Monday, February 28, 2011

Insurers adapt to changing climate

BusinessWorld
Posted on February 28, 2011 10:57:18 PM
BY DIANE CLAIRE J. JIAO

AMID forecasts of a stormy summer, the insurance industry is gearing up to provide the public with better protection from typhoons and floods after the devastation wrought by Ondoy and Pepeng in 2009.

"We are more prepared than before because we’ve already gone through very strong typhoons," non-life insurer Federal Phoenix Assurance Company, Inc. President Ramon Y. Dimacali told BusinessWorld yesterday.

"It’s a common practice now for the protection from acts of God to be automatically costed into the premiums of insurance products," he explained. "Then, it is up to the consumers if they want to opt out of it."

Non-life insurance typically only provides coverage from accidents and theft for cars and fire and lightning for property. Protection from damage caused by natural disasters such as typhoons, floods and earthquakes, which are considered acts of God, is not included.

An estimated 75% of all property losses caused by typhoons Ondoy and Pepeng were uninsured for acts of God, Lacson & Lacson Insurance Brokers, Inc. managing director Salvador L. Lacson said in a text message yesterday.

Since then, awareness has spiked, Mr. Lacson said.

"For our company, all our insured have coverage for natural disasters," he said. "Brokers also make it a habit to advise the insured about the importance of acts of God coverage."

Banks have also began to require acts of God coverage for property acquired through housing and car loans, Mr. Dimacali said. Companies are also insuring their car fleets against natural catastrophes.

But this awareness may be short-lived given the additional costs, warned Mario C. Valdez, general manager of the non-life group Philippine Insurers and Reinsurers Association (PIRA).

While rates may vary among different insurers, annual premiums usually cost 1% of the value of the property. Acts of God coverage costs an additional 0.5%, he said. A car worth P1 million would effectively be charged P15,000 in premiums per year.

"Filipinos are very aware now, but after two or three years of paying premiums, they could think, ‘Forget it.’ They could think that typhoons [as strong as Ondoy] only come once every 10 years," Mr. Valdez said.

Awareness could also wane in areas which don’t experience many disasters, he added.

"It’s more economics than awareness. At 0.5% per year, it can be quite expensive," Mr. Valdez said.

Mr. Lacson said customers who approach him have also expressed the reluctance to shell out so much money. However, he said he asks them, "For every peso you save in premiums, how much do you lose in potential claims?"

Disaster-prone

According to the German Agency for International Cooperation’s (GIZ) Study on Demand of Insurance for Natural Catastrophes, the Philippines is one of the countries most prone to natural disasters. An average of 25 typhoons hit every year and Ondoy and Pepeng racked up an estimated P30 billion in overall damage.

Global reinsurance leader Munich Re also singled out Asia as the region most vulnerable to losses caused by natural catastrophes.

"Weather-related catastrophes worldwide and in Asia have tripled since 1980, and the loss potential is rising," Francis Savari, Munich Re Singapore head of client portfolio management, said in an e-mail on Friday.

According to Munich Re data, 32% of the 19,500 loss events from 1980 to 2010 happened in Asia. The region also had 51% of the 2,275,000 disaster-related fatalities during the 30-year period.

Moreover, Asia had an estimated $1.140 trillion in overall losses from natural catastrophes during the 1980-2010 period but insured losses only totalled $66.6 billion.

Major factors for the increasing losses are a rise in population, higher value concentration in extremely exposed regions and climate change, Mr. Savari said.

Reinsurance

To help insurers deal with the destruction caused by natural catastrophes, many industry players have begun seeking partnerships with reinsurance companies abroad.

Reinsurance is insurance for insurance companies, or a practice of spreading the risk to other parties.

Federal Phoenix’s Mr. Dimacali explained: "Most companies don’t usually get reinsurance. But Ondoy sunk entire warehouses, factories, and shopping malls. That is a very big pay-out, more than one insurer can absorb."

Insurance companies are now striking agreements with reinsurers abroad by paying them a portion of the premiums they receive. In return, the reinsurer helps pay for the obligation when a large claim needs to be settled.

"We’ve also began getting reinsurance for car claims, which are usually very small. But when a disaster hits, it’s not just one car that gets damaged. It could be all the cars in the Marikina and Cainta area," Mr. Dimacali said. "The industry probably paid P2 billion in car claims alone after Ondoy."

Broker Mr. Lacson added that the ability of insurers to quickly settle claims -- no matter how large -- would encourage more customers to purchase non-life insurance.

