Millions of people in developing countries are vulnerable to unpredictable events. A severe drought, the death of an income-earner, or the loss of livestock, can push them below the poverty line. They often have no means of protecting themselves because they lack access to micro-insurance.

There are many reasons why insurance is not very affordable or available in developing countries, such as: (1) the high cost of collecting premium payments and monitoring agricultural output; (2) mistrust in insurance providers leading to low take-up rates; (3) moral hazard (the idea that people with insurance may put less effort into growing crops); (4) risk to insurance providers due to correlated risks in a region; (5) low take-up due to differences in risk perceptions of the poor and traditional insurance companies; (6) the high cost of reinsurance due to regulations make it costly for reinsurers to bear risk where data on that risk is limited (as is common in developing countries).

Ensurers overcomes these six problems in an innovative way.

Ensurers involves an online peer-to-peer platform similar to Kiva, but for insurance rather than credit. People in developing communities (individuals, families, villages, or non-governmental organisations) could upload profiles of themselves along with a price they are prepared to pay for insurance. They could submit these profiles and bids directly, or indirectly via the partner organizations Ensurers will work with. Individuals considering providing insurance could then browse the website and choose profiles to insure. Insuring would involve putting down a deposit in return for receiving regular premium payments. We would use mobile banking to collect premiums and make payouts, and index measures (such as rainfall data) to determine disbursement.

Our innovations would overcome many existing problems with insurance provision. Firstly, by using mobile banking and index measures, the administration cost could be reduced and the problem of moral hazard overcome. Secondly, by reversing the offer-acceptance so that people who want to buy insurance set their own price, the problem of mistrust is internalised. Thirdly, by using a peer-to-peer online platform, risk could be spread across people worldwide, which would reduce the cost of reinsurance and mean that highly correlated risks in a region are no longer problematic.