Holcim Ltd is teaming up with an insurance company to sell building materials and homes to Indonesians as it seeks to benefit from the future middle class in the emerging markets.
So-called microinsurance costs the customer as little as 67 cents a year and is designed to help low-income individuals limit their financial risk when they buy construction material or fertiliz
The policy offered by Holcim of Jona, Switzerland, pays out when a house is struck by an earthquake or tsunami, allowing first-time home builders to protect themselves when they make a large investment.
“Microinsurance is seen as a way to get in and get market share,” said Jim Roth, co-founder of LeapFrog Investments, a US$135m Mauritius-domiciled private equity fund that plans to invest in microinsurers.
“Today’s low income person is tomorrow’s middle class.” Those policies have the potential to generate annual premiums of as much as US$40bn, said Zurich-based Swiss Reinsurance Co., the world’s second-biggest reinsurer.