Friday, November 12, 2010

Asia: Big scope for microinsurance in several countries

Asia Insurance Review Vol I Issue 184

The Philippines, Indonesia and India offer the biggest market opportunities for microinsurance because of their regulatory frameworks, strong cooperative systems and potential risks from extreme weather and disasters such as earthquakes and volcano eruptions, reports Reuters citing Mr Craig Churchill, head of the global Microinsurance Network and team leader of the International Labour Office's Microinsurance Innovation Facility.

He was speaking in conjunction with the three-day 6th International Microinsurance Conference in Manila that began on Tuesday. Around 500 participants are attending the event to discuss the solutions and challenges in microinsurance. The conference is organised by the Munich Re Foundation, Microinsurance Network, the Philippines' Department of Finance, and Georgia State University's Center for the Economic Analysis of Risk.

At present, over 140 million people, mostly in Africa and Asia, are covered by affordable insurance premiums, and studies showed the potential market is up to 3 billion, says the Munich Re Foundation and International Labour Organisation. More than half of microinsurance products are focused on life and health, while less than 10% cover farms.

"We're still at the experimental stage in offering products that could cover agriculture," said Mr Churchill, adding that there is huge potential growth for such products, citing the impact of typhoons Ketsana and Parma in the northern Philippines in late 2009.

Last month, German reinsurer Munich Re said that it would launch a reinsurance project in the Philippines to cover cooperative companies against extreme weather events. That will be the first microinsurance product in the country to offer farmers some protection against typhoons and flooding problems, to which the Philippines is prone.

Mr Joselito S Almario, a director of the Department of Finance, said that microinsurance has a potential Philippine market of nearly 35 million people willing to pay a premium of PHP20-30 (US$0.46-0.69) a week for coverage of up to PHP120,000 (US$2,771) in life and non-life benefits. At present, 14% of the Philippines' 96 million people have insurance, including 2.9 million people covered by microinsurance, mostly as members of cooperatives.

Micro-insurance regulatory framework set

BusinessWorld, Finance
Posted on 02:04 PM, November 10, 2010
Breaking News ( Updated as of 01:54 PM )

A REGULATORY framework for micro-insurance companies will be implemented in January, officials said on the second day of the sixth International Micro-insurance Conference in Makati City.

"The performance standards [regulations] will take in effect by January 2011," said Vida T. Chiong, Insurance Commission deputy commissioner and officer-in-charge.

"This will serve as a guide for the commission and other stakeholders to determine the viability of a [micro-insurance] company -- if it has the capacity to settle claims in the future," she added.

Ms. Chiong said the standards will provide "regulatory space" to micro-insurers with "lower" requirements for putting up a micro-insurance compared to those stipulated in the Insurance Code.

Geraldine Desiderio-Garcia, chairman of the micro-insurance committee of the Philippine Life Insurers Association, said in a lecture at the conference the standards will "formalize existing micro-insurance practices" such as cutting by half the P100-million capital requirement -- the fund to put up a micro-insurance firm -- for commercial insurers.

The standards, currently undergoing fine-tuning by a technical working group composed of government officials and private representatives, will be transmitted next month to a micro-insurance steering committee, headed by Finance Undersecretary Gil S. Beltran,, for review.

The Insurance Commission will give final approval of standards. -- Prinz P. Magtulis

Insurance standards readied

Insurance standards readied
BusinessWorld
Finance
Posted on 08:38 PM, November 10, 2010

REGULATORS are preparing “performance standards” for microinsurance providers to make sure their operations are sustainable and the poor, who are their clients, are protected.
At the same time, they are planning a nationwide financial literacy campaign to increase awareness among the poor about the importance of microinsurance.

Vida T. Chiong, deputy commissioner and officer-in-charge of the Insurance Commission (IC), shared with participants of the 6th International Microinsurance Conference in Makati City yesterday that the performance standards shall serve as a “guide for the commission... to determine... the capacity [of a microinsurer] to settle claims in the future.”

The standards go by the acronym “SEGURO,” for Stability, Efficiency, Governance, Understanding of the product, Risk Management and Outreach.

Microinsurance providers -- which include commercial insurers, cooperative insurance societies and mutual benefit associations -- will be evaluated based on their solvency and level of risk-based capital, among others.

Their performance, in terms of time they take to pay out claims, number of claims they reject, growth in number of clients and growth in premiums, will also be examined.

