Yolanda hits MFI clients hard

BusinessWorld
Finance
Posted on December 03, 2013 09:29:23 PM


MORE THAN a third of microfinance clients are estimated to have been affected by typhoon Yolanda (international name: Haiyan), which battered central Philippines last month, data from the Bangko Sentral ng Pilipinas (BSP) showed.

 “For the areas of Samar, Leyte, Panay Islands, Mindoro, Negros and Northern Cebu, the 10 largest microfinance NGOs (non-government organization) in these areas estimated that about 392,000 of their clients were affected by typhoon Yolanda,” Pia Roman-Tayag, BSP head for financial inclusion, said in a speech at the 2013 Citi Microentrepreneurship Awards (CMA) yesterday.

She added that the estimates still lack reports from two big microfinance institutions (MFI) that are still in the process of assessing the damage caused by the typhoon, said to be one of the world’s worst to make landfall.

There are 1 million microfinance clients in the country with loans amounting to P8 billion in the first semester, according to BSP data.

Microfinance savings reached P8.9 billion as of June, higher than the P8.22 billion posted in the same period last year.

Ms. Roman-Tayag said majority of the 10 banks with operations in Leyte and Samar have resumed their operations, but those with limited access to power have cut their operating hours.

“The MFIs have been very quick to respond to the needs of their clients, providing support to those who have lost their homes to even counselling to those affected by the typhoon,” she cited.

“Some of the MFIs and banks used their other branches to service clients in nearby areas. Others have partnered with financial institutions who were able to resume operations earlier,” she added.

Moving forward, Ms. Roman-Tayag said MFIs are already thinking of new offerings to meet the needs of their market in the aftermath of typhoon Yolanda.

FASTER CLAIMS RELEASE

Meanwhile, the Insurance Commission (IC) has launched a program to expedite the processing and release of claims for typhoon survivors.

The Department of Finance said in a statement yesterday that the IC, together with industry players, has unveiled the “Agarang Proseso, Benepisyo ay Sigurado” program to provide faster insurance relief to those affected by the disaster in the Visayas.

Under the program, insurers will establish on-site action centers in the affected areas for policyholders to file their claims.

Life insurer CLIMBS General Life and Insurance Cooperative already put up claims centers in the cities of Tacloban, Ormoc and Cebu. Two more will be set up in Tacloban -- which bore the brunt of the storm -- on Dec. 8 and 13.

Non-life insurers, meanwhile, will deploy personnel to strategic areas in the Visayas this week to further speed up the processing and release of claims.

As of yesterday, typhoon Yolanda has left 5,680 individuals dead, 26,233 injured and more than 11.2 million affected.

The cost of damage in agriculture and infrastructure was pegged at P34.367 billion, and nearly 1.2 million houses have been destroyed, government data showed.

Total insured losses have yet to be determined, Insurance Commissioner Emmanuel F. Dooc earlier said but he warned: “Based on the initial reports, we are quite certain that losses will be very substantial.”

According to the IC, microinsurers have already released P85.132 million to insured fisherfolk, farmers, vendors and members of the marginalized sector in the cities of Tacloban and Ormoc, as well as other affected areas in the Visayas.

Broken down, releases for non-life claims reached P83.641 million, while death claims amounted to P811,000 and and relief assistance, P680,000.

Microinsurers have also approved another P110 million worth of claims to be released to over 19,000 claimants.

Moreover, the IC has requested insurers to “process and release payments to the affected insuring public without the necessity of an actual claim filed before them.”

It is also considering the possibility of requiring insurance providers to release claims even without the traditional documentary proof and notices of loss.

Satellite imaging and crisis mapping could be used as the basis for the payment of property insurance proceeds, the regulator said. -- Ann Rozainne R. Gregorio and Diana Jean B. Evite

Philippines has highest microinsurance coverage ratio in Asia/Oceania

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More Pinoys need access to affordable insurance coverage

Sunstar Cebu
By Jeandie O. Galolo
Saturday, November 30, 2013


WHILE only a small percentage of Filipinos has availed of insurance due to high premium payments, the take-up is expected to increase as financial institutions and insurance providers offer micro-insurance.

