Micro insurance can peak at P20B

Business Mirror

TUESDAY, 09 NOVEMBER 2010 21:13 JUN VALLECERA / REPORTER

THE domestic micro-insurance sector at this time is only about a P200-million area in risk coverage, but the group of insurers and reinsurers sees a huge potential, estimating that premium payments of P20 billion a year is a reasonable expectation within a few years.

Philippine Insurers and Reinsurers Association (Pira) chairman Mitch F. Rellosa made the projection at the opening on Tuesday of the three-day 6th International Micro Insurance Conference summit aimed at identifying industry challenges and offering possible solutions.

Key figures in micro insurance at the global level acknowledged the topnotch performance of the Philippines in this area, but local industry leaders acknowledged that the country’s insurance-penetration rate at less than 14 percent of the population is one of the lowest in the region.

Nevertheless, Rellosa argued that while some 40 million of the estimated 92 million Filipinos can hardly afford to pay the price of a risk cover, the market for micro insurance “is without doubt very promising. . . .There is even an estimate that the micro-insurance market for the Philippines alone is worth at least P20 billion a year. That’s a huge market if you ask me.”

Joselito S. Almario, deputy executive director of the National Credit Council and Finance department assistant secretary, pointed out there already are more or less 7 million Filipino micro-insurance clients, each with a potential to recruit five more.

At the press meeting, Almario said the largest domestic challenges are overcoming the insurance “literacy black hole”
that holds back the advance of microrisk coverage, the relative incapacity of quite a number of Filipinos to pay the cost of a risk cover, and the attitude that such cover is a nonessential and that they would rather get a mobile phone and other gadgets.  

On this issue, Craig Churchill of the International Labor Office said one also has to consider the demand side of the equation and tailor-fit a micro-insurance product that perfectly matches the requirements of poor people not just in the Philippines but everywhere else.

Antonio Malagardis, program director of the micro-insurance project in the Philippines under the auspices of Germany’s Gesellschaft fur Technische Zusammenarbeit, or GTZ, looks forward to seeing the country excel in its pursuit of a micro-insurance program and become its premier example.

He said the Philippines is considered the third most active and successful disciple of micro insurance, no matter that it still has a long way to go to really get the sector moving at its potential stride.  

Thomas Losterm, chairman of the Munich Re Foundation, which helps underwrite government’s micro-insurance programs, noted that the Philippines has an “almost perfect environment for the development of micro insurance.”

Gov’t not keen on insurance subsidy

Philippine Daily Inquirer

2:01 am | Monday, September 17th, 2012

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The government is not keen on subsidizing insurance premiums for low-income Filipinos or giving perks to insurers even with a still much-needed push for an emerging micro-insurance market.

Finance Undersecretary Gil S. Beltran said in an interview that the government’s thrust was to encourage greater participation from commercial insurance sellers, mutual benefit associations and other private-sector entities.

“Right now we are not looking at tax breaks for insurers and we want to limit subsidies to the conditional cash transfer program,” Beltran said.

He said that while micro-insurance was expected to help the Philippines meet its millennium development goals, particularly in reducing the number of Filipinos living below the poverty line, the best way to improve access to this service was through a greater role for the private sector.

“We want this to be market-driven, with the private sector providing the supply based on demand,” Beltran said.

According to Reynaldo Vergara, chief of the Insurance Commission’s actuarial division, there were now some 7.8 million Filipinos covered by micro-insurance. He clarified that the number included the policyholder’s dependents.

This was more than double the 3.1 million individuals covered before a multisectoral drive to promote micro-insurance made headway in 2008.

“Micro-insurance growth is forthcoming as insurers become more familiar with the low-income market, and the market becomes more comfortable with them,” Vergara said.—Ronnel W. Domingo

National Conference on Microinsurance Photos

Held at Hotel Sofitel, 12 September 2012, with the theme "Insuring the Future, Empowering the People".
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Microinsurance clients surge

BusinessWorld

Finance

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Posted on September 12, 2012 09:50:11 PM

BY DIANE CLAIRE J. JIAO, Senior Reporter

AN ESTIMATED 7.8 million Filipinos are now covered by microinsurance, more than double the number five years ago, the Insurance Commission (IC) yesterday said.

