Microinsurance business formally kicks off

Business World, Finance
January 30, 2010

The government on Friday formally jumpstarted the microinsurance business, which targets the poor as clients, by launching the national strategy and regulatory framework for the industry.

Representatives from the government -- the Department of Finance, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, Cooperative Development Authority and state health insurer Philippine Health Insurance Corp. -- signed the two documents in a ceremony at the Philippine International Convention Center in Pasay City.

The national strategy and regulatory framework for microinsurance were completed by a technical working group composed of representatives of state agencies and nongovernment organizations last Nov. 13.

The government defines microinsurance as a low-cost insurance that provides the poor protection and relief against distress, misfortune or contingent event.

"We believe that promoting, supporting and advocating microinsurance is one invaluable step towards freeing our people from those chains of poverty," Finance Secretary Margarito B. Teves said in his keynote speech during the event.

The national strategy for microinsurance states the objective, the roles of the various stakeholders and the strategies to be implemented in improving access to insurance of the poor, the self-employed and their families. It also provides ways to encourage those who are providing informal insurance and insurance-like activities to register and to comply with existing regulations set by the government.

The regulatory framework specifies that commercial life and non-life insurance firms, mutual benefit associations, cooperative insurance societies, pre-need firms and health maintenance organizations, among others, which sell microinsurance, should be registered and licensed by the state.

Finance Undersecretary Gil S. Beltran said that this will eliminate "fly by night" microinsurance firms and eradicate "scams."

"We will try to avoid these by coming up with a uniform set of rules to be followed by regulators and microinsurance firms. And nobody will escape the net," he said in an interview. -- BUA