"Ondoy hit Metro Manila in September 2009. By the year-end, we were able to settle all motor claims. Also, 95% of all property claims were settled," he said.

Munich Re’s Mr. Savari did not disclose figures on the portion of their reinsurance business that comes from Philippine insurers. He admitted, though, that there was a "substantial rise in reinsurance demand and interest over the last years."

"With the rise in natural catastrophes, the higher living standards in the Philippines and the increasing capital requirements we expect this to increase further," he said.

Microinsurance

The low-income sector, meanwhile, remains an untapped market.

"They are the most vulnerable because they don’t have enough capital. Sometimes, their cars and their homes are still being paid off," Mr. Dimacali said.

Reinsurance giant Swiss Re emphasized the need for microinsurance.

"The more pressing challenge is how to protect those who are unable to purchase insurance protection for themselves, but whose lives and properties may be directly affected by natural catastrophes. The government may need to step in here," Swiss Re Vice-President Sandra Capay said in an e-mail.

Last month, the Insurance Commission approved a microinsurance product called Buhay, Bahay, Kabuhayan.

The product is designed to give P10,000 worth of coverage against death from accidents or damage to property/business from natural calamities. Consumers can buy up to three units for a total coverage of P30,000.

A Buhay, Bahay, Kabuhayan contract is good for a year.

In an earlier interview, the PIRA’s Mr. Valdez said eight non-life insurance companies had already expressed interest in offering the product this year.

GIZ and Munich Re have also partnered with the Cooperative Life Insurance and Mutual Benefit Services (CLIMBS), an umbrella organization of cooperatives, late last year to offer a natural catastrophe insurance product to 1,600 cooperatives with nearly a million members.

The product, CLIMBS Weather Protect, insures a portion of a cooperative’s loan portfolio so it remains liquid in the event borrowers, affected by natural calamities such as storms, default.

Eighty cooperatives are already set to insure their portfolios this year, CLIMBS Executive Vice-President Isagani B. Daba has said.

"With our product we strengthen the cooperative’s capacity to offer their members financial relief at that time where it is most needed," Munich Re business development manager Thomas Mahl said in an e-mail on Friday.

Friday, February 25, 2011

Manulife to sell micro insurance to rural Pinoys

Business Mirror
Wednesday, 23 February 2011 19:09
Jun Vallecera / Reporter

THE Manufacturers Life Insurance Co., which earlier partnered with local lender China Banking Corp., plans the sale of micro insurance to rural Filipinos on a scale that is not only sustainable, but commercially viable as well.

It is part of the insurer’s multiyear plan to make the Philippines the center of its microinsurance business in the region.

David Wong, senior vice president and regional executive at Manulife Financial operations within the Association of South East Asian Nations or Asean, said they are about to undertake the pilot testing of the project on the island of Mindanao down the country’s south.

Wong noted that most microinsurance programs tend to focus on urban-based middle classes no matter that in Asia some two billion of the population live below the poverty line and have no cover for the various risks they face on a daily basis.

“A large population in rural Asia has no risk cover and this sector is ignored thus far. We need to go to this segment of the population,” Wong said.

He also noted that while microinsurance programs exist in most countries in the region, only the Philippines and India took the trouble to support them with legislative measures that ensure continued viability and growth.

In the Philippines, Wong said some two to three million benefit directly from microfinance programs extended by such carriers as nongovernment organizations, mutual benefit associations and others looking out for the financial welfare of the less financially endowed.

“We are looking at this market and pilot test a program in one or two provinces in the Philippine south,” Wong said of Mindanao where the poverty incidence is relatively higher than in most parts of the country.

What Manulife learns from the project in the months ahead should be instructive as to the size and scope of the microinsurance program they have in mind, Wong explained.

He ruled out risk protection for farmer crops that some insurers are also pilot testing on Leyte island, saying they are thinking along the lines of health and wellness cover.

This means offering rural Filipinos cover for their hospital bills at premium prices that even the poor can afford to pay.

Wong was not too specific but insurance executives said earlier that an affordable health cover typically involves premium payments of around P300 a year

Thursday, February 24, 2011

Cooperatives eye insurance vs extreme weather events

BusinessWorld
Finance
Posted on February 23, 2011 09:26:43 PM
BY DIANE CLAIRE J. JIAO

EIGHTY cooperatives are eyeing insurance for their loan portfolios to protect themselves against a rash of defaults when their members are hit by natural calamities.
Insurers have come up with various products to provide protection as the number of storms that hit the country each year increases in number or severity. -- AFP
Global reinsurance leader Munich Re and the German Agency for International Cooperation (GIZ) have partnered with the Cooperative Life Insurance and Mutual Benefit Services (CLIMBS), an umbrella organization of cooperatives, late last year to offer a natural catastrophe insurance product to 1,600 cooperatives with nearly a million members.

