First Micro Insurance Agency
Micro Insurance for Families in Pakistan
The Challenge
- Pakistan's low-income families are particularly vulnerable to the financial impacts associated with life cycle events – births, deaths, hospitalizations, graduations and business failures all present unique challenges. During the economically active lifetime of a two-parent nuclear family, more than 30% of such families are expected to experience a severe financial shock.
- Whether planned or unplanned, these events often precipitate a severe drop in a family's quality of life; one study estimates that one-quarter of all hospitalizations result in the patient's family falling below the poverty line due to the related expenses.
- Despite their ability and willingness to pay, Pakistan's low-income families are underserved by insurance products that could alleviate the financial burden of life cycle events.
The Innovation
- Acumen is partnering with the Aga Khan Agency for Microfinance in a joint venture equity investment in the First Micro Insurance Agency (Pakistan), (FMiA). The company, Pakistan's first corporate insurance agency, is dedicated to developing, marketing and managing micro-insurance products for the base of the pyramid market, focusing on life and health insurance. Its micro-insurance policies will be underwritten by New Jubilee Life, one of Pakistan's largest insurance companies.
- Micro-insurance products will help shield low-income families from financial shocks and help them maintain a minimum standard of living. Insurance can also promote early health care-seeking behavior. Many low-income families do not seek healthcare due to high costs and when they do so it is frequently too late.
- Partnering with the Aga Khan Agency for Microfinance, Acumen Fund's investment is providing a jump-start for new experimental products clearly required by the embryonic micro-insurance industry in Pakistan.
The Impact
- First Micro Insurance Agency expects to serve as many as 300,000 low-income customers – families earning between $80 and $180 per month – within two years.
- By making this investment, Acumen Fund hopes to demonstrate a commercially viable model that will provide insurance to underserved groups not only in Pakistan, but in other, similar markets worldwide.