In a seminar organized by the Department of Finance- National Credit Council and the Insurance Commission (IC) in Cebu last Wednesday, IC Deputy Commissioner Ferdinand George Florendo said millions of poor Filipinos will be encouraged to avail themselves of micro-insurance.

This will grant them protection for P35 per day, or not more than 7.5 percent of the current minimum wage.

Micro-insurance offers protection against death, accidents, illnesses, fires, calamities and other contingent events.

Although micro-insurance was introduced in the country in 2006, Florendo said there are still a lot of Filipinos who have not insured themselves.

Out Of the 25 million Filipinos identified as poor, only 2.9 million of them have some kind of risk protection or are covered by insurance products from informal insurance schemes. The low number is due to the lack of awareness of insurance and low financial literacy level among the low-income sector.

Florendo said that with a number of institutions like insurance companies, mutual benefit associations and cooperatives around the country offering micro-insurance, it is expected that more Filipinos will insure themselves.

More than 100,000 residents

DOF-NCC Director Joselito Almario said there are a total of 54 institutions in the country that offer 84 types of micro-insurance policies.

One of the insurance providers that offer micro-insurance is the Climbs and General Insurance Cooperative that offer both life and non-life protection.

Through its non-life division general manager Sanie Dosdos, who also attended the seminar last Wednesday, Climbs distributed its calamity assistance benefits to over 100,000 residents in Region 8 a few days after typhoon Yolanda wrecked their properties.

P100M projected

Dosdos said the claim is at P4,000 per policyholder. However, instead of handing them the cash, Climbs partnered with a hardware based in Ormoc City to provide the affected policyholders P4,000 worth of housing materials to help them in rebuilding their houses.

An estimated total of P100 million will be distributed after all calamity assistance benefits are claimed.

For the life insurance policyholders, Dosdos said they have not yet distributed the claims because of the difficulties in identifying the dead. He said an average of P100,000 can be claimed per policyholder, but the amount still depends on the amount of loans they availed of from partner cooperatives.

Climbs is a 42-year-old insurance provider with more than 2,000 partner-cooperatives nationwide.

“We have been offering micro-insurance ever since but we call them grassroots insurance,” said Dosdos.

Micro-insurance, like micro-finance, is considered an important contributor to the national poverty alleviation strategy.

“Micro-finance institutions are there to provide for their (the poor’s) current needs, to help them get out of poverty, but if something happens to them, they’re back to being poor,” said Florendo.

Micro-insurance benefits are pegged at P5,000 to P20,000.

Farmers, fishermen and vendors account for a big share of the micro-insurance market.

Florendo added that other countries look up to the Philippines for its micro-insurance framework, like the National Strategy for Micro-insurance and the Regulatory Framework for Micro-insurance launched in 2010.

Mobile banking without a phone: Here comes the bank van

By Betsy Nolan, Global Envision / November 11, 2013
The Christian Science Monitor
Weekly Digital Edition

In Uganda, Rwanda, and the Philippines mobile banking vans reach out to the rural poor as an alternative to cell phone banking schemes.

A travelling bank bus makes a call on customers in the village of Maderuelo in central Spain, serving a remote area with no branch bank. Despite the growing popularity of banking by mobile phone, mobile bank vans are proving popular and useful in several countries.

Including the rural poor in formal financial systems can be difficult because of the high cost of traditional banking models, which include brick-and-mortar branches. Although developments in mobile phone banking are on the rise, some banks are trying a less high-tech kind of mobile bank – one on wheels.

When the poor have no access to formal banking institutions, they instead resort to hiding their money at home, which can make it hard to keep safe and perhaps even harder to save. The rural poor often encounter more risk in their day-to-day lives, and individuals who have money on hand may be expected to help with the more frequent family emergencies inherent with increased risk.

With a bank account, money is out of reach and account holders can save up for future expenses such as education, fertilizer, and medical care.

So with the rise of tech-driven banking in developing nations, why is this rubber-to-the-road method of reaching customers gaining traction? In Uganda, many of the rural unbanked still prefer the physical presence of a banker, even though they have access to the technology for mobile banking.

