Manulife Financial Corp.'s customer service agent rolled up his pant-legs as the jungle path became increasingly muddy. Undaunted, he crossed a rickety little bridge made of sticks over a river of rushing brown water. Eventually he reached the customer's home in Tien Giang, and was invited into the small shack where he stood on the mud floor next to the family's rooster.
This is the future of Manulife, Canada's largest life insurer, which is stretching into the far reaches of Asia in search of long-term growth.
The company launched an experimental microinsurance program in Vietnam in September, an alliance with a women's co-operative union.
"In Vietnam, only about 20 per cent of the population lives in urban centres," Robert Cook, head of Manulife's Asian business, said in an interview. "So you've got another 60 million people who we have no effective way to reach."
Hence the microinsurance experiments in northern Vietnam. The customer service agent, Tran Bao Thinh, travelled to Tien Giang to make the first payment of a death claim.
"He delivered the claim proceeds to, unfortunately, a grieving couple," said Mr. Cook. "What was interesting was to watch the impact on the rest of the community, because it kind of made it real to them."
The company built custom products just for this program.
"When we say micro, this is really micro. The premiums are one or two U.S. dollars a month," he added.
In the first three months the program attracted more than 15,000 customers. While there is a microinsurance market in India, Manulife is the first company to bring it to Vietnam, Mr. Cook said.
"I hope it works. They're such small policies you can't make money on them now, but the theory is you acquire a customer and hopefully as economic development in the country extends to the rural areas we'll be able to leverage that customer relationship with sales of other products."
Global insurers such as Munich Re and Zurich Financial are also expanding into microinsurance - in many cases, by linking up with local partners - to reach poorer clients who need buffers against unexpected events such as health problems, workplace accidents or bad weather.
Germany's Allianz, for example, has more than three million microinsurance customers in India, along with clients in Indonesia, Egypt, Cameroon, Senegal and Colombia.
Germany's other major insurer, Munich Re, is testing a pilot project in Indonesia that will help protect households in Jakarta against economic losses due to floods.
The sector got a boost in 2008 with the launch of the Microinsurance Innovation Facility, which aims to make such insurance more accessible to the developing world and is funded by the Bill and Melinda Gates Foundation.
The financial crisis has hit the sector, causing a slowdown in funding, escalating costs and, in some cases, weaker repayment rates.
In total, more than 100 million microinsurance policies have been issued worldwide, up from about 10 million in 2000, according to ACCION International, a non-profit organization that works in microfinance.
Jennifer Lee, a Toronto-based manager in Deloitte & Touche LLP's financial advisory practice who has worked on the restructuring of the microfinance industry in Azerbaijan, said this is probably a good strategy for Manulife.
There are a number of challenges that make microinsurance a difficult product to roll out, not the least of which is the need to produce paperwork and process claims in areas where paper can still be rare, not to mention computers.
"The challenge with microinsurance will always be the paperwork and documentation," Ms. Lee said. Nevertheless, "Manulife's strategy makes sense because it's a market that Manulife could move into in the future. The brand awareness works."
Broadly speaking, Manulife's Asian operations, which make up about one-third of the company, are in many ways an investment in the future. Take China, a country where Manulife has placed a small army of resources. The insurer, which wants to be the first foreign company to operate across the nation, hopes to be in 75 to 100 cities within five years.
"China is a long-term story for Manulife," Mr. Cook said. "Shareholders are not going to see a huge contribution to earnings from China in my working life. But, hopefully, down the road someone will look back and say 'we're grateful for those guys who laid the foundation there.'"
With files from reporter Tavia Grant