Colombia: For the Poor, a New Way to Protect Against Disaster
Tuesday, January 25, 2011
BARRANQUILLA, Colombia – Before a sales team for Liberty Mutual fanned out into a crime-infested slum to sell insurance, the venders bowed their heads, asking god to bless their work and protect them from thieves.
A ramshackle neighborhood where horse carts ply the streets and the floors of many houses are made of dirt might seem an odd place to peddle insurance. After all, insurance companies have historically ignored the poor.
But the Liberty team was offering something new to low-income families in the northern city of Barranquilla: health insurance for 3,000 pesos a month, which is less than two dollars. In case of serious illness, policyholders would receive an immediate payout of about $2,000.
“Before insurance was too expensive,” said construction worker Luis Marmolejo, who signed up with Liberty: “But 3,000 pesos is nothing.”
These low-cost policies, which provide coverage for accidental death, medical problems, crop failures and other calamities, are known as microinsurance. Development experts say microinsurance could become a key tool in fighting poverty because impoverished families are the most exposed to risk but almost never have coverage.