Saturday, February 27, 2010
Tuesday, February 16, 2010
Rural banks welcome microinsurance
(The Philippine Star) Updated February 16, 2010 12:00 AM
MANILA, Philippines - The Rural Bankers Association of the Philippines (RBAP) and the Microenterprises Access to Banking Services (MABS) program has expressed its support for initiatives to introduce microinsurance in the country.
Both have also started working with other groups in the insurance industry to support the National Strategy on Microinsurance formally launched last month. These include technical assistance and training for insurance providers in developing and enhancing the quality of microinsurance products and services in the country.
As part of this initiative, RBAP-MABS, USAID, MICRA/Philippines and Mercy Corps MAXIS also held a workshop last Feb. 1-3 at the Asian Institute of Management (AIM) in Makati City entitled “Developing Successful Microinsurance Products.”
RBAP president Joseph Omar Andaya said the event dovetails with the government’s efforts towards developing the Philippines as the microinsurance capital of Asia.
“It (the event) proved to be a fitting follow-through to the recent launching of the National Regulatory Framework and National Strategy for Microinsurance,” Andaya added.
RBAP has actively been advocating for member rural banks to eventually partner with private local insurance companies to provide needed insurance services for their microfinance clients.
Formulation of the strategy and its framework involved the Department of Finance, the Insurance Commission, the National Credit Council, other public and private stakeholders, as well as international agencies.
Aimed at enhancing insurers’ skills in product development, service delivery and marketing, the workshop was participated in by AA International, Country Bankers Life, CocoLife, Malayan Insurance, MicroEnsure Philippines, Philippine Prudential Life and Pioneer Life, mutual benefit associations or MBAs including TSPI, ASKI, RBTI and CARD.
Taking part in the event were representatives of GTZ-German Technical Cooperation, USAID, the Philippine Life Insurance Association (PLIA) and Coop Life Insurance and Mutual Benefit Services (CLIMBS).
The training workshop is considered as the first of its kind in the Philippines and was conducted by Michael McCord, senior microinsurance specialist and president of the Microinsurance Centre of USA. McCord has been conducting a series of meetings with the country’s insurance industry stakeholders in support of RBAP-MABS and MICRA’s efforts in expanding microinsurance services in the Philippines.
MANILA, Philippines - The Rural Bankers Association of the Philippines (RBAP) and the Microenterprises Access to Banking Services (MABS) program has expressed its support for initiatives to introduce microinsurance in the country.
Both have also started working with other groups in the insurance industry to support the National Strategy on Microinsurance formally launched last month. These include technical assistance and training for insurance providers in developing and enhancing the quality of microinsurance products and services in the country.
As part of this initiative, RBAP-MABS, USAID, MICRA/Philippines and Mercy Corps MAXIS also held a workshop last Feb. 1-3 at the Asian Institute of Management (AIM) in Makati City entitled “Developing Successful Microinsurance Products.”
RBAP president Joseph Omar Andaya said the event dovetails with the government’s efforts towards developing the Philippines as the microinsurance capital of Asia.
“It (the event) proved to be a fitting follow-through to the recent launching of the National Regulatory Framework and National Strategy for Microinsurance,” Andaya added.
RBAP has actively been advocating for member rural banks to eventually partner with private local insurance companies to provide needed insurance services for their microfinance clients.
Formulation of the strategy and its framework involved the Department of Finance, the Insurance Commission, the National Credit Council, other public and private stakeholders, as well as international agencies.
Aimed at enhancing insurers’ skills in product development, service delivery and marketing, the workshop was participated in by AA International, Country Bankers Life, CocoLife, Malayan Insurance, MicroEnsure Philippines, Philippine Prudential Life and Pioneer Life, mutual benefit associations or MBAs including TSPI, ASKI, RBTI and CARD.
Taking part in the event were representatives of GTZ-German Technical Cooperation, USAID, the Philippine Life Insurance Association (PLIA) and Coop Life Insurance and Mutual Benefit Services (CLIMBS).
The training workshop is considered as the first of its kind in the Philippines and was conducted by Michael McCord, senior microinsurance specialist and president of the Microinsurance Centre of USA. McCord has been conducting a series of meetings with the country’s insurance industry stakeholders in support of RBAP-MABS and MICRA’s efforts in expanding microinsurance services in the Philippines.
