Friday, July 27, 2012

Micro-insurance program tailored to needs of the poor - DOF director


Philippine Information Agency
By Susan C. Aro
Friday 27th of July 2012

BAGUIO CITY, July 27 (PIA) - - The Department of Finance and its partners are into massive advocacy campaign on micro-insurance program which gives access and assurance to the poor sector of society.

Finance Director Joselito Almario, who was one of the lecturers on the Advocacy Seminar on Micro-insurance held in this city last week, said that government together with private sector insurance providers and micro-finance institutions had come up with a micro-insurance program tailored-fit to the needs of the poor and those not formally enrolled in mandated insurance systems.

Almario, who is also deputy director of the National Credit Council, explained that micro-insurance are insurance, insurance-like, and other similar business activity which provide specific products and services that meet the needs of the poor for risk protection and relief against distress, disaster, or any untoward incidents.

The amount of premium or contribution per micro-insurance policy ranges from P1 to P20 per day.

The Asian Development Bank and the German International Cooperation provide technical assistance to the micro-insurance program.

Almario assured that micro-insurance packages are supervised by the Insurance Commission and covered by stringent rules and regulations to be adhered by providers which guarantee benefits to be availed by the poor in the event something happens to them.

He recounted how through the years, micro-finance originally dubbed as micro-credit has evolved and now covers the micro-insurance program with government giving recognition on the need to uplift the standard of living of the poor through insurance access.

There is also a wrong notion that the poor cannot pay. Past experiences prove that they can pay in informal credit institutions, according to Almario.

Insurance, unlike credit, savings, payment transfers, and remittances was the only major financial product not accessible to micro, small, and medium entrepreneurs (MSMEs), Almario noted.

He said there is poor insurance penetration among marginalized or the poor sector due to absence of policy and regulatory framework and inappropriate products as these are unaffordable, not tailored fit with complex and complicated contracts and cumbersome requirements.

There is also lack of awareness because people think these are just additional financial burdens and with no immediate benefits and the belief on the a "leave it to destiny mentality."

But through product innovation, micro-insurance is already designed with affordable premium, simpler, and easy-to-understand contract and tailored fit to the needs of the poor, Almario pointed out.

If micro-credit provides the unserved and underserved their present financial needs, mico-insurance will provide for the future unforeseen and unexpected financial needs of the poor, he declared.

Almario said that the Economist Intelligence Unit gave recognition to the micro-finance program of government in 2010.

It was ranked first in regulatory framework, second among 54 countries in overall microfinance business environment, 4th in institutional development and 18th in investment climate. It has maintained its top rank in Regulatory Framework in 2011.

Meantime, Baguio Mayor Mauricio Domogan said there's need to screen insurance companies involved, and strengthen their capability to improve public perception.

He believes the program is important in enhancing the capability of insurance providers to be able to entice those who would like to avail of the product. (JDP/SCA-PIA CAR, Baguio) 

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