“We are currently in the process of marketing the product to our member cooperatives,” CLIMBS Executive Vice President Isagani B. Daba said in a phone interview with BusinessWorld yesterday.

“We are still closing the deals, but we expect 80 cooperatives to avail of the product this year.”

The product, CLIMBS Weather Protect, insures a portion of a cooperative’s loan portfolio, so it remains liquid in the event its borrowers, affected by natural calamities such as storms, default on their loans.

CLIMBS will act as primary insurer, and Munich Re, the reinsurer.

“[Natural catastrophes] interrupt the cash flow of cooperatives as member-borrowers can lose their livelihood and assets in a single storm and become unable to repay their loans,” read the GIZ demand study, a copy of which was obtained by BusinessWorld.

CLIMBS Weather Protect was developed after tropical storm Ondoy and typhoon Pepeng successively hit the Philippines in 2009. The two typhoons had an estimated combined damage of P30 billion, according to the Office of Civil Defense.

Cooperatives suffered financially as the homes, properties and crops of their members were destroyed, Antonis Malagardis, program manager of GIZ Microinsurance Innovations Program for Social Security, told BusinessWorld in an interview on Friday.

The GIZ study also noted that the Philippines is hit by an average of 25 typhoons yearly. The country is also vulnerable to floods, landslides, droughts, volcanic eruptions and earthquakes.

“The amount of payout depends on the severity of the natural catastrophe,” said Mr. Malagardis, explaining the product. The severity is measured either through wind speed or rainfall.

“We developed a unique set of weather indices for each of the 1,700 municipalities of the Philippines,” he added, since the geographic profile and vulnerability to disasters differ for every area.

If a storm exceeds the weather index set for that municipality, the cooperative in that area receives a payout. If wind speed or rainfall is the highest recorded in 10 to 15 years, the insurer will pay 5% of the cooperative’s loan portfolio. If the highest in 15 to 20 years, 10%; and in 20 years, 20%.

Mr. Malagardis emphasized the need to cover cooperatives as loan institutions, but he added that individual members also stand to gain from CLIMBS Weather Protect, even though it’s the cooperatives that are directly insured.

“Currently, to offset this risk [of loan defaults], cooperatives lend money at a higher interest rate, posing an additional burden to the member-borrower, especially to low-income households,” the GIZ study explained.

Moreover, cooperatives are required to pass on the benefits of the insurance payout to their members.

“Each cooperative establishes a separate Natural Catastrophe Fund and special lending window that offer interest-free emergency loans from the fund to help afflicted members recover,” the GIZ study said.

“We are also planning to extend benefits to households directly. This can be done through cash advances, loan discounts or a rescheduling of their loan repayments,” Mr. Malagardis added.

Wednesday, February 9, 2011

Life-savings product planned

BusinessWorld
Finance
Posted on January 30, 2011 08:24:24 PM

BY DIANE CLAIRE J. JIAO

THE GOVERNMENT is developing a prototype product combining life protection and savings, in a bid to boost the nascent microinsurance market.
The Department of Finance and the National Credit Council, along with the German Agency for International Cooperation (GIZ, formerly German Technical Cooperation or GTZ) and the Asian Development Bank, have been developing prototype products for the microinsurance industry in the Philippines.

A non-life product dubbed “Buhay, Bahay at Kabuhayan” is up for approval by the Insurance Commission (IC).

“Based on our studies, low-income families want a life insurance product they can benefit from even while they are alive,” GIZ Senior Finance Adviser Dante Portula told BusinessWorld last Friday.

Life insurance products typically pay money to beneficiaries of the policyholder only upon the event of his or her critical illness or death.

“The product we are developing will act like a savings account for the poor,” Mr. Portula said. “They will open an account and deposit money.

The monthly premiums for life insurance will be deducted from this savings account.”

He added it will also allow the poor to withdraw their money at any time, especially in cases of emergency.

GIZ, which conducts the technical studies for the government’s microinsurance initiatives, designed the life-savings plan to suit the poor and their erratic wage patterns.

“One season, farmers earn a lot from a good harvest. The next season, a typhoon can hit their province,” Mr. Portula explained. “They may not always be able to pay their monthly premiums.”

The savings account will act as a stable pool of money to collect premiums from, he said.

