For a country that has an estimated 41% of its population living below the poverty line, the provision of regulated microinsurance to the vulnerable people in the community has finally come to realization. Earlier this month, National Insurance Timor-Leste (NITL) partnered with Tuba Rei Metin and Moris Rasik, the two microfinance institutions currently operating in Timor-Leste, to introduce the first ever regulated microinsurance products in the country. Through this partnership, NITL expects to provide protection to nearly 6% of the economically active population by the end of 2012.
With over 17,000 female clients across the 13 districts of Timor-Leste, Tuba Rai Metin and Moris Rasik will distribute these microinsurance products to its clients while NITL underwrites the products. The first products developed, ‘Credit Life Plus’ and ‘Asuransi Protesaun ba Familia’, are mandatory as they are tied to the disbursement of new loans and provide coverage for the women and their spouses. Product benefits have been tailored to meet the peculiar needs of the borrowers in each organization and pay-outs may be linked to the size of the loan. At a minimum, however, if a borrower dies, her outstanding loan balance will be cancelled and her family will receive $500. In the case of the borrower’s spouse dying, his family will receive, at a minimum, $250.
Tuba Rai Metin launched ‘Credit Life Plus’ on April 2nd at their Dili branch and ‘Asuransi Protesaun ba Familia’ will be launched May 2nd by Moris Rasik at their Ermera branch. In total, these products are expected to cover more than 34,000 lives by the end of 2012.
NITL Managing Director, Mr. Collin Yap, expressed, “NITL is committed to develop the insurance and risk management industry in Timor-Leste that will in turn contribute to the positive long impact on Timor-Leste’s economic future, and we hope that this partnership with Tuba Rei Metin and Moris Rasik will enhance the quality of life for the widows, orphans and the needy. The provision of low cost insurance to thousands of Timor-Leste’s poor families constitutes a vast market potential. Microcredit is a rapidly expanding business in Timor-Leste and by offering insurance we are expanding the range of financial services available to families which previously had been excluded. The provision of microinsurance is thus in line with NITL’s social mission.”
For many of the women, this will be their first encounter with microinsurance and the first time to ever be introduced to the concept. Upon signing up for the product, Tuba Rei Metin clients felt that the price was fair and not too high. A client conveyed, "We like this product and think it can help us in the future. Afterall, I don't know my destiny, only God knows."
The Inclusive Finance for the Under-served Economy (INFUSE) Programme facilitated the partnerships between the microfinance institutions and NITL through the provision of technical support and advice. The INFUSE Programme is funded by UN Capital Development Fund (UNCDF), United Nations Development Programme (UNDP) Timor-Leste, the Ministry of Economy and Development (MoED) and the Australian Agency for International Development (AusAID).