MICROCAPITAL STORY: First Dedicated Microinsurance Agency in Pakistan Launched with $483k Investment from Aga Khan Agency for Microfinance (AKAM)

The first dedicated microinsurance agency in Pakistan has been launched with major funding from the Switzerland-based Aga Khan Development Network’s (AKDN) microfinance arm.

The First Microinsurance Agency (FMiA) has received PKR 30 million (USD 482,567) in start-up capital from the Aga Khan Agency for Microfinance (AKAM) and is partnering with New Jubilee Life, an insurance subsidiary of the Aga Khan Fund for Economic Development (AKFED), to offer insurance services to underserved poor families in Pakistan. These services will include life and health microinsurance products.

Microinsurance has been burgeoning as one of the latest offerings of financial services to those previously unable to afford them, in the same vein as microfinance. It is designed to help poor families weather economic hardships induced by such unforeseen circumstances as natural disasters, hospitalizations, or deaths in the family. According to AKDN, less than three percent of people in the world’s 100 poorest nations have any form of financial insurance.

As previously reported by MicroCapital, microinsurance has been in the news as political violence flared in Kenya in February and the Bill and Melinda Gates Foundation granted USD 34 million to the International Labour Organization (ILO) to establish a microinsurance support initiative last December. The marketing of microinsurance was also a recently summarized paper topic (Part 1, Part 2).

The Aga Khan Agency for Microfinance is a part of the AKDN’s approach to economic, social, and cultural development, as previously profiled by MicroCapital. The AKDN (MicroCapital profile) began in 1957 as a network of agencies launched by Aga Khan, a prominent Shia Muslim imam. Today it operates ten microfinance institutions (MFIs) worldwide. Founded in February 2005 as a non-profit in Geneva, Switzerland, AKAM is overseen by a staff of 1,300. Its first venture in Pakistan was the creation of the country’s First MicroFinance Bank Ltd. According to its unaudited 2006 Annual Report, the agency had USD 68.9 million its gross loan portfolio and a debt/equity ratio of 102.62 percent.

By Stephen Son

Additional Resources:

AKDN: “First Microinsurance Agency Established in Pakistan”; AKAM 2006 Annual Report

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MicroCapital.org article, February 14, 2008: “Co-operative Insurance Company (CIC) To Pay Microinsurance Claims Amidst Kenyan Political Violence”

MicroCapital.org article, December 17, 2007: “The Gates Foundation Makes USD 34 Million Grant to the International Labour Organization to Set Up Microinsurance Initiative”

MicroCapital.org article, February 6, 2008: “Microinsurance in Focus Note Nr. 1: ‘Marketing: Promoting Insurance to the Poor’, by the Consultative Group to Assist the Poor (CGAP)”

MicroCapital.org article, February 11, 2008: “Microinsurance in Focus Note Nr. 2: ‘Product Design and Insurance Risk Management’, by the Consultative Group to Assist the Poor (CGAP)”

MicroCapital.org article, June 15, 2007: “MICROCAPITAL PROFILE: Aga Khan Agency for Microfinance (AKAM) of the Aga Khan Development Network (AKDN)”

MicroCapital.org article, June 14, 2007: “WHO’S WHO IN MICROFINANCE: Aga Khan Development Network (AKDN), Switzerland”