputs, and new techniques that would move them from subsistence farmers to true income-producing farmers selling to the entire world, is stifling these efforts. A product to help provide insurance to those who give loans to farmers is probably a good place to start (although with convincing evidence, I may still be persuaded that direct insurance for the farmers is feasible in the short run too ).

Anyway, if you didn't get to hear President Obama's speech here it is. http://www.youtube.com/watch?v=QkNpUEWIhd4&NR=1

The four areas he felt that Africa needs to emphasize are democracy, opportunity, health, and peaceful ways to resolve conflicts. Ghana is a great role model for all of these and the reason we chose Ghana as our first country to study microinsurance potential. Our project is focused more on the opportunity part, and building sustainable economic capacity for low income people, but a number of microinsurance projects in other countries in Africa, such as in Uganda, have been successful and should be replicated elsewhere in Africa.

Afterwards the President and his family flew to Cape Coast, Ghana to tour the former slave castles. When I was there last month, I videotaped the tour and I posted them on Youtube this week so that those who are interested in learning more about the slave castles history can get it. It is one of many sites that should be seen when touring Ghana, which we did on a Saturday while in Ghana. I uploaded some of our rare "tourist videos" to Youtube, in addition to the interviews we had related to microfinance and microinsurance.

Here are urls for those.

Cape Coast Slave Castle Video Overlook
http://www.youtube.com/watch?v=BtdrynGMsRs
Cape Coast Slave Castle Tour Male Slave Dungeon
http://www.youtube.com/watch?v=5g8NaD3iAe4
Cape Coast Castle Tour “Door of No Return”
http://www.youtube.com/watch?v=uP1ySdxyP5k
Cape Coast Castle Tour Prison Cell
http://www.youtube.com/watch?v=bkWgD-d9ek4
Cape Coast Castle- Tour Keep Memories Alive
http://www.youtube.com/watch?v=yvxfeVj95zk
Outside Cape Coast Castle
http://www.youtube.com/watch?v=8lTM1U5R9n0

Cape Coast also has some beautiful beaches and as I mentioned, has cool things to do like going to the Global Mamas tour of the batik making. These are women empowered by fair trade, and microfinance. (I think that they also have a potential for being microinsurance clients as their families become more and more dependent on their growing levels of income. ) I took videos of that too, but the Global Mamas own video was better so I will only include this one of my own, and direct you to their site for more. My colleage at ISU and asst. professor of marketing Horace stamping his batik (As part of the Global Mamas tour you get to do your own batik)
http://www.youtube.com/watch?v=AanSkTaM9Cw
While the batiks dried our driver retrieved a ripe papaya. Very inventive and sustainable tool. ;-)
http://www.youtube.com/watch?v=g49rTy9XfZE
The last stage is actually “cooking” the batik
http://www.youtube.com/watch?v=QwRX4Xrcgg0

Day 5 of my blog has other photos from our short time at Cape Coast too, but this should give you a feel. The Cape Coast was usually a destination for every student study abroad program that we encountered travelling through Ghana, usually their last day or two before they returned home.

I am so glad that President Obama chose Ghana to visit. Evidently for the same reasons we chose Ghana, political stability, friendly people, and a model of economic growth. And a place where we could take students for a study abroad and feel comfortable about it.

I hope to have some wonderful news about the projects progress within the next two months.

Again, please check out the Katie School wiki at http://www.katiepedia.com/ for more on microinsurance under the tab for insurance and sustainability.

Faithfully submitted,

Jim Jones

Director, Katie School

Illinois State University

http://www.katieschool.org/

One More Stop on the Way Home

Overview
I am blogging from the Heathrow Sheraton now preparing to head home later today. Our last day of the trip related to Africa was yesterday, and it was a fitting end. Time will tell, but it was quite likely the most important meeting we had for making this project into a long term program with outcomes for ISU, our students, and faculty. More details in a moment.

I will be reviewing overall blog and making some edits on names, spellings, and accuracy but I will preserve the observations I was making along the way as I actually saw them. I now have a clearer understanding, and some of the perspectives I had at the time were...,let's say, limited. I now see things more clearly and I would like to change some of what I said to make my observations appear more informed. But I think it is important to recognize that there each day we are learning (or should be) new ideas and gaining new perspectives that change our paradigms, our beliefs.

I think it is easy to think that what we believe now is what we have always believed. But if we are honest with ourselves we would see how much our core beliefs have changed over time, as we gain new perspectives. In Ghana they have a word Sankofa (literally meaning "go back and take"). It teaches the wisdom in learning from the past in order to build for the future. I think that to remain true to what I felt at the time is important. If I make any edits for the purpose of clarification now, I will note that it came at a different time.