The IC bared a list of industry milestones as it concluded yesterday the Developing Microinsurance Project, a technical assistance program of the Asian Development Bank (ADB)-Japan Fund for Poverty Reduction that ran from 2008 to 2012.

Only 3.1 million Filipinos were protected by microinsurance before 2008, IC Chief Insurance Specialist Reynaldo M. Vergara said during the National Conference on Microinsurance yesterday.

The number has grown sharply to 7.8 million this year, he said, due to the concerted effort of the government, development partners and the private sector to develop microinsurance, low-premium insurance targeted at low-income individuals.

Moreover, prior to 2008, microinsurance products were only offered as an optional benefit for the credit and savings programs of microfinance institutions, he noted.

Now, there are 80 microinsurance products approved by the IC -- 54 life and 26 non-life.

The uptake of the private sector has also been immediate, he said. There are now 17 mutual benefit associations and 28 insurance companies -- 16 life and 12 non-life -- licensed to offer microinsurance products from the “very few” seen before.

There are also 116 licensed microinsurance agents to date, 26 of which are rural banks and 90 are individuals.

Since 2008, with the help of technical assistance from the ADB, Japan and the German Agency for International Cooperation (GIZ), the government has been able to draft a national microinsurance strategy, a comprehensive regulatory framework and a roadmap to financial literacy.

“As a result, the Philippines is now the pioneer and the source of concrete best practices in the world when it comes to microinsurance,” Mr. Vergara said.

“Many countries have microinsurance products and providers but no foundation, which makes it difficult to develop the industry,” he explained.

Despite these early gains, stakeholders pointed out in the conference that there are 23 million Filipinos below the poverty line, and they need to be targeted for microinsurance.

“They remain susceptible to unpredictable incidents such as unemployment, accidents, illnesses and natural disasters. This is where microinsurance could enter as aid in ensuring that inclusive growth penetrates even the bottom layer of the society,” Takahiro Etchu, financial attache of the embassy of Japan, said.

Inclusive growth is growth that reaches the poorest sectors of society.

Kunio Senga, director-general of the ADB Southeast Asia department, added: “Under uncertainty of another global crisis, financial inclusion will enable even poor people to access a wide range of financial services, including credit, savings, insurance... integral to sustain and realize inclusive growth.”

In order to expand microinsurance coverage, GIZ program manager Antonis Malagardis called for the improvement of distribution channels so more people can be reached at less cost.

“Well-developed distribution channels are crucial in bringing microinsurance... to the doorsteps of the low-income people. It will not only make enrollment more efficient for insurance providers but more importantly, it makes the servicing of claims faster,” Mr. Malagardis said.

Some of the conduits that have been eyed are schools, pharmacies and utilities, he explained. Relationships with local communities must also be strengthened so they can be convinced to participate in microinsurance.

Finance Undersecretary Gil S. Beltran also revealed the government is considering imposing a mandatory allocation for microinsurance for insurance companies, similar to the case of India where 10% of premiums must be from microinsurance policies.

This will be similar to the Agri-Agra Reform Credit Act of 2009 which requires banks to set aside at least 25% of their total credit resources for lending to the agriculture and agrarian reform sectors.

Other than this possible quota, the government is not keen to offer subsidies or tax incentives to encourage microinsurance providers, Mr. Beltran said.

“These perks are not efficient. Microinsurance must be mainly private sector-led,” he said.

Microinsurance coverage surges 95% year-on-year

By: Likha Cuevas-Miel, InterAksyon.com

September 13, 2012 8:38 AM

 

 

MANILA - About 7.8 million Filipinos, including dependents, are now covered by microinsurance, the government announced on Thursday.InterAksyon.com
The online news portal of TV5

During a national conference, Reynaldo Vergara, actuarial division chief at the Insurance Commission, said this level of coverage has expended from 4 million last year due to increased awareness and interest.