The standards are currently being fine-tuned by a technical working group composed of the IC, National Credit Council, Securities and Exchange Commission, Philippine Life Insurance Association, Inc. and the Philippine Insurers and Reinsurers Association.

These will be transmitted next month to a steering committee, headed by Finance Undersecretary Gil S. Beltran for review.

The IC will give final approval to the standards.

The plan is to have the standards in place by January 2011 and for microinsurance providers to report to the IC how they performed against the standards by 2012.

“The Insurance Commission shall use the performance standards to identify as early as possible those entities whose financial condition is a concern and recomend appropriate remedial measures, if necessary,” a draft IC circular states.

Meanwhile, Joselito A. Almario, a director at the Finance department, said a microinsurance literacy campaign is planned to start by January.

“It will run from January to June. We will go region to region to educate stakeholders, especially the poor, about microinsurance,” he said.

Modules will be provided during the regional campaign, Mr. Almario said, with stakeholders such as regulators, insurance firms, clients, and even legislators expected to learn “what they can contribute to boost the microinsurance industry in the country.” -- Prinz P. Magtulis

Microinsurance sees growth opportunities in Asia

Reuters - Wednesday, November 10

MANILA, Nov 9 - India, Indonesia and the Philippines offer the biggest
opportunities for the fledging microinsurance industry, which has a potential market of 3 billion people, industry officials said on Tuesday.

Microinsurance offers coverage for people with low incomes, including products such as life insurance, and is branching into areas such as offering farmers polices against extreme weather.

Over 140 million people, mostly in Africa and Asia, are now covered by affordable insurance premiums, and studies showed the potential market is up to 3 billion, the Munich Re Foundation and International Labour Organisation said ahead of a three-day microinsurance conference in Manila.

Craig Churchill, head of the global Microinsurance Network, said more than half of microinsurance products were focused on life and health while less than 10 percent cover farms.

"We're still at the experimental stage in offering products that could cover agriculture," he said, adding there was huge potential growth for such products, citing impacts of typhoons Ketsana and Parma in the northern Philippines in late 2009.

Those typhoons, and Typhoon Megi in October, caused deaths, flooding, landslides, and damage to crops and infrastructure.

Last month, German reinsurer Munich Re said it would launch a reinsurance project in the Philippines to cover co-operative companies against extreme weather events. [ID:nLDE69A1DM]

That will be the first microinsurance product in the country to offer farmers some protection against perennial typhoon and flooding problems. Another three groups offer non-life products.

Churchill said the Philippines, Indonesia and India offer the biggest market opportunities due to their regulatory frameworks, strong co-operative system and potential risks from extreme weather and disasters such as earthquake and volcanoes.
About 14 percent of the Philippines' 96 million people have insurance, including 2.9 million people covered by microinsurance, mostly as members of co-operatives,
Joselito Almario of the Finance Department said.

He said microinsurance had a potential Philippine market of nearly 35 million people willing to pay a premium of 20-30 pesos a week for coverage of up to 120,000 pesos in life and non-life benefits.

"It costs them just a pack of cigarettes a day," said Almario, who is also deputy executive director of the national credit council.

The government has set a maximum daily premium of 20 pesos, 5 percent of the daily minimum wage in Metro Manila, for life and health insurance products offering payouts of up to 200,000 pesos for more than a dozen insurers, including rural banks and co-operatives

Microinsurance conference today

Monday, 08 November 2010 00:00
Written by Gold Star Daily


SOME of the world's most prominent and ardent advocates of microinsurance are set to convene today as part of a global effort to extend risk cover for the poor and help popularize the practice of financial inclusion in the Philippines where the less financially endowed are often shut out of financial services available to everyone else.

Germany's Munich Re Foundation announced the three-day Manila conference earlier in Munich, Germany and in Luxemburg to boost awareness of the event in a country where fewer than one in seven Filipinos even know what an insurance policy is and what it can do to one's life.

The 6th International Microinsurance Conference will convene at the Hotel Intercontinental in Makati City where some 500 participants from all corners of the world will discuss issues and offer solutions to the challenges facing microinsurance at present. Finance Secretary Cesar V. Purisima was expected to attend the opening of the conference.

