Author: Solène Favre, VisionFund International.
On March 12th, e-MFP was pleased to launch the European Microfinance Award (EMA) 2025 on ‘Building Resilience through Inclusive Insurance’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. This year, e-MFP is also delighted to welcome as a strategic partner our friends at Microinsurance Network (MiN).
In this second piece in a series of guest blogs that we’ll be running throughout the year on this topic, Solène Favre, Global Director of Insurance for VisionFund International (VFI) argues, through the case example of one of World Vision’s savings group clients in Rwanda, that MFIs are a natural fit as distribution channels for microinsurance – yet misconceptions and challenges stymie growth of this model.
There is a profound link between microfinance institutions and microinsurance. As Muhammad Yunus once said, “When microfinance institutions step up to offer such solutions [microinsurance], they hold the power to change lives and empower communities, providing not just financial services but the security that every individual deserves”.
The Story of Venuste Venuste, a member of World Vision’s savings group in Rwanda, endured immense hardships that tested his resilience and ability to provide for his family. Venuste’s story demonstrates the transformative role of microfinance institutions (MFIs) in helping individuals overcome financial shocks. After losing his wife, Clarisse, and later his leg due to a severe infection, Venuste faced immense challenges. At a crucial time, VisionFund Rwanda provided him with the needed financial support through a loan bundled with insurance products. This safety net covered funeral costs, hospital bills, workers’ wages, and his children’s school fees, preventing him from falling into poverty. The insurance benefits allowed Venuste to focus on recovery and adapt to his new circumstances. Unable to continue vegetable farming due to his disability, he transitioned to pig breeding—a venture better suited to his physical condition. This shift not only ensured a stable livelihood but also marked a fresh start for Venuste as an entrepreneur. Microinsurance made the vital, life changing difference for Venuste. |
How prescient those words were. MFIs such as VisionFund play a vital role in offering accessible financial tools tailored to vulnerable populations. By bundling loans with microinsurance, they provide both short-term relief and long-term stability, enabling clients to navigate crises and rebuild their lives. Venuste’s journey highlights how these institutions empower individuals to not just survive adversity, but also to thrive by turning challenges into opportunities for reinvention and resilience.
The Natural Fit of MFIs Providing Microinsurance
Microinsurance has grown rapidly in recent years- we saw that again recently with the release of the Landscape of Microinsurance from the Microinsurance Network (MiN), offering simplified procedures, lower premiums, and accessible claims processes to meet the needs of low-income communities. However, its penetration remains low, highlighting the critical role of MFIs in bridging this gap. MFIs are uniquely positioned to develop and distribute microinsurance due to several advantages.
Firstly, MFIs have established trust with underserved populations, fostering confidence in financial products like insurance. Their clients, often hesitant to engage with unfamiliar institutions, are more likely to adopt microinsurance when introduced by trusted MFIs. Secondly, MFIs possess local infrastructure, including field agents, mobile platforms and client data systems that efficiently reach remote populations. Thirdly, their expertise in managing financial transactions ensures effective implementation of insurance products.
MFIs also understand the needs of low-income clients through extensive networks and needs assessments. This knowledge enables them to design tailored products while educating clients on financial concepts. Microinsurance fits seamlessly into MFIs’ holistic approach to improving financial well-being by providing protection against unexpected events that can derail stability.
For MFIs, microinsurance complements their core activities, generating additional revenue while improving social impact. By empowering clients to handle life’s shocks and climb the economic ladder, MFIs can become one-stop shops for financial solutions. Ultimately, microinsurance enhances resilience and transforms lives by turning crises into opportunities for growth.
Misconceptions Remain
Despite the advantages of MFIs in distributing microinsurance, several misconceptions hinder its full potential. These misconceptions exist at both the insurer and MFI levels:
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Low client education: Some insurers believe low-income populations lack knowledge or interest in insurance products. However, MFIs are well-equipped to educate clients about insurance concepts due to their close community relationships.
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Profitability concerns: There is a perception that microinsurance premiums are too low for insurers to profit or too high for clients to afford. In reality, administrative costs are minimized when MFIs handle customer acquisition, enrolment and claims processes. MFIs’ understanding of client needs and existing processes for data collection and loan management make premium integration easier.
