The fund will invest in fast-growing markets such as India, Pakistan, South Africa, Ghana and Kenya.
The LeapFrog Financial Inclusion Fund has raised $44 million for what is the world's first investment fund focused on microinsurance.
The fund, launched from Luxembourg, will invest in businesses that will bring insurance and financial services to 25 million low-income people in Africa and Asia. The fund will invest in fast-growing markets such as India, Pakistan, South Africa, Ghana and Kenya, according to its website.
The investors in the fund, which include public and private institutions, are the European Investment Bank (EIB), FMO, Omidyar Network, Triodos-Doen, Hivos-Triodos Fund, ACCION International, Calvert Large Cap Growth Fund, wealth manager Felipe Medina, and the LeapFrog team.
Micro-insurance involves a low premium and low caps or low coverage limits, sold as part of a typical risk-pooling and marketing arrangements, and designed to service low-income people and businesses not served by typical social or commercial insurance schemes.
For markets like India where more than two-third of India’s population lives in rural areas, it's a suitable instrument to reach the poor and socially disadvantaged.
"The world desperately needs market-based solutions to poverty that draw in major financial investors by offering fair but competitive returns.
The best part about microinsurance is that we can reach millions of people, swiftly. Microinsurance is both profitable and scalable," said Dr. Andrew Kuper, President and Founder of LeapFrog.
The 100 Country Landscape Report by the Microinsurance Center estimated a market size of one billion people, but found that less than three percent of these people now have any kind of insurance.
"The future of financial inclusion lies in moving microfinance beyond credit, offering the working poor the suite of financial tools that we (in developed countries) take for granted," said Monica Brand, a Principal Director of ACCION.