Collecting premiums will also be made easier as insurers no longer have to nag customers to pay.

However, GIZ has yet to resolve which institutions will be responsible for managing the savings accounts.

“Will it be the Bangko Sentral ng Pilipinas? Will it be insurance companies who provide the life insurance? Or will it be microfinance institutions (MFIs), where the poor are enrolled in?” Mr. Portula asked.

If insurance companies managed these accounts, he said, the savings will have to be booked as liabilities or financial obligations in their accounting books, just like the collected premiums.

On the other hand, MFIs, which presently extend savings and microinsurance services, are worried their members will no longer tap their services since they can get both life insurance and savings accounts from insurers anyway, Mr. Portula said.

“We will fix these issues first, but we expect the life insurance prototype product to be ready by the second quarter of this year,” he said.

Prototype products serve as the guide for insurance firms, cooperatives and mutual benefit associations that want to venture into microinsurance.

The basic features and the terms of the microinsurance product are outlined, but insurers are free to tweak these in case they want to provide additional services. The pricing is not dictated, though, to give insurers room to compete with each other.

However, the prices set by insurers have to comply with the terms set by the IC for all microinsurance products.

According to the IC’s Insurance Memorandum Circular 1-2010, the amount of premiums computed on a daily basis should not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

The “Buhay, Bahay, Kabuhayan” 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.

Insurers interested in ‘three-in-one’ microinsurance

BusinessWorld
Finance
Posted on February 08, 2011 09:03:08 PM
BY DIANE CLAIRE J. JIAO

EIGHT non-life insurance companies have expressed interest in the “three-in-one” microinsurance product approved by the government last Monday.
The Philippine Insurers and Reinsurers Association (PIRA), which groups 87 non-life insurers, said this number could still rise, hailing microinsurance as the “next big step” for the insurance industry.

“We are just about to release the circular about the prototype product to our members,” Mario C. Valdez , PIRA general manager, told BusinessWorld in a phone interview yesterday.

“However, five companies have already inquired about it, while three others are looking to expand their existing microinsurance product line.”

Mr. Valdez declined to name the companies, though, as the Insurance Commission (IC) will still have to approve companies’ respective products before these can be offered in the market.

The Department of Finance and the National Credit Council, along with the German Agency for International Cooperation (GIZ) and the Asian Development Bank, have been developing prototype products in a bid to boost microinsurance in the country.

IC approved on Monday the non-life prototype product dubbed Buhay, Bahay, Kabuhayan.

The product is designed to give P10,000 worth of coverage against death from accidents or damage to property/business from natural calamities. Consumers can buy up to three units for a total coverage of P30,000. A Buhay, Bahay, Kabuhayan contract is good for a year.

“Microinsurance is the next big step for our industry. It’s such a large market that we can tap, probably worth P2 billion,” Mr. Valdez said.

The non-life microinsurance market is presently estimated at just P200 million.

He said Filipinos from the low-income sector have realized the value of insurance, especially after tropical storm Ondoy wreaked havoc in Luzon in 2009.

“We are also complementing the prototype product with financial literacy campaigns nationwide, to encourage more people to purchase insurance,” Mr. Valdez added.

While the basic terms and conditions were already set in Buhay, Bahay, Kabuhayan, the government gave room to insurers to price the premiums of the product themselves.

“If they have an efficient business model, they can afford to price the products lower. Usually, companies tie up with microfinance institutions so they can reach more people,” GIZ Senior Finance Adviser Dante Portula told BusinessWorld yesterday. “The pricing is where they will compete.”

He added that insurers could tweak the prototype and add their own features to it, as long as it complied with the terms set by IC for all microinsurance products.

According to IC’s Insurance Memorandum Circular 1-2010, the amount of premiums computed on a daily basis should not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

“Insurers have to get the approval of the Commission for their new product offerings. However, since the terms and conditions of Buhay, Bahay, Kabuhayan were already pre-approved by IC, non-life insurers can expect faster processing for their microinsurance products,” Mr. Portula said.

The next step now for donor institution GIZ is to support the PIRA members who will venture into microinsurance, he shared.

“We will help link insurers to different distributing partners, like microfinancing institutions, schools, religious organizations and pawnshops,” Mr. Portula said.

Tuesday, February 8, 2011

Amendment to Insurance Code approved

BusinessWorld
Finance
Posted on February 07, 2011 09:41:17 PM

INSURANCE CONSUMERS have to be careful on who they entrust their premium payments to, as they will be held responsible should their brokers fail to remit these payments to insurance companies.
The House banks and financial intermediaries committee yesterday approved a provision in House Bill No. 1502 seeking to amend the Insurance Code. The approved provision stated: “Payment of premiums to brokers is not considered payment of premiums to insurers.”

