NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, June 1, 2011

MUMBAI –LeapFrog Investments, a $135 million fund focused on micro-insurance, is looking to deploy as much as $40 million in India.

“India presents an opportunity as the level of penetration of insurance is very low,” said Jim Roth, the company’s co-founder and partner.

In other markets, insurance is for the wealthy, whereas in India there is insurance that focuses on the mass market, he said, adding that LeapFrog will invest between $5 million and $20 million in a company. Micro-insurance is a product that offers coverage at a low premium and is designed for businesses not covered by conventional insurers, and the poor.

The Washington-based fund received initial commitments from wealthy individuals like George Soros and Pierre Omidyar, and development finance institutions such as the Netherlands-based FMO, Germany’s KfW Entwicklungsbank and International Finance Corp., the private investment arm of the World Bank.

“The aim was to set up a fund that would tap private capital and would have a social impact,” Mr. Roth said.

Insurance penetration in India has risen to 5.2% in 2009 from 2.32% in 2000, when the sector was opened up to private firms, according to the Insurance Regulatory and Development Authority of India.

LeapFrog has roped in Bangalore-based advisory firm Unitus Capital to help scout for deals in India.

“Apart from investing in micro-insurance companies, we are also looking for opportunities where LeapFrog could invest in micro-insurance products being designed by larger companies,” said Abhijit Ray, director at Unitus Capital.