NU Online News Service, March 30, 3:10 p.m.EDT

NEW YORK—Microinsurance is not an act of charity but abusiness model that can pay insurers real dividends while helpingthe impoverished climb back from natural catastrophes, says thechairman of America for Swiss Re.

Speaking last night during a benefit gala to honor thereinsurance carrier Swiss Re for its involvement in themicroinsurance program run by Fonkoze in Haiti, Walter Bell,chairman of Swiss Re America Holding Corp., representing Swiss Re,says that the economic culture in Haiti posed a challenge to acompany trained in writing policies within a complex businessenvironment.

“We view microinsurance not just as a charitable piece of ourphilanthropy; we view it as part of a core business strategy,” hesays.

He emphasizes that Swiss Re's work in Haiti developed a newbusiness model to provide property and casualty insurance indeveloping countries.

The strategic relationship formed between Swiss Re, with itsresources, and Fonkoze, which had built the appropriatedistribution channels, is a “global-private partnership team” whichcan link with governments, non-government organizations andmicrofinance institutions.

“We know that when we help vulnerable communities, we fighthunger, build resistance to climate change, reduce the cost ofnatural disasters, and get people back on their feet as soon aspossible,” states Bell, adding that Fonkoze helped entrepreneursremain solvent after rebuilding their businesses.

Microinsurance and microfinance are programs aimed at providingloans and insurance programs to people in developing countries at acost that is affordable to them.

Fonkoze, adult education and microfinance provider in Haitireaches 275,000 families, honored Swiss Re at its 2012 GlobalPartner of the Year gala for financing and piloting an innovativecatastrophe bond product in the disaster-ridden country.

Also honored was Yeardley Smith, American actress known for hervoice-over work as Lisa Simpson. She was the recipient of the 2012Solidarity Award for her work and charitable contributions to theorganization.

The theme of the evening was that a sustainable business plandirected by experienced risk managers, not charitable donationsaimed independently of one another, can truly help people pullthemselves out of poverty in the wake of disaster.

Anne Hastings, CEO of financial arm Sèvis Finansye Fonkoze,notes that Haiti had been hit by an unusually vicious decade ofnatural catastrophes beginning in 2004 with flooding in SoutheastHaiti and four-hurricanes swiping the nation in 2008.

The onset of each event nullified the financial help provided toHaitians by Fonkoze.

“I watched the same person work her way out of poverty threetimes running,” Hastings relates. “She started with a loan of about$30, ended up with a loan of over $1000, and she losteverything.”

“After the earthquake, we were ready to begin offering aninsurance product that would allow our clients to get the insurancethey needed to help them recover,” she says.

The program became available shortly after the January 2010magnitude 7.0 earthquake that destroyed the nation's capitalPort-au-Prince. For those participants, it was a blessing becauseshortly after a torrential downpour flooded the island causing moremisery for the populace.

Swiss Re proved its value by paying out more than $1 million ininsured losses to participants. It was something Bell calls arounding error for Swiss Re in terms of losses, but underscored thebenefit of the program for those involved.

Under the microinsurance plan, for an initial membership fee of$6 Fonkoze delivered an insurance product that gave one-time cashgrants of $125, cancelled a participant's remaining loan balance onthe day of the disaster, and immediately offered a new businessloan.

According in Hastings, by January of last year each Fonkozeborrower purchased his or her first catastrophic insurance policyfor $31 annually that protects loss of property and businessmerchandise due to hurricanes, wind damage and earthquakes.

Going forward, Fonkoze will continue working with Swiss Re,along with GCM Gallagher Group's risk analytics division CaribbeanRisk Managers Limited, Guy Carpenter & Company's GC Micro RiskSolutions, and Mercy Corps, to finance the MicroinsuranceCatastrophe Risk Organization (MiCRO).

MiCRO is a donor-capitalized insurance vehicle developed by ateam of strategic stakeholders to protect entrepreneurs from theeconomic devastation of natural disasters. It reaches 50,000clients and promises rapid claim settlement due to disaster throughthe use of parametric triggers.

Corrected to show that Walter Bell is Chairman of SwissRe America.