Brokers are financial intermediaries who find sellers of insurance products on behalf of their clients. They are different from insurance agents who represent specific insurance companies. Payments made to insurance agents are considered payments made to insurance companies.

The Insurance Code provides that “No policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid.”

The approved amendment, however, was contested by Surigao del Norte Rep. Guillermo A. Romarate, Jr. who pointed out this could expose the public to risk.

“They might expect protection, not knowing their payments to their brokers were not received by the insurer,” he said during the hearing yesterday.

But industry players did not want to be held liable for erring brokers either.

“We cannot extend coverage when we have not received a single centavo,” said Fortunato D. Peralta, Philippine Insurers and Reinsurers Association (PIRA) deputy general manager.

He explained that brokers were representatives of insurance clients, unlike agents who have contractual obligations to insurers.

“They are ‘shopping boys’ for the assured, based on industry parlance,” Mr. Peralta explained. “They are not representatives of the insurers.

That’s why they don’t even get commissions, like agents.”

PIRA board member Victoria B. Roman also revealed there was a scheme in the past wherein some brokers allegedly made money by pocketing their clients’ premium payments.

Industry practice usually allows brokers a credit extension or a grace period of 90 days after a policy is issued, before payments have to be made.

“Clients already have an insurance policy in those 90 days. But there are some brokers who would cancel the policy on the 89th day, and then move to another insurance company, and then start all over again,” Mario C. Valdez, PIRA general manager told BusinessWorld in a phone interview yesterday.

Mr. Valdez added that a client could be moved to different insurance companies and effectively earn coverage for an entire year, without premiums actually being paid to an insurer.

Mr. Romarate, however, insisted insurance companies were in the best position to control brokers.

“But if we had a measure of control over them through a contract, they wouldn’t be brokers anymore. They would be agents,” PIRA’s Mr. Peralta said.

So, to strike a balance between the interests of the insurers and the protection of consumers, the House banks and financial intermediaries committee resolved that the provision would instead read, “Payment of premiums to brokers, who are not agents of insurance companies, is not considered payment of premiums to insurers.”

Industry players suggested several measures to help the insuring public protect their premium payments.

“Deal with brokers you know and trust,” PIRA’s Mr. Valdez said. “Always ask for the original receipt of the insurance company, not just the acknowledgment receipt of the broker.”

Consumers often think paying premiums is a nuisance, he added. Once they make their payments, they no longer bother to get proof it has been remitted to insurance companies.

Philippine Life Insurance Association representative Jose L. Cuisia, Jr. also urged the Insurance Commission to regulate brokers, since they are the ones who give licenses to them.

Mr. Valdez was quick to clarify, though, that the scam of pocketing premiums was limited to a few brokers. -- Diane Claire J. Jiao

Tuesday, February 1, 2011

Insurance Commission OK’s microinsurance standards

BusinessWorld
Finance
Posted on January 31, 2011 09:26:37 PM

THE INSURANCE Commission (IC) has approved the performance standards that will govern the microinsurance industry, an official said yesterday.
The performance standards dictate how insurance companies, cooperative insurance societies and mutual benefit associations providing microinsurance products and services will be evaluated and monitored by IC.

“The performance standards are crucial because they will ensure the financial stability of microinsurance providers and, in turn, the protection of the consumers,” Deputy Insurance Commissioner Vida T. Chiong said in a phone interview with BusinessWorld.

She said the IC is readying a draft circular for Insurance Commissioner Emmanuel F. Dooc’s signature.

Insurers will be evaluated and monitored according to standards or indicators grouped under the acronym SEGURO, which stands for: solvency and stability; efficiency; governance; understanding of the product by the client; risk-based capital; and outreach.

According to the draft circular obtained by BusinessWorld, the risk-based capital, solvency and stability indicators will be applied to insurers’ total operations, while the others will be applied only to their microinsurance operations.

Solvency and stability measure the soundness and strength of the microinsurance provider. Insurers must have the capacity to cover all their liabilities or financial obligations, including the claims of clients, in the short- and long-term.

Efficiency, on the other hand, should show how premiums cover not only the benefits promised to the insured, but also operational and transactional expenses like commissions and taxes.

Efficiency also determines how fast clients are paid after the submission of the complete, required set of claims documents.

