Microinsurance sales surge as poor see need for protection

Business World
Finance
Posted on January 27, 2012 08:11:34 PM

A TOTAL of 3.5 million microinsurance policies were sold last year after the government and the private sector began promoting the financial protection products for the poor.
"From January up to December 15, 2011, about 3.5 million policies were sold," said National Credit Council Deputy Executive Director Joselito S. Almario during a roundtable discussion with the media on Friday.

"And this number did not even indicate how many people were covered, since some policies were group insurance policies. They could be covering 100 or 200 people," he added.

No comparable data for 2010 is available.

Mr. Almario said the figure could easily rise to 5 million by the end of this year, as the Insurance Commission (IC) and the German Agency for International Cooperation (GIZ) continue their financial literacy campaign until August. The campaign was launched in February 2011.

"That target is attainable," he added, especially since insurers will be required to report progress on their microinsurance efforts to the IC this year.

Microinsurance is one of the key priorities of the IC and the Aquino administration. Insurance Memorandum Circular 1-2010, released in January 2010, set the guidelines for the nascent microinsurance industry. 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. Also, the coverage of microinsurance policies should not be more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

There are currently eight microinsurance providers from the nonlife industry, seven from the life industry and 15 from mutual benefit associations, Insurance Commissioner Emmanuel F. Dooc said.

"We have diverse microinsurance products. For life we have, among others, the usual basic life and credit life insurance, disability benefits, medical expenses reimbursement and micro-investment products," he pointed out.

Nonlife insurers offer variants of the prototype "Buhay, Bahay, Kabuhayan" designed by GIZ and approved by IC. The product is designed to give a 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.

Despite the progress, Mr. Dooc expressed hope other insurance companies will also offer insurance products for the poor.

In response, George C. Mina, the general manager of the industry group Philippine Life Insurance Association, Inc., said during the roundtable that a number of life insurers are keen to offer microinsurance.

"Nine companies have already gotten approval to offer microinsurance this year. Five are waiting for approval and six are interested," Mr. Mina said.