Monday, February 15, 2010
BSP okays microinsurance sales - Business World Feb. 15, 2010
THE POOR may now buy micro-insurance from rural, cooperative and thrift banks after these institutions were green-lighted by the central bank to serve as distributors.
In a statement issued last Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board the day before had "approved ... the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks."
These banks, the BSP added, "are ideal insurance distribution channels as they are the trusted financial institutions in the countryside and have a deeper knowledge and understanding of the low-income market."
Rural banks had clamored to be allowed to sell microinsurance -- aside from the credit life insurance they normally bundle into loans -- noting the additional revenues that big banks were reaping from bancassurance, or the sale of insurance policies within their premises.
Bancassurance rules, however, stipulate that banks should own at least 5% of insurance firms -- a requirement rural banks said they could not fulfill since they were too small to invest in insurance companies.
Rural banks proposed a "partnership model" where they would partner with commercial insurers. They would act as information disseminators and collection agents of the insurers, earning a fee in the process.
The banks also said they wanted to sell microinsurance products other than credit life insurance -- which primarily protects banks from default by clients who are often poor and without collateral -- such as life, crop, and property insurance but needed the central bank’s go-ahead before they could do so.
Officials of the thrift and rural bank associations welcomed the BSP move.
Pascual M. Garcia III, president of the Chamber of Thrift banks, said in a telephone interview yesterday: "Banks will be able to provide products to more customers. These banks are heavily exposed to the micro-sector... [This] will improve penetration of the sector and improve the existing relationship."
Mr. Garcia also said the order would make microinsurance cheaper as insurance firms would not need to open branches and hire people.
Joseph Omar O. Andaya, president of the Rural Bankers Association of the Philippines (RBAP), said the BSP move would further boost lending to the agricultural sector.
"Banks will be more encouraged to lend because when you are in agribusiness, you are subject to the vagaries of nature. Microinsurance mitigates that because banks can recover what they lend, since farmers affected by natural calamities get back seed money to restart their enterprise with insurance," he said.
While the BSP has not released the rules and regulations covering the sale of micro-insurance by rural, cooperative and thrift banks, its statement said banks needed to comply with Insurance Commission rules on microinsurance and verify that insurers have "adequate consumer protection mechanisms."
Both Messrs. Garcia and Andaya could not immediately say how much the sale of microinsurance would add to their bottom line, but said the BSP’s move was significant more for its social implications.
"[Microinsurance] will serve as parachutes for those who were poor but have made good in their lives so they won’t go back to poverty," Mr. Andaya said.
"It’s not going to be a big revenue source," Mr. Garcia said. "Our organizations can provide input on the type of products... Customers will understand about risk that can damage their business and families and pick up appropriate insurance for that. This will give them better chances for recovery and help them manage risk when things happen..."
Mr. Andaya said the RBAP was already in talks with insurance firms for products that could be introduced, but said the government should consider inviting more players from abroad so the cost of microinsurance could go down. -- Don Gil K. Carreon
In a statement issued last Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board the day before had "approved ... the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks."
These banks, the BSP added, "are ideal insurance distribution channels as they are the trusted financial institutions in the countryside and have a deeper knowledge and understanding of the low-income market."
Rural banks had clamored to be allowed to sell microinsurance -- aside from the credit life insurance they normally bundle into loans -- noting the additional revenues that big banks were reaping from bancassurance, or the sale of insurance policies within their premises.
Bancassurance rules, however, stipulate that banks should own at least 5% of insurance firms -- a requirement rural banks said they could not fulfill since they were too small to invest in insurance companies.
Rural banks proposed a "partnership model" where they would partner with commercial insurers. They would act as information disseminators and collection agents of the insurers, earning a fee in the process.
The banks also said they wanted to sell microinsurance products other than credit life insurance -- which primarily protects banks from default by clients who are often poor and without collateral -- such as life, crop, and property insurance but needed the central bank’s go-ahead before they could do so.
Officials of the thrift and rural bank associations welcomed the BSP move.
Pascual M. Garcia III, president of the Chamber of Thrift banks, said in a telephone interview yesterday: "Banks will be able to provide products to more customers. These banks are heavily exposed to the micro-sector... [This] will improve penetration of the sector and improve the existing relationship."