“The market reality is that people want bank services closer,” according to Tonny Miiro, managing director of Uptime Solutions Uganda, one of the banks in Uganda that is using vans to reach more far-flung residents. “That is what we are doing. It is important that government comes up with more policies that call for more inclusive bank services provided by financial institutions, as there is demand.”

In the Philippines, however, the goal of mobile banking vans is bringing microinsurance to a hard-to-reach population. Cebuana Lluillier’s “Micro-insurance On Wheels” program teaches potential policyholders about insurance, hoping this will increase policy sales and allow the rural poor to avoid financial ruin in case of disasters, such as a flood or an earthquake.

The initiative aims to teach poor, rural Filipinos about how microinsurance works. It is part of a global movement to promote microinsurance as the next big idea in poverty reduction.

“Ordinary people see ‘insurance’ as something that only rich people can afford,” says Jonathan Batangan, the company’s general manager. “We are offering ordinary Filipinos affordable insurance with the added benefits of accessibility, reliability, and convenience.”

In Rwanda, Bank of Kigali uses vans to address two issues. First, the vans will serve as the first point of contact for the 50 percent of the population that is currently unbanked. Second, the vans will increase the effectiveness of rural microfinance institutions that need to make more deposits and withdrawals to serve their members adequately.

By both promoting its own brand and helping local organizations that provide financial services, Bank of Kigali plans to be a major player in reaching the government’s 2020 goal of 90 percent financial inclusion.

Whatever the reason, mobile banking isn’t just for telephones anymore.

• This article originally appeared at Global Envision, a blog published by Mercy Corps

After Haiyan: Can Microinsurance help?

http://www.microinsurancenetwork.org/networknew-1274.php#commentaire

The recent typhoon disaster in the Philippines has left millions of people without access to basic food and shelter. In such situations, microinsurance can play a significant role in providing people with means to rebuild their lives.

Microinsurance has boomed in the Philippines over the last decade. With a population of 98 million,1 it has the highest insurance penetration rate in all of Asia and Oceania, with an estimated 19.9 million individuals and properties covered.2 “This success can be attributed both to the Philippines’ adoption of conducive legislation regulating their insurance market, as well as the establishment of a network of effective distribution channels that can be easily accessed by low income people” says Dr. Antonis Malagardis, Programme Director of the GIZ Programme 'Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia' (RFPI Asia).

Yet the challenges faced by clients and insurers in claims repayment, following a catastrophic event, are not to be underestimated. One can imagine the difficulty that clients have to even provide the most basic documentation to insurers whilst they are left without a home, water, food and electricity. Further, damage to infrastructure and communication channels often mean that it is difficult for clients to get information to the insurers, and for insurers to reach their clients. Richard Leftley, CEO at MicroEnsure, a company that has 1.3m clients in the Philippines alone, reports: “We are aware of over 50,000 claims for calamity related damage to property in the Philippines. However, we have no data on lost lives yet, due to poor communications with affected areas.”

At Ahon Sa Hirap (ASHI), a Filipino NGO and Microfinance Institution (MFI), which offers a wide range of financial services to clients, the organisation has taken a proactive approach to supporting their clients with claims submissions. The MFI, which counts 9 branches in the disaster struck Panay area, has sent out their agents, equipped with cameras, to help clients document claim and take picture of their houses. Laarnie A. Aquino, one of the agents, reports that “the wide road is blocked due to the falling trees destroyed by the typhoon, and there are no electricity and telecommunication services in the area until now.” The ASHI team was able to take pictures of a number of their clients’ damaged properties (see photo above) but eventually their camera ran out of battery, and, with no electricity in the area, they continued their documentation work with pen and paper alone. In total they were able to document damage to over 2,700 of their clients’ properties, with 700 properties completely destroyed.

Other insurers, based abroad, are taking a different approach by providing monetary grants to clients affected by the typhoon through local partners on the ground. For example, the Grameen Crédit Agricole Microfinance Foundation has announced that the Group Crédit Agricole SA will dedicate €1m to support rehabilitation work through one of its associations, providing rehabilitation on site.

