The 2005 Aga Khan Agency for Microfinance Annual Report

THE MICROINSURANCE INITIATIVEMicrocredit is widely known for its power to assist people breakout of poverty. However, it is not uncommon for families justbeginning to work themselves out of poverty to remain highlyvulnerable to catastrophic events such as the death of a familybreadwinner or an emergency need for expensive major surgeryand a long hospital stay. As a result of such a catastrophe, familiesthat had just begun to see the prospect of a better life can often– for reasons beyond their control – be driven back into extreme,debilitating poverty, possibly for decades.The Microinsurance Initiative, funded by a grant of $5.5 million fromthe Bill & Melinda Gates Foundation to Aga Khan Foundation USA, isbeing implemented by AKAM with the hope of safeguarding thepoor against loss of savings and income as a result of catastrophicevents such as death of a household breadwinner, long-termhospitalisation and business or crop loss. Bringing together internationalexpertise and modern technology, the five-year initiativewill strive to develop a replicable model for microinsurance thatwill be viable and financially sustainable in multiple socio-economicand cultural contexts.Beginning in Pakistan, where AKDN has a strong institutionalpresence and long history of innovation and success, FMFB-Pwill work as a platform for launching the insurance products. Inensuring success and innovation, AKAM will leverage the technicalexpertise of the New Jubilee Insurance Companies, also part ofthe AKDN, in developing the most appropriate, accessible andviable microinsurance products. In subsequent years, a similarexercise in Tanzania will adapt the model to the different socioeconomic,political and cultural context.LEFT: IN HALTHAGHARI VILLAGE, INNORTHERN PAKISTAN, MICROFINANCEOFFICERS ARE HELPING WOMEN MAN-AGE AND INVEST EARNINGS FROM LANDDESIGNATED FOR THEIR USE.39