Mr. Garcia also said the order would make microinsurance cheaper as insurance firms would not need to open branches and hire people.
Joseph Omar O. Andaya, president of the Rural Bankers Association of the Philippines (RBAP), said the BSP move would further boost lending to the agricultural sector.
"Banks will be more encouraged to lend because when you are in agribusiness, you are subject to the vagaries of nature. Microinsurance mitigates that because banks can recover what they lend, since farmers affected by natural calamities get back seed money to restart their enterprise with insurance," he said.
While the BSP has not released the rules and regulations covering the sale of micro-insurance by rural, cooperative and thrift banks, its statement said banks needed to comply with Insurance Commission rules on microinsurance and verify that insurers have "adequate consumer protection mechanisms."
Both Messrs. Garcia and Andaya could not immediately say how much the sale of microinsurance would add to their bottom line, but said the BSP’s move was significant more for its social implications.
"[Microinsurance] will serve as parachutes for those who were poor but have made good in their lives so they won’t go back to poverty," Mr. Andaya said.
"It’s not going to be a big revenue source," Mr. Garcia said. "Our organizations can provide input on the type of products... Customers will understand about risk that can damage their business and families and pick up appropriate insurance for that. This will give them better chances for recovery and help them manage risk when things happen..."
Mr. Andaya said the RBAP was already in talks with insurance firms for products that could be introduced, but said the government should consider inviting more players from abroad so the cost of microinsurance could go down. -- Don Gil K. Carreon
Monday, February 1, 2010
New microinsurance rules issued
Business World
Front Page
February 1, 2010
Regulators want informal schemes closed within a year
NEW RULES governing microinsurance were issued on Friday, re-laying the groundwork for the potentially multibillion-peso industry.
The Insurance Commission (IC), which came out with a new circular, also issued a separate set of rules together with two other regulators that close down informal insurance schemes. Both directives were signed on Friday during the launch of a national microinsurance strategy and regulatory framework.
The government is pushing microinsurance for the poor, noting that they risk getting poorer as a result of calamities. Given its insufficient funds, the state is pushing for the development of a private sector-driven microinsurance market.
Studies have shown that while there are formal and informal microinsurance schemes, their penetration rate among the poor is very low.
Microinsurance is distinguished for being low-cost and easy to dispense. The government conservatively estimates sales to hit P2.5 billion annually based on premiums of as low as P1 a day and a client base of seven million.
The first circular which is still unnumbered, said Joselito S. Almario, deputy executive director of the National Credit Council, "implements" the national strategy and regulatory framework and as such serves as the IC’s primary document for regulating the industry.
It amends Insurance Memorandum Circular (IMC) 9-2006 that promoted and defined microinsurance, and spelled out the responsibilities of providers.
IMC 9-2006, Mr. Almario said, was overly focused on mutual benefit associations (MBAs) -- non-profit organizations set up by teachers or government workers, for instance -- to the exclusion of other microinsurance providers.
"The government pushed for MBAs [in providing microinsurance]. But there are cooperatives that do that also," he said.
The new circular states that all insurance firms, cooperatives, and MBAs licensed by the IC may sell microinsurance products, which may consist of one type, or several products -- life, non-life and health -- bundled together.
It also requires microinsurance agents to be licensed by the IC. These agents, however, need not take the regular licensure exam but must undergo a special training program and pass a qualifying exam.
The circular also redefines microinsurance as that where the amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed 5% of the current daily minimum wage rate for non-agricultural workers in Metro Manila.
Premiums, under IMC 9-2006, were computed at 10% of the daily minimum wage rate.
The new circular retains the old one’s provision that "the maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila."
Meanwhile, Joint IC-CDA-SEC Memorandum Circular 01-2010 terminates "informal insurance" or "insurance-like schemes" and orders organizations that extend these to either partner with commercial insurers or incorporate themselves into an insurance firm, a cooperative, or MBA.
The joint circular was signed by Insurance Commissioner Eduardo T. Malinis, Securities and Exchange Commission (SEC) Chairman Fe B. Barin, and Cooperative Development Authority (CDA) Chairman Lecira V. Juarez.
"Many organizations are operating without a license," Mr. Almario said, "when the law clearly states they get a certificate of authority, essentially a license, from the Insurance Commission."
The circular cites the Insurance Code, which insists that organizations undertaking insurance activities first secure a certificate of authority from the IC, and the Cooperative Code which requires cooperatives undertaking such activities to also get an IC certificate.
There are also entities, including non-profit organizations, registered with the SEC that don’t have the authorization but are extending insurance.
Informal insurance schemes are to close in a year, and their providers may either partner with commercial insurers or encourage members to become members of MBAs or cooperatives.
They may also, within two years, organize themselves into a life or non-life insurer, cooperative, or MBA licensed by the IC.
Deputy Insurance Commissioner Vida T. Chiong said other circulars covering reportorial requirements and the required capitalization would be issued.
For BusinessWorld On-line, click here
Front Page
February 1, 2010
Regulators want informal schemes closed within a year
NEW RULES governing microinsurance were issued on Friday, re-laying the groundwork for the potentially multibillion-peso industry.
The Insurance Commission (IC), which came out with a new circular, also issued a separate set of rules together with two other regulators that close down informal insurance schemes. Both directives were signed on Friday during the launch of a national microinsurance strategy and regulatory framework.
The government is pushing microinsurance for the poor, noting that they risk getting poorer as a result of calamities. Given its insufficient funds, the state is pushing for the development of a private sector-driven microinsurance market.
Studies have shown that while there are formal and informal microinsurance schemes, their penetration rate among the poor is very low.
Microinsurance is distinguished for being low-cost and easy to dispense. The government conservatively estimates sales to hit P2.5 billion annually based on premiums of as low as P1 a day and a client base of seven million.
The first circular which is still unnumbered, said Joselito S. Almario, deputy executive director of the National Credit Council, "implements" the national strategy and regulatory framework and as such serves as the IC’s primary document for regulating the industry.
It amends Insurance Memorandum Circular (IMC) 9-2006 that promoted and defined microinsurance, and spelled out the responsibilities of providers.
IMC 9-2006, Mr. Almario said, was overly focused on mutual benefit associations (MBAs) -- non-profit organizations set up by teachers or government workers, for instance -- to the exclusion of other microinsurance providers.
"The government pushed for MBAs [in providing microinsurance]. But there are cooperatives that do that also," he said.
The new circular states that all insurance firms, cooperatives, and MBAs licensed by the IC may sell microinsurance products, which may consist of one type, or several products -- life, non-life and health -- bundled together.
It also requires microinsurance agents to be licensed by the IC. These agents, however, need not take the regular licensure exam but must undergo a special training program and pass a qualifying exam.
The circular also redefines microinsurance as that where the amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed 5% of the current daily minimum wage rate for non-agricultural workers in Metro Manila.
Premiums, under IMC 9-2006, were computed at 10% of the daily minimum wage rate.
The new circular retains the old one’s provision that "the maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila."
Meanwhile, Joint IC-CDA-SEC Memorandum Circular 01-2010 terminates "informal insurance" or "insurance-like schemes" and orders organizations that extend these to either partner with commercial insurers or incorporate themselves into an insurance firm, a cooperative, or MBA.
The joint circular was signed by Insurance Commissioner Eduardo T. Malinis, Securities and Exchange Commission (SEC) Chairman Fe B. Barin, and Cooperative Development Authority (CDA) Chairman Lecira V. Juarez.
"Many organizations are operating without a license," Mr. Almario said, "when the law clearly states they get a certificate of authority, essentially a license, from the Insurance Commission."
The circular cites the Insurance Code, which insists that organizations undertaking insurance activities first secure a certificate of authority from the IC, and the Cooperative Code which requires cooperatives undertaking such activities to also get an IC certificate.
There are also entities, including non-profit organizations, registered with the SEC that don’t have the authorization but are extending insurance.
Informal insurance schemes are to close in a year, and their providers may either partner with commercial insurers or encourage members to become members of MBAs or cooperatives.
They may also, within two years, organize themselves into a life or non-life insurer, cooperative, or MBA licensed by the IC.
Deputy Insurance Commissioner Vida T. Chiong said other circulars covering reportorial requirements and the required capitalization would be issued.
For BusinessWorld On-line, click here
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