LeapFrog to invest up to $30 Million in Indian microinsurance space

By SiliconIndia   |   Monday, 29 March 2010, 09:26 Hrs
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New Delhi: LeapFrog Investments, a microinsurance fund, has raised over 506 Crore ($110 million) to invest in businesses that deliver affordable insurance in Asia and Africa. India is one of the priority countries for the fund, wherein LeapFrog would seek to invest up to 138 Crore ($30 million) in innovative insurance and financial services companies or Indian businesses that own strong distribution platforms and are eager to seize the growth opportunity in the microinsurance space.

Over the next four years, the fund aims to make a number of individual investments of between 23 Crore to 69 crore each ($5 million to $15 million) and partner with local insurance companies, microinsurers, or businesses with significant distribution platforms that reach the mass market. These distribution partners could include banks, retail stores, mobile phone networks, microfinance institutions, religious institutions or any company with a broad network.

Microinsurance (the provision of insurance to the financially excluded) is a big business in India today. In 2009, the non-life microinsurance business alone pulled in over 1300 Crore ($850 million) in premiums. There are currently 24 microinsurance plans registered with the Insurance Regulatory and Development Authority (IRDA) by 15 commercial life insurers in India. Yet, there is a huge growth opportunity as only five million people - or only two percent of the poor, have microinsurance.

"We are tremendously excited by the potential of microinsurance in India," said Jim Roth, the LeapFrog Principal who leads the fund's investments in South Asia. "India is, in absolute terms, the largest and fastest growing microinsurance market in the world. It is also the centre of most microinsurance innovation today. Yet, the potential market for insurance here is still underserved, with most people unable to access insurance via conventional channels. There is a massive opportunity for smart business leaders and policymakers to increase the reach and scale of microinsurance in India – generating both high social impact and strong profits."

LeapFrog is the first investment fund globally focused on meeting the insurance and inclusive financial services needs of low-income people in developing countries. The LeapFrog team consists of global pioneers in microinsurance market, with track records of both investing in and scaling microinsurance businesses.

As a long-term and strategic investor, LeapFrog will commit substantial time and capital to support high-growth and high-impact companies in the country. "We are here for the long-term and bring unique expertise," said Roth. "We will partner with local players and bring equity capital and our knowledge of global best practices, to ensure commercial success and impact – supporting the provision of affordable and relevant microinsurance products."

Stating the reasons for focusing on India, President and Founder of LeapFrog Investments, Dr. Andrew Kuper said, "A vast majority of the Indian population, that falls under the low-income group, has enough income to afford insurance that protects their families and enterprises. Insurance can have a transformative impact on their lives and livelihoods, enabling them to build their future without fear."

In addition to India, LeapFrog's priority countries for investment include Philippines, South Africa, Kenya and Ghana. The fund has already made its first investment of over 28 Crore ($6 million) in AllLife, an innovative South African insurer serving people living with HIV and diabetes.

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