When it comes down to catastrophic risk, the sector is still at an early stage of development. “The business case for catastrophic risk still has to be proven; current experiences have not demonstrated the existence of a business case for the private risk carriers unless the public sector is involved to support the initiatives” says Clémence Tatin-Jaleran of the MicroInsurance Centre. Beyond the business case, it is clear that for catastrophic risk products to be of true value to clients, the sector need to come up with innovative ways to ensure clients are able to submit and receive their claims swiftly after such an event.

According to the 2012 World Disaster Report, the Philippines ranks as the third most disaster-prone country in the world, with an average of 20 typhoons per year. Since 2009 typhoon-related damages have totalled USD 2.5 billion: the poverty levels among farmers and fishermen remain three times higher compared to the rest of the population. An example of a recently established partnership that aims to offer microinsurance tailored to farmers in the Philippines is that of the International Finance Corporation (IFC), the Center for Agriculture and Rural Development (CARD), and the Pioneer Insurance and Surety Corporation. The new partners will work together to design affordable insurance products for farmers against typhoon-related losses in the Philippines, allowing for risk mitigation for farmer clients of CARD, the largest MFI in the country.

The Microinsurance Network and its members believe that microinsurance is an essential component of sustainable development. “The importance of insurance is clearly evident by the typhoon that ravaged the Philippines “ stated Craig Churchill, Chairman of the Microinsurance Network and Head of the ILO’s Microinsurance Innovation Facility, during this year’s 9th International Microinsurance Conference. “While you might argue that for catastrophes such as these, one needs macro insurance, not micro; I contend that they are in fact intimately related” he continued. “We need to dramatically expand access to better insurance services to build safety nets and enhance the resilience of low-income communities. And the development impact of insurance isn’t just seen at the household level, but also within the economy as a whole. By managing and diversifying risks, insurance supports entrepreneurs to make higher risk, and higher return investments, thus stimulating growth and bolstering economic development.”

Footnotes:
1 - Projected Population as of May 6, 2013, PH: Commission on Population, May 6, 2013
2 - The Landscape of Microinsurance in Asia and Oceania, Briefing Note 2013, MRF/GIZ.

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Comments
2013-11-26
A few additional figures that have just reached us:
• CARD has 100,000+ clients affected.
• FCB Foundation, Inc. has 500 clients affected.
• NWTF has 44,000+ clients affected.
• TSKI has 70,000+ clients affected.

(Source: http://100millionideas.org/)

Microinsurance seen as solution to disaster risks

Source: eDaily | 26 Nov 2013

Insurance schemes aimed at low earners could be part of future solutions to disaster risk management in the Philippines, even as government ministers say that the country is considering an insurance plan that will ease the burden of financing relief and reconstruction activities following calamities.

Mr Reto Schnarwiler, head of Global Partnerships for Swiss Re in the Americas, Europe and Africa, told the swissinfo.ch website, that to help recovery, a better solution than international aid, raising funds through issuing debt or switching budgets, is for governments and organisations to jointly work on increasing insurance penetration, or number of insurance policy holders.

In the Philippines, non-life insurance premiums made up less than 0.49 percent of GDP in 2012, according to Swiss Re Economic Research and Consulting. That is below Asia’s average of 1.64 percent and is relatively low, according to Mr Clarence Wong, the research centre’s chief economist for Asia.“Most insured properties are believed to concentrate in metropolitan areas. Earlier typhoons have consistently resulted in limited insurance pay-outs due to low penetration,” Mr Wong told swissinfo.ch.

Professor Martin Eling, who teaches insurance management at the University of St Gallen in Switzerland, says that micro insurance is being introduced with the help of non-governmental organisations on the ground in a number of different countries to see. ?He believes that it has a great deal of potential if combined with factors such as education, financial literacy and regulation, to increase the level of trust among people putting up their money.

Meanwhile, National Treasurer Rosalia de Leon has said that the government is tapping the assistance of the World Bank to develop a protection scheme against the financial drag of post-calamity recovery. “We are currently working with the World Bank in developing a catastrophe risk model. This model will enable the Philippine government to evaluate options for risk transfers and insurance that will reduce the fiscal burden of relief and reconstruction efforts,” the Philippine Daily Inquirer cited Ms De Leon.