I am grateful that I had a colleague, Horace, there with me. I think that made my observations more objective. Every evening we sat down and debriefed the days events, sometimes for several hours over dinner.

I hope that these blogs challenged some of the things you may have thought about Africa. That it is technologically in the stone age, or that they are all poor and in constant need of of a handout from those of us living in rich countries. Or that we have nothing to learn from them. I hope that people will see the fallacies of those assumptions as they read through my blogs, and see the photos I posted.

I already miss Ghana. It truly is a place of where modern meets traditional. A place where cultures blend, almost seamlessly. My favorite photo illustrating this was the photo of an Islamic man, in a thatched-roof village outside of Tamale, sitting on a motorcyle, with his cell phone in hand. I miss the places we saw, the food we ate, and especially the friends we made. I am comforted by a line from Frederick Beuchner's book "Telling the Truth" it reads:
You can kiss your friends and family good-bye and put miles between you, but at the same time you carry them with you in your ear, your mind, your stomach, because you do not just live in a world, but a world lives in you. I can honestly say, Ghana lives in me now.

If you want to find out more about the topic of microinsurance please see our Katie School wiki

at http://www.katiepedia.com/ and search under the topic of microinsurance. I keep that updated with research and papers on the topic. I have gotten good feedback on the You Tube videos that I posted on Day 12 on Ecotourism and Day 8 on the value of microfinance for women in Ghana.

Day 12- Baobab Financial Services http://www.youtube.com/watch?v=FOcIdw61j1Q
Day 8- Larabanga Ecotourism http://www.youtube.com/watch?v=H9THYjEVEC4

Here is the blog from yesterday.

One Stop to Go
We finally left Accra at around 11 p.m. headed for London. We ate a nice dinner on the plane, love British Airway meals, and then tried to get some sleep. We arrived at London at around 7 a.m. and then got a bus for Cheltenham, which is about two hours outside of London, to the home office of Microensure http://www.microensure.com/.

The history of Microensure was that it was established in 2005, as Microinsurance Agency (MIA) , the insurance agency of the international microfinance organization Opportunity International, a faith-based non-profit headquartered in Oak Brook, IL

They have packaged life and non-life microinsurance products in Ghana and have microinsurance operations in numerous developing countries. They successfully provided microinsurance in Uganda, and worked with World Bank in financing a weather-indexed insurance product for Malawi. MicroEnsure acts as a broker between regulated local insurers, reinsurers, and microfinance organizations and the farmers who purchase the insurance. They currently work with 40 different microfinance organizations, including their founding organization, Opportunity International. They provide product development, and the IT back office support for loan and insurance applications, and claims payment information for insurers and reinsurers. They see there role as helping to make sure that the insurance is affordable for the bottom billion (people who can only pay a few dollars a year).

One of the other key concepts that they relayed to us was that the best thing that microinsurance was doing was moving the risk from local people to the international reinsurance market, which can more easily spread and diversify the risk. I see the value of this, and I wonder how to work that concept with the risk retention concept I considered in earlier blog re. Agogo region. Figuring out how to integrate those two will be on my mind for some time, I suspect.


MicroEnsure recently received $24.5 million from the Gates Foundation for the purpose of faciliatating microinsurance, and weather-indexed crop insurance around the world. They have an office in Accra and are working on developing products for Ghana, including indexed insurance for crop loss.

We compared notes and reassuredly found that we had several similar findings. We both saw the importance of helping the agricultural sector because so much of the population (over 70 percent) somehow rely on that sector. We also agreed that the most important part of addressing this sector is to get farmers more credit. As mentioned in earlier blogs, banks and microfinance institutions are reluctant to expand their loan portfolios to include morefarm loans, as the are currently viewed as risky.

We discussed their approach and strategy, which was a bit different than what we were considering (I feel like I shouldn't go into too much detail on that publicly as I am not sure what they considered public information) but the result would be the same, greater willingness to provide credit for farmers.They have had success with their approach in other countries, so it may very well work out in Ghana. They certainly have the resources to overcome many challenges, and in fact have a good track record of doing just that in Malawi and India.

After about two hours of sharing observations and brainstorming ideas we came to the conclusion that we really should be working together. There are things we can be doing at ISU to support them and they have a lot to offer ISU, including providing data to help accelerate our research and development of student and faculty involvement in microinsurance, including student internships and study abroad programs to Ghana. We see a role for our students in helping with the pilots they run. This includes, the needs analysis, helping with initial product development ideas, providing education about insurance to farmers (and others) in Ghana. There would also be a number of projects students (agribusiness and actuarial science) could conduct on campus. In short, this could be an enormous win-win for both organizations.

On our way home from Cheltenham, we had the simultaneously feelings of being completely wrung out and exhilirated.

It was a long journey in many ways. One that I will never forget.

Faithfully Submitted,
Jim