Before 2008, microinsurance products sold in the market were mostly credit life, except for those sold by mutual benefit associations. Only six licensed microisurance MBAs and "very few" commercial insurance companies were offering these kinds of products back then.

But now, the industry offers 80 microinsurance products, including 54 life and 26 non-life. Seventeen licensed microinsurance MBAs and 28 insurance firms (16 life and 12 non-life) are selling these insurance products.

Vergara, however, said the industry must aim for coverage of 23 million Filipinos who are living below the Asian poverty line. 

The low-income households can now have easier access to these financial products since the cost of selling and paying for microinsurance - where policy holders pay small premiums in many transactions - can be reduced by using mobile banking, e-payment or paperless policies.

Vergara said the Philippines is pushing for more private sector participation and the government's role would be on establishing the enabling policy and regulatory environment. 

Antonis Malagardis, GIZ Microinsurance innovation program manager, said the Philippines has one of the most advanced regulatory frameworks in the world. 

The German development organization has been working with the Philippine government towards the development of the microinsurance industry since 2007. GIZ has helped design microinsurance products that are affordable, simple  and accessible to low-income households.

Malagardis said the Philippine government must now revise and draft new regulations in agroinsurance, which has been stagnating under the current Philippine Crop Insurance Corp. set-up.

For the farms, the ideal would be an area-based yield insurance that would base its actuarial computation on data gathered in the last 5 years. The coverage would be P10,000 per hectare and the premium would only be at 4 percent. 

The government and the private sector are in discussions on which of them would take care of marketing the product.

Industry sources said there are also proposals to overhaul PCIC and just make it a regulatory entity so that private sectors can come in and offer products that are responsive to the needs of farmers. 

Another option is to make the PCIC a national reinsurance body for agro-microinsurance.

Ayala group's mobile banking arm enlists 200,000 clients

By: Joseph Villanueva, InterAksyon.com

September 13, 2012 3:42 PM

 

 

MANILA - (UPDATED 7:33 p.m.) The Philippines' first mobile phone-enabled savings bank has grown its clientele to 200,000, its chief executive said on Thursday.InterAksyon.com
The online news portal of TV5

In a press briefing on Thursday, Tessie Tan, president of BPI Globe BanKO, said the lender has enrolled 1,500 new deposit accounts every day since the start of the year.

She said BanKO is catering to the financial requirements of the unbanked, or those intimidated by the formalities of regular lenders. BPI and Globe Telecom each own 40 percent of BanKO, with Ayala Corp holding the remaining 20 percent.

“Our biggest hurdle is client education. It is often difficult to explain the various products,” Tan said.

She said the lender aims to tap a larger segment of Filipinos by harnessing the popularity of mobile phones.

Nearly 9 out of 10 Filipinos own a mobile phone. In contrast, only 2 out of every 10 households have a bank account, with the bulk of account holders classified as payroll accounts, according to the Bangko Sentral ng Pilipinas.

“This inclusive approach brings closer to Filipinos, making BanKO the Filipino’s partner to a better, more secure and rewarding life. Through BanKO’s affordable banking services, Filipinos gain financial empowerment and an opportunity to build their savings,” Tan said.

She said mobile banking can wean many Filipinos away from informal savings methods, such as literally keeping cash at home or saving in a cooperative or paluwagan.

To tap into the unbanked, BanKO has partnered with a growing number of retail establishments, which act as the lender's cash-in and cash-out centers. They include Tambunting pawnshops, Prime Asis, Santolan, CVM and Jaro branches, Generika drugstores, Czarina foreign exchange, gasoline stations, internet cafes, loading stations, convenience stores, among others.

These partnerships enable BanKO to serve micro entrepreneurs, homeowners and farmers, Tan said.