She adds that the latest natural calamity, Super Typhoon Haiyan which slammed the central Philippines on 8 November, highlights the need for smart financial strategies that would help the country bounce back after disasters. “Initiatives are underway to mitigate risk exposure and strengthen fiscal resilience in times of calamities,” she said.

Separately, Finance Secretary Cesar V Purisima has proposed a multi-nation natural catastrophe risk pooled insurance facility for vulnerable nations in the Asia Pacific region, such as Indonesia, Thailand, Malaysia and Japan. “We’ve proposed to the World Bank that all countries be asked to be part of a mandatory insurance pool, and the insurance premium be based on each country’s share of the carbon footprint,” he said

Alternative microinsurance dispute resolution launched in CdeO

Philippine Information Agency
BY: APIPA P. BAGUMBARAN
Saturday 26th of October 2013

CAGAYAN DE ORO CITY, October 26 (PIA) --- The Department of Finance-National Credit Council (DOF-NCC) and Insurance Commission (IC) launched here on Thursday, October 24, an alternative redress mechanism for claims disputes in the microinsurance industry.

Dubbed Alternative Dispute Resolution for Microinsurance (ADReM), this mechanism aims to provide stakeholders with options to resolve disputes outside the courtroom to minimize expenses and avoid delays of litigation.

IC Deputy Commissioner Dorothy Calimag in a seminar held in Mallberry Suites said ADReM provides an avenue to settle microinsurance disputes through the swiftest and most accessible means.

She said the ADReM process is characterized by the principles of LAPET which stands for least cost, accessible, practical, effective and timely resolution of disputes.

Cases referred to the ADReM include disputes arising from denied claims or those not fully paid within 10 working days from receipt of complete documents, she said.

Calimag further said microinsurance providers are required to promote the use of ADReM as a recourse mechanism available to policy holders to address disputes.

She also clarified that there will be confidentiality in everything that will be stated in the ADReM settlement agreement and it cannot be used for or against the parties in the regular courts.

The IC has already issued separate guidelines for the implementation of ADReM by commercial insurance companies, mutual benefit associations, and cooperative insurance societies.

In addition, a circular was also issued on the procedures of accrediting ADReM mediators-conciliators.

Pushed by the government to supplement its anti-poverty programs, microinsurance provides small insurance coverage that meets the needs of the low-income sector for risk protection and relief against contingencies such as death, accidents, illness, and natural and man-made calamities.

DOF-NCC Director Joselito Almario said they incorporated the ADReM processes into the country’s microinsurance regulatory framework to ensure that microinsurance consumers are protected. (APB/PIA-10)

DOF, Insurance Commission launch ‘Adrem’ in C. de Oro

Sunstar, Cagayan de Oro
By Butch D. Enerio
Saturday, October 26, 2013


TO GIVE more assurance to their clients for a speedy settlement of claims, the Department of Finance-National Credit Council (DOF-NCC) and the Insurance Commission (IC) have initiated a pro-active measure that would benefit mainly the stakeholders in the micro-insurance industry.

The Alternative Dispute Resolution for Microinsurance (Adrem) seminar, on its second leg here on Thursday, was designed to give an idea to interested parties to become mediators after going through trainings, that would enable insurance providers and policy holders to reach a win-win resolution of cases where disputes might arise.

Gil Beltran, DOF undersecretary, said that Adrem is a kind of reform that would make the microinsurance industry more attractive to the low-income bracket as intended.

He said that through the years microinsurance has its continued uptrend in that since it started in 2010 with only three million clients, it has already reached 12 million policy holders this year.

“And we are aiming to cover the 25 million Filipinos in the country who are informally employed and educate them on the importance of the insurance coverage.” Beltran said.

Lawyer Chris Rafal of the IC said that the microinsurance is in response to the need of the low-income sector where their capacity to pay for premiums is within reach.

“Microinsurance products have affordable premiums and the benefits correspond to the risks, and the claims settlement is fast,” Rafal said.

He said that the Adrem method aims to reduce the cost, time, and