“A short time to pay-out indicates good service and good value of insurance to the client,” the document read.

The performance standards set a limit of 10 working days for pay-outs.

Moreover, IC monitors the risk-based capital of microinsurance providers. This is the minimum amount of capital needed to support the degree of risks insurers take on in their operations and investments.

In addition to studying the performance of individual insurers, several standards also measure the growth and development of the microinsurance industry as a whole.

One indicator is based on clients’ understanding of the value of microinsurance products.

The renewal ratio compares the number of in-force policies and terminated policies. The number of claims filed by clients that are rejected by insurers can also indicate how well the insured understand the product.

Meanwhile, the outreach indicator determines the extent of the microinsurance business. This is measured by the growth in the number of clients and the growth in collected premiums.

Lastly, the governance indicator determines if the conduct of business complies with the principles of good governance. Insurance providers have to be transparent and educate their clients about the responsibilities of both the insurer and the insured.

“Our higher goal is to increase the penetration of microinsurance in the country and to help our less privileged Filipinos,” Ms. Chiong said.

“It is also the responsibility of microinsurance entities to make sure the industry grows.”

She urged insurers to participate in IC’s nationwide campaign for financial literacy, to encourage more people to purchase microinsurance products.

The performance standards will be used to evaluate the operations of microinsurance providers beginning this year. The standards will be applied to annual statements submitted by insurers in 2012. -- Diane Claire J. Jiao

National gov’t, Quezon City partner on microinsurance

BusinessWorld
Finance
Posted on January 24, 2011 09:46:54 PM

THE DEPARTMENT of Finance (DoF) and the Insurance Commission (IC) are partnering up with the local government of Quezon City to bring microinsurance to barangays.
The nationaL government’s partnership with the Quezon City government to bring microinsurance to barangays, whose residents are most vulnerable to calamities, serves as a test case for the initiative. -- AFP

The Quezon City government, along with DoF, IC, the Philippine Information Agency and insurance associations, will form a technical working group to develop training modules for barangay leaders to teach microinsurance to their constituents.

“The educational materials will include the basics of insurance, the responsibilities of insurers and the benefits entitled to clients,” National Credit Council (NCC) Deputy Executive Director Joselito S. Almario told BusinessWorld in a phone interview last Friday.

The NCC is headed by the DoF.

Mr. Almario, also a director at the DoF, also stressed the importance of bringing down the concept of risk protection to the masses, saying, “Microinsurance contracts have to be made simple and written in Filipino.”

The partnership with Quezon City is the first stage of a bigger campaign by DoF and IC to bring microinsurance to all barangays in the country.

“We will work with all local government units (LGU). We want to have information bureaus in each locality to link Filipinos to microinsurance providers,” Mr. Almario said.

The nationwide financial literacy campaign will be launched in June of next year. The partnership with Quezon City will serve as a pilot run, for the technical working group to test the effectivity of the educational materials and training modules.

Mr. Almario explained that Quezon City was chosen as a pilot city because of its population of informal settlers. According to the Quezon City government’s website, there are more than 200,000 informal settlers in the city, the highest in Metro Manila.

“Since poor households are most vulnerable to risks... such as death, illness or injury, accidents, and natural or man-made calamities, there is a vital need to provide the low-income sector with access to affordable financial protection,” IC said in a statement.

Mr. Almario also said Quezon City’s existing poverty alleviation program, Sagip Buhay, was the perfect vehicle for the microinsurance campaign.

“Several microfinance institutions (MFI) are already tied up with the Quezon City government for Sagip Buhay. Microinsurance providers, in turn, can link up with MFIs to deliver their products to the poor,” he said.

Mr. Almario said he hoped to build their own version of private-public partnerships with insurers and LGUs working together to make insurance more accessible.

“When we were hit by calamities last year, poor families could only rely on LGUs for assistance,” he explained.

“But LGUs don’t always have enough resources to attend to all their constituents and rebuild infrastructure at the same time. If insurers can provide coverage for the people, LGUs can focus on reconstruction efforts.”

The partnership with the Quezon City government will officially kick-off on January 31.

DoF and IC will also be also announcing the approved performance standards for the microinsurance industry on the same day.

“The performance standards will evaluate the strength and stability of microinsurance providers,” Mr. Almario said.

There are currently 25 microinsurance products approved by IC. The performance standards will be applied in the evaluation of their operations this year.

“Once the microinsurance standards are approved, we will train IC staff so they can evaluate the insurers’ annual reports according to the performance standards,” Mr. Almario said. -- Diane Claire J. Jiao