Micro Money Adds Up

A Raspao vendor we met on Santana’s peatonal.

First, we want to wish everyone a blessed and prosperous New Year!

For the past couple of years the print media as well as the news on television in Panama has been abuzz with the words micro-empresa and micro-seguros

With the promotion of more initiatives to start your own business, AMPYME has been instrumental in fomenting within the poorer groups of people a sense of self reliance and has set up an impressive array of supportive classes to aid potential entrepreneurs carry out their plans for a small, successful business venture.  AMPYME, The Micro, Small, and Medium Business Authority, also offers access to seed money, Capital Semilla, and a broader funding program called PROFIPYME.  You can read all about it here.

This Authority has wisely organized itself and recognizes the well known fact that pennies add up and that, particularly the miro-empresas– you know, the ladies who prepare take-out lunches from their home to sell to the noon crowds in the banking district or the Raspao vendor who raises a family of six kids on what he earns selling snow cones, or even the up-and-coming producers of Pepper Sauce or Ceviche to commercialize on Panama’s streets and in the small kiosks- are an important generator of employment and cash for our small country.

The proliferation of small businesses has also pointed up a glaring need as we discussed in our last article for some form of access to insurance coverage.  In 2011 the spokesman for Panama’s insurance industry, Mauricio Ruiz, coincided with his colleagues in highlighting the potential for micro-insurance as the flagship product sector for 2011.

Micro-insurance, they predicted, will be the star product in Panama for the year 2011 and an important point of reference for the new legislation that the Government is preparing in order to regulate this vital activity.  Ruiz, President of the Association of Insurers (APADEA), confirmed that “micro-insurance is something that all companies are pursuing because obviously it is a market segment that is not covered.”

Some $830 million was mobilized by the insurance industry last year with a range of products that targeted the middle income and business sectors,  Micro-insurance, however, emerged as a solution to the low income social groups.  At the very least, a micro-insurance policy, for example may cost $2 per month and range in value from $800 to $1,000.  Some companies like Seguros Nacionales are beginning to offer heretofore uncovered clients who are not covered by Social Security or any other insurance for that matter, life insurance policies that may cost as little as $12 to $18 per year and reach a value of $10,000.

Of course, Jaime Sanjur, president of The Association of Insurance Producers of Panama, has maintained a guarded tone by stating, “We’re concerned since the subject of micro-insurance should be appproached cautiously since we’re looking at channels of mass distribution that, if they are not well regulated, can wind up being sold by anybody.”

As the pending Bill of Law #360 is being hammered out in the National Assembly, we look at this new line of insurance products as a step in the right direction towards a better social environment for the masses of people who are shoring up an important part of Panama’s economy and job market.