Business World
Finance
Posted on April 25, 2011 11:51:19 PM
A FIFTH of the population could be insured by the end of the year as insurers gear up to answer a pent-up demand for protection among the country’s poor.
“Microinsurance is getting a lot of attention. Everybody is interested.”
IC Chief Insurance Specialist Reynaldo M. Vergara told BusinessWorld in a phone interview last Wednesday.
“We could have 20% of the population insured by the end of 2011.”
According to the latest IC data, only 13.90% of the population was insured in 2009. The insurance penetration rate -- total premiums as percentage of gross domestic product -- was a mere 1.02% that year.
The microinsurance market is growing because there are small, medium and large providers of the low-cost insurance products now, Mr. Vergara explained.
Four insurers -- Pioneer Life, Inc., Philippine Prudential Life Insurance Company, Inc., Asian Life & General Assurance Corp. and Manila Bankers Life Insurance Corp. -- as well as 12 mutual benefit associations (MBAs) are just some of the providers that have submitted microinsurance products for the IC’s approval, he said.
“Manulife (Manufacturers Life Insurance Co.) and Philam Life (Philippine American Life and General Insurance Co.) have also expressed interest and have made courtesy calls to us to inquire about microinsurance,” Mr. Vergara added.
The government’s push for microinsurance -- designed to protect the poor who are most vulnerable to personal or natural catastrophes -- began with the release of the National Strategy and the Regulatory Framework for Microinsurance in January 2010.
The IC then came out with Insurance Memorandum Circular 1-2010 that defined microinsurance. Together with the Securities and Exchange Commission and the Cooperative Development Authority, it issued 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.
In January, the IC approved the performance standards governing the microinsurance industry.
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.
The IC and the Department of Finance last week wrapped up training for IC personnel on how to monitor the performance of microinsurance providers.
“We need to train the regulator because it is the first time we are using these performance standards. But our experience in monitoring insurance products will help us,” Mr. Vergara said.
The training of the IC will then be followed by training for the life and nonlife insurers, as well as MBAs.
The performance standards will be applied to insurers’ 2011 performance, as reflected in their 2012 annual reports.
Mr. Vergara added that as training is being conducted, the nationwide financial literacy campaign to bring insurance education to barangays would be rolled-out.
The campaign seeks to teach low-income Filipinos the basics of insurance, the responsibilities of insurers and the benefits entitled to clients.
Earlier, the IC also approved a prototype product for nonlife microinsurance 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.
For life insurance, on the other hand, the government is already developing a prototype product that would combine life protection and savings for clients.
With all the preparations being completed to promote the microinsurance industry, Mr. Vergara said he was optimistic a significant expansion would be created. -- Diane Claire J. Jiao