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Low MFI expertise: While MFIs primarily focus on credit and savings, insurance can be easily introduced and implemented. MFIs’ expertise helps insurers avoid one-size-fits-all approaches, recognizing that products successful in one context may not work in another.
To overcome these challenges, collaboration between insurers and MFIs – as distribution channels – is crucial. By working together, they can design affordable, tailored products for specific markets while educating clients about their value. This partnership can unlock the full potential of microinsurance, making it more accessible and ensuring relevant and accessible products for vulnerable populations. Innovation and partnerships are key, particularly in seeking solutions for where MFIs serve communities more prone to weather related disasters and the impacts of climate change. As VisionFund we have worked together with Ibisa, an insurtech to develop the ClimaCash+ product. The idea is to adapt the successful principle of hospicash to climate risks. ClimaCash+ is a suite of parametric coverages such as RainCash, DroughtCash, HeatCash… simple to understand, simple to use and to claim (automatically loss assessment and payment when the trigger is reached).
The Transformative Power of MFIs
MFIs face challenges in actively engaging with microinsurance, despite its benefits. Although MFIs generate income from microinsurance, that income often covers only the operational costs of training and services, requiring negotiation for higher commissions to generate profits. Network headquarters with dedicated teams can help, but covering expert costs poses a challenge. VisionFund International addresses this by offering operational support to other MFIs or other partner organisations, helping them determine suitable products, collaborate with local insurers, and implement solutions through training and practical support. This work is important given the low penetration rates of insurance across low-income communities and has enabled VisionFund to grow to now offer insurance products from credit life, health, hospicash, asset, livestock, crop, climate and more, to over 2.3m clients globally, through its network MFIs and through technical support to partners.
Today, Venuste’s story has taken a hopeful turn. His pig farming business has grown steadily, providing him with a stable income that supports both his family’s needs and his aspirations for the future. His children remain in school, continuing their education uninterrupted—a testament to how financial safety nets can preserve opportunities even during crises.
Venuste’s journey exemplifies resilience in action: not merely surviving hardship but using microinsurance to adapt creatively and finding new paths forward. The combination of VisionFund’s support and bundled insurance products empowered him to rebuild after devastating losses—proving that even in the face of overwhelming adversity, recovery is possible with the right tools.
Venuste’s experience highlights how MFIs like VisionFund foster resilience through microinsurance. By bundling loans with tailored insurance products, MFIs provide safety nets that protect against shocks and enable stability. In a world where families increasingly face health emergencies and natural disasters, MFIs play a crucial role. They empower individuals like Venuste to overcome challenges and seize opportunities, transforming despair into hope. His journey shows that resilience is built through communities uniting with compassion and support.
As MiN’s latest Landscape shows, the opportunities for growth in microinsurance are enormous – and so too is the role that MFIs can play in helping it. As Joachim von Amsberg, Vice President of Development Policy and Partnerships at the World Bank, says: “In the world of microinsurance, MFIs are more than just distributors – they are enablers. They are uniquely positioned to bridge the gap between traditional insurance providers and the world’s most underserved populations, helping to create a more equitable system of risk-sharing”.
Let’s grasp this immense opportunity, and ensure that insurers, MFIs and other key stakeholders see themselves as partners, all pursuing a common goal.
Solène Favre has been Global Director of Insurance for VisionFund International (VFI) since February 2019. With her team, she supports MFIs in setting up insurance operations for their borrowers and their families. More recently, VFI’s insurance team has expanded its technical assistance for WV National Offices and other MFIs & organisations to protect more families and more children among WV beneficiaries. Currently, she is also a board member of the Microinsurance Network. Before joining VisionFund International, Solène created and managed the Cambodian subsidiary of the French insurance group Prévoir, the first microinsurance company in Cambodia for almost 7 years, reaching 300,000 insurance policies with a team of 147 people. She also worked on a pilot project to set up Cambodia’s National Social Security before it was handed over and launched by the Ministry of Labor in 2012. She also ran a micro-insurance program in India for 2 years providing a health and life community-based insurance for slum dwellers in Maharashtra. She started her career in France working for a mutual insurance company for 10 years.