Purisima acknowledged the key role microinsurance will play in the lives of Filipinos in the coming years and that with the full implementation of the government's public-private partnership program or PPP. "Microinsurance will be at the forefront of the Philippine government's efforts to provide our low-income sector and the poor protection from risks, providing them the means to rebuild their lives when unfortunate and unforeseen events occur," he said.

The government previously bared plans to improve the country's low insurance penetration rate where only an estimated 13.92 percent of some 90 million Filipinos have insurance cover. Local insurers under the Philippine Insurers and Reinsurers, for example, vowed to help raise awareness about the benefits of insurance cover among Filipinos. pna

A version of this article appeared in print on Nov 9, 2010 Tuesday

Thursday, November 11, 2010

Insurance standards readied

Business World
Finance
Posted on 08:38 PM, November 10, 2010

REGULATORS are preparing “performance standards” for microinsurance providers to make sure their operations are sustainable and the poor, who are their clients, are protected.

At the same time, they are planning a nationwide financial literacy campaign to increase awareness among the poor about the importance of microinsurance.

Vida T. Chiong, deputy commissioner and officer-in-charge of the Insurance Commission (IC), shared with participants of the 6th International Microinsurance Conference in Makati City yesterday that the performance standards shall serve as a “guide for the commission... to determine... the capacity [of a microinsurer] to settle claims in the future.”

The standards go by the acronym “SEGURO,” for Stability, Efficiency, Governance, Understanding of the product, Risk Management and Outreach.

Microinsurance providers -- which include commercial insurers, cooperative insurance societies and mutual benefit associations -- will be evaluated based on their solvency and level of risk-based capital, among others.

Their performance, in terms of time they take to pay out claims, number of claims they reject, growth in number of clients and growth in premiums, will also be examined.

The standards are currently being fine-tuned by a technical working group composed of the IC, National Credit Council, Securities and Exchange Commission, Philippine Life Insurance Association, Inc. and the Philippine Insurers and Reinsurers Association.

These will be transmitted next month to a steering committee, headed by Finance Undersecretary Gil S. Beltran for review.

The IC will give final approval to the standards.

The plan is to have the standards in place by January 2011 and for microinsurance providers to report to the IC how they performed against the standards by 2012.

“The Insurance Commission shall use the performance standards to identify as early as possible those entities whose financial condition is a concern and recomend appropriate remedial measures, if necessary,” a draft IC circular states.

Meanwhile, Joselito A. Almario, a director at the Finance department, said a microinsurance literacy campaign is planned to start by January.

“It will run from January to June. We will go region to region to educate stakeholders, especially the poor, about microinsurance,” he said.

Modules will be provided during the regional campaign, Mr. Almario said, with stakeholders such as regulators, insurance firms, clients, and even legislators expected to learn “what they can contribute to boost the microinsurance industry in the country.” -- Prinz P. Magtulis

Monday, November 8, 2010

‘Three-in-one’ microinsurance product planned

Today’s Headlines
BusinessWorld
Posted on 10:22 PM, November 07, 2010
BY JUDY T. GULANE, Sub-Editor


REGULATORS want to introduce a "three-in-one" product to the fledgling microinsurance market, capitalizing on the Filipinos’ penchant for cheap, convenient products and to boost protection for the poor.
Tropical storm Ondoy’s damage is cited as spurring the development of the proposed ‘Buhay, Bahay at Kabuhayan’ microinsurance product. -- AFP
Tropical storm Ondoy’s damage is cited as spurring the development of the proposed ‘Buhay, Bahay at Kabuhayan’ microinsurance product. -- AFP

They are still at the stage of finalizing the product, for now dubbed "Buhay, Bahay at Kabuhayan," but already have inquired if they can start developing and marketing it.

"It’s a simple yet powerful product," said Joselito S. Almario, a director at the Finance department and deputy executive director of the National Credit Council, which the Finance department heads.

The product is designed to give P10,000 coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of P30,000. A contract is good for a year.

"It’s a composite, a three-in-one," said Mr. Almario, adding that no insurer at home or abroad is known for selling this bundle.

"If something happens to you, an accident and you die, then your beneficiaries get P10,000," he explained. "If your home or business or place of business gets damaged by flood or an earthquake, then you get P10,000."

Regulators, he said, are constantly seeking ways to provide social nets for the poor -- the slowest to recover after personal or natural calamities -- without burdening them with high premiums.

