Philippines: Multisectoral agency to draft country's first EQ insurance pool

Source: eDaily | 26 Oct 2012
The private insurance industry, government and multilateral lending agencies are teaming up to create the country's first-ever earthquake insurance pool due to the frequency of Nat CATs wreaking havoc in the country, reported the Philippine Star. The pool will cover the middle class residential and medium-sized enterprise property owners. 

The initial draft of the insurance pool is expected this December, the first structured draft by the first half of 2013. The actual implementation of the Public Private Earthquake Insurance Pool of the Philippines is expected in late 2014 or early 2015.

The project is part of the bigger integrated disaster risk management that would result in innovative risk management tools in dealing with the increasing number, intensity and frequency of natural catastrophes, such as earthquakes, tsunami, tropical cyclones, floods and droughts, in Philippines. The initiative received a boost following a US$225 million technical assistance special fund from the Asian Development Bank (ADB) in August.

Ms Madeleine Varkay, Principal Development Specialist for ADB Southeast Asia, said the increasing number of disasters called for an earlier implementation of the insurance pool. The pool will also strengthen the ability of private insurance to underwrite new policies on CAT risk and enhance their capacity to proactively manage and transfer risk to international reinsurers. It is expected to offer options for insurers to expand available scope to cover private earthquake risk.

A property valuation survey is being conducted currently, which includes model assets at risk, estimations of the scope of the market and related insurance and re-insurance premiums. Following these stages, the technical working group composed of the private and public sector representatives, will formulate the structure of the earthquake insurance pool.

Philippines improves ranking in global microfinance survey

Business World

Finance

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Posted on October 26, 2012 09:21:37 PM

By Diane Claire J. Jiao, Senior Reporter

THE PHILIPPINES maintained its leadership in microfinance as most countries ran into problems with the rapid expansion of the industry, the Economist Intelligence Unit (EIU) said.

The Philippines placed fourth out of 55 countries polled by the EIU’s “Global Microscope on the Microfinance Business Environment 2012 ” -- a jump of two spots from its sixth-place finish last year.

The country also improved its score of 64.4 out of an index of 100, up 4.8 points.

Peru topped the EIU rankings for the fifth straight year, followed by Bolivia and Pakistan.

Kenya, El Salvador and Colombia -- other mainstays in the top 10 like the Philippines -- ranked fifth, sixth and seventh, respectively.

Cambodia, meanwhile, was the only newcomer in the top 10, rising five places to eighth from 13th. Mexico and Panama tied at ninth.

At the other end of the EIU rankings, Vietnam remained at the bottom rung because of the government's monopoly of microfinance.

"The last few years have presented a series of challenges and learning opportunities for the microfinance sector. During the last few decades the microfinance industry experienced substantial growth, but eventually this resulted in market saturation, a rise of non-performing loans and multiple lending across a few key markets," the EIU said in its report.

The global financial crisis also highlighted the need for risk management, corporate governance and regulatory capacity, it explained.

The EIU rankings were created in 2007 as microfinance began to emerge as one of the key strategies for growth in developing countries.

It surveys governments, industry associations and international organizations on three areas: regulatory framework, institutional framework and stability.

The Philippines -- along with Peru -- kept its hold on the top spot in terms of regulatory framework, which assesses the legal recognition of microfinance institutions, national regulatory and supervisory capacity and policies towards deposits and market distortions. It was the fourth time the country led the regulatory rankings.

It also placed 15th in terms of institutional framework, which covers financial reporting standards and transparency, credit bureaus, pricing, dispute resolution and policies for offering microfinance through new agents and channels. It was an improvement of two slots from last year's 17th place.

The sub-category of stability, a new addition to the survey, put the Philippines at 22nd place. It analyzes to what extent political shocks have affected the microfinance sector and general country conditions.

Overall, the EIU cited the country for its business environment.

The Bangko Sentral ng Pilipinas doesn't just regulate but promotes and enables microfinance, it noted.

Government financial institutions like People's Credit and Finance Corp., Small Business Corp., Land Bank of the Philippines and Development Bank of the Philippines also provide wholesale funds for retail lenders. The private sector, for its part, is diverse, with "no one dominant institutional type."

The EIU is the business information arm of The Economist Group, publisher of The Economist magazine. The "Global Microscope on the Microfinance Business Environment 2012" is its fourth annual analysis of the microfinance business in 55 countries.

Govt has plan in place for microinsurance claims

Business Mirror

Published on Sunday, 21 October 2012 18:36

Written by Jun Vallecera / Reporter

THE government has a draft framework for resolving disputed microinsurance claims whose incidence does not as yet threaten the popularity of an P8-billion industry catering to the insuring requirements of some seven million policyholders.

The draft was presented on Friday at a consultation workshop held by proponents at the Hyatt Hotel as an initial step towards full accreditation and adoption by the Insurance Commission (IC).

Disputes between policyholders and microinsurance providers are still rare but the government, said Joselito “Itoy” Almario, director at the Department of Finance, is making sure the framework addresses the absence of dispute resolution bodies for insurance claims involving no more than P200,000.

Right now, such bodies can be found only in the cities of Cebu in the Visayas, Davao in Mindanao and in Manila, the nation’s capital.

Requiring microinsurance policyholders to elevate their claims to the regional offices of the Insurance Commission was clearly impractical and thus the need to adopt an accredited alternative dispute resolution mechanism right where the conflict arises.

The framework seeks to respond to the physical and administrative challenges to the resolution of microinsurance-related conflicts at the local levels.

Establishing ADR mechanisms for microinsurance foresees the decentralization of dispute resolution capacities by deputizing fair and capable third party mediators outside of the three regional offices of the Insurance Commission.

Thus far, the government said, five microinsurance claims have been disputed since the IC issued the mandate for the creation of the ADR in 2010.

The ADR aims to eliminate the likelihood for the conflict to reach the level of the judicial courts which entail costs on both the policyholder and the microinsurance provider.

The long and tedious legal process, plus the lack of readily accessible resolution bodies other than those found in three regional centers, may discourage microinsurance clients to pursue disputed claims with legitimate microinsurance providers.

Microinsurance policies typically cover risk claims of up to P200,000 and require premium payments of between P1 to P20 a day.

Delivery channels for now include community-based organizations, rural banks, cooperatives and non-government organizations.

Microinsurance ADR Consultations-Cebu City Oct 2, 2012

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Alternative Dispute Resolution Consultation - Batangas (Pics)

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