Case | HBS Case Collection | March 2007 (Revised April 2007)

Micro Insurance Agency: Helping the Poor Manage Risk

by Michael Chu and Jean Hazell

Abstract

The notable success of insurance products for low-income clients of its microfinance network leads Opportunity International to launch the first global specialized microinsurance company, the Micro Insurance Agency (MIA). Building on the experience in 10 countries across Africa, Asia, and Latin America of developing products appropriate to the sector and acceptable to risk carriers, and minimizing distribution and administration costs by going through Opportunity International (OI) partner microfinance institutions (MFIs), MIA must now define the strategy for its future growth. Facing both the need to achieve scale and profitability as quickly as possible, and increasing competition from international and local providers with few barriers to entry, MIA must grapple with a series of strategic choices: geographic expansion, continued product innovation, serving MFIs outside of the OI network, and new distribution mechanisms to reach market segments beyond MFIs. Wholly owned by faith-based nonprofit OI, MIA must also factor in OI's desired mission impact with commercial viability. Illustrates the challenges and tradeoffs inherent in pioneering efforts at the edge of microfinance, the emerging industry to serve the financial needs of low-income sectors in the developing world.

Keywords: Developing Countries and Economies; Cost Management; Microfinance; Globalization; Growth and Development Strategy; Risk Management; Infrastructure; Nonprofit Organizations; Competition; Financial Services Industry; Africa; Asia; Latin America;

Citation:

Chu, Michael, and Jean Hazell. "Micro Insurance Agency: Helping the Poor Manage Risk." Harvard Business School Case 307-089, March 2007. (Revised April 2007.)