The technical group that is working on "Buhay, Bahay at Kabuhayan" still has to compute the final premiums but these shall hew to guidelines set in Insurance Memorandum Circular 1-2010 that state premiums on a daily basis must not exceed 5% of the daily minimum wage of nonagricultural workers in Metro Manila, which is currently at P404 daily.

The Philippine microinsurance industry is still in its infancy, with the National Strategy and the Regulatory Framework for Microinsurance released only in January 2010.

Yet it is fast-developing. After the IC came out with Insurance Memorandum Circular 1-2010 that defined microinsurance, the agency issued, together with the Securities and Exchange Commission and Cooperative Development Authority, another circular closing down informal insurance or insurance-like activities.

The Bangko Sentral ng Pilipinas also came out with a circular allowing rural, cooperative and thrift banks to market and sell microinsurance products within their premises.

Commercial insurers, mutual benefit associations and cooperatives are now selling microinsurance products, but in singles, not "three-in-one" as contemplated in "Buhay, Bahay at Kabuhayan."

Considered a pioneer in the field of microinsurance, the Philippines will share its experiences during the 6th Microinsurance International Conference that takes place starting tomorrow to Thursday.

Manila is this year’s host of the annual gathering.

Mario C. Valdez, general manager of the Philippine Insurers and Reinsurers Association (PIRA) that groups the country’s 80-plus non-life insurers, claimed that "several" PIRA members expressed interest in the product after it was unveiled during an October 11 association conference.

"Buhay, Bahay at Kabuhayan" will be considered a non-life product.

"They were enthusiastic about it. They said they want to develop it, as it suits their clients’ needs," Mr. Valdez said.

There is demand for this product, he claimed, with many victims of tropical storm Ondoy, which ravaged Luzon last year, regretting not having insurance against calamities.

"With this product, we hope to help the poor get back on their feet," Mr. Valdez said.

"It’s also a way for non-life insurers to expand their market," he added.

"Right now, they are competing for a small market, and the IC will require they have a P125-million capitalization by December. Microinsurance opens up a new market and provides a venue for them to make returns on their additional capitalization," Mr. Valdez said.

The technical working group, headed by the Finance department, targets to launch the final "Buhay, Bahay at Kabuhayan" policy contract before yearend.

Other members of the technical working group are the IC, PIRA, National Credit Council, Philippine Life Insurance Association, Inc. and the Actuarial Society of the Philippines.

The group enjoys technical assistance from the GTZ or German Technical Cooperation.

Tuesday, November 2, 2010

Gov’t pushing wider life insurance coverage

By Ronnel Domingo
Philippine Daily Inquirer
First Posted 21:50:00 11/01/2010

Filed Under: Insurance, Government

MANILA, Philippines—The government is now pushing efforts to expand life insurance coverage among the people.

At present, only 13.9 percent of the country’s population have insurance coverage—a disparity the government hopes to address by promoting micro-insurance as well as policies that offer low-priced premiums.

To boost this campaign, the Philippines will host the 6th International Micro-insurance Conference to be held in Manila on Nov. 9 to 11.

Over 500 delegates from around the world are expected to take part in the proceedings, said Dirk Reinhard, chairman of the conference steering committee.

According to Reinhard, most delegates recognize the importance of providing insurance services for low-income populations which, in turn, will enable a country to attain the United Nation’s Millennium Development Goals.

In a statement, Reinhard said the conference would focus on key issues, such as new distribution channels, claims-handling mechanisms, strategies for enabling the environment to develop micro-insurance, solutions for natural disasters, and insurance literacy.

“Of the many challenges the sector faces, insurance literacy is currently recognized as one of the most important hurdles to overcome,” he said. “Educating the clients on the benefits of insurance is an indispensable ingredient to the success of any micro-insurance program.”

According to Munich Re Foundation, the Germany-based organizer of the meeting, micro-insurance in the Philippines has been on the rise compared with the rest of world over the last few years.

However, Munich Re said that life insurance penetration rate in the country “is still very low.”

Even then, the group noted efforts to improve the figures, including the government’s adoption of a national strategy and regulatory framework for micro-insurance.

This policy “promotes greater access by the poor to small, affordable micro-insurance products and requires the formalization of all informal schemes of micro-insurance by 2012 to ensure that clients are adequately protected,” Munich Re said.

“The Philippine Insurers and Reinsurers Association recently pledged to inform some 27 million Filipinos on the merits of securing insurance policies in support of the government’s literacy campaign,” it added.