Let's Talk: Joan Lamm-Tennant
Joan Lamm-Tennant is the Chief Executive Officer of Blue Marble Microinsurance, a consortium of eight companies including XL Catlin that are collaborating to bring financial protection to the underserved in emerging markets. Before joining Blue Marble, Joan was the Global Chief Economist and Risk Strategist for Guy Carpenter & Co. L.L.C., the reinsurance and risk advisory unit of Marsh & McLennan Companies. Her professional experience includes various executive roles in the insurance industry following a career as a tenured professor. Joan currently maintains a presence in academia as a Senior Research Fellow at the Wharton School at the University of Pennsylvania.
How did Blue Marble come to exist?
I have to credit my daughter, Lauren Tennant Pollock (who joined XL Catlin in 2016 as Vice President of Emerging Markets). She studied development and microcredit at Georgetown University's School of Foreign Service. Lauren and I talked about how to accelerate development through insurance, and forming a consortium to develop a market for microinsurance came up as an intriguing solution. Microinsurance has been used before, but the challenge is making it sustainable and scalable. In 2012, I proposed the idea of Blue Marble to Brian Duperreault, who at the time was CEO at Marsh & McLennan Companies, and he backed it. Shared value creation through consortia and microinsurance were of great interest to my graduate students at Wharton, who contributed their inputs to the Blue Marble business model. Ultimately, Blue Marble grew out of a lot of work by millennials, scholars and insurance industry legends including XL Catlin's Mike McGavick. As we shaped our business model, other companies became interested in what we were doing and the consortium came together in early 2015. While Blue Marble has evolved, we remain committed to our mission of creating a market for microinsurance.
Blue Marble recently announced it is piloting its first venture. Why did Blue Marble choose Zimbabwe for this?
Our pilot is providing drought protection to smallholder maize farmers. Maize is a key crop in many parts of the developing world, and our consortium has a very strong bench in agriculture. The pilot is using the license of Old Mutual, a leading African insurer, and the team that launched the venture is the best of the best when it comes to insuring agriculture risks. Zimbabwe was right for our pilot because very little work like this has been done there. Foreign-backed ventures have made mistakes in many emerging markets but not in Zimbabwe. We have found that the people of Zimbabwe are so resilient, courageous, and educated. Our model at Blue Marble is to ideate, accelerate, pilot and then scale microinsurance ventures. We spent a year ideating and accelerating the venture in Zimbabwe, and our board approved the business case in the spring of 2016. Now we are executing on it.
How does the Zimbabwe pilot work?
Zimbabwe has 1 million smallholder maize farmers, and drought is a major risk for them. Climate change has pushed the start of the growing season there back to November. Our pilot provides drought protection by insuring the farmers for the loss of seed, fertilizer and herbicides. Technology plays an important role in our pilot. We have installed ground sensors and use satellite data to alert farmers about optimal times for planting their seeds, fertilizing and so on when the rainy season starts. A big piece of the financial puzzle is an index we developed that covers the growing season. We established a microinsurance product, got it licensed by regulators and arranged reinsurance. This outcome would not have been possible without the dedication of the venture team, which included secondees from many of the consortium companies, including XL Catlin. On that note, I would like to thank Tom Philp, Science Analyst, XL Catlin, for his analyses used in the index design as well as for facilitating the Blue Marble Climate Risk expert community and Scott Swanay AVP & Actuary, Multinational Casualty Insurance, XL Catlin, for his work on specifying and validating the customer proposition. While we are not insuring yields in Zimbabwe, we will insure agricultural yields in more stable markets. Our goal is to launch 10 ventures in 10 years. We're already looking at several other ventures and working in other African countries.
A recent article by Bloomberg Businessweek titled “Designed in Davos, Tested in Zimbabwe” takes a closer look at the pilot.
What are the keys to making microinsurance sustainable?
Our goal is to have an impact through developing a sustainable market. The majority of microinsurance right now is credit life, but there is little evidence that it is having an impact beyond temporarily providing access to credit. What is unique about Blue Marble is our business model: a consortium with a shared value creation approach. We are pursuing opportunities that generate significant social impact as well as financial return. Our ultimate goal is that the financial returns derived from the pilots fund subsequent pilots and the innovations needed to scale. We will maintain a diversified venture portfolio in terms of region and thereby manage our risk and create mechanisms for cross-learnings to drive scalability. We are looking to build a substantial volume of business and economically empower the underserved, which will ultimately become a customer group of traditional insurance.