IC, Pira to entice poor Pinoys to get insurance

Business Mirror
Written by Jun Vallecera / Reporter
Sunday, 03 October 2010 10:40


POLICY crafters, regulators and industry players vowed on Friday to enlighten poor, but enterprising Filipinos, whether rural- or urban-based, on the merits of acquiring some form of protection against financial reverses and other forms of misfortune.

The Insurance Commission (IC), the Philippine Insurers and Reinsurers Association, the various small units engaged in microinsurance, and technocrats from the Department of Finance met at the Century Park Hotel in Manila and committed to inform as many of the estimated 27 million poor Filipinos who do not have any kind of risk protection at all.

Less than 3 million of these very poor Filipinos have purchased an insurance policy against sickness, dismemberment, property loss, natural perils or even death, and all because an overwhelming number of them are uninformed, said Joselito Almario, deputy executive director of the National Credit Council.

The event formalized the pursuit of what has always been an informal approach to microinsurance and, at the same time, marked the start of a literacy campaign and road show meant to mainstream the microinsurance program.

Almario said only about half of the less than 3 million Filipinos that bought microinsurance policies obtained them from the formal insurance providers, potentially exposing them to many more risks than just the loss of a house or limb.

He would not blame the formal sources of risk protection for not coming down to where their services are sorely needed on account of the high transaction costs, actuarial difficulties and other factors the microinsurance program faces.

Nevertheless, Almario said, the government recognized the need to bring the large swathe of the unprotected population in from the cold and provide them with a measure of risk-mitigating programs like microinsurance.

This was the reason the IC issued a circular in March that laid down policies on what was up to then informal microinsurance activities.

The IC followed up with another circular that set guidelines on the treatment of funds collected from informal microinsurance activities.

Right now, Almario said, performance standards are being set and some fine-tuning is done on the risk-based regulatory framework the IC implements to suit the microinsurance business.

Industry players are also being urged to come up with innovative products so more Filipinos are encouraged to take risk protection for contingent events.

In essence, microinsurance is all about policies written costing as small as P300 a year yielding benefits as large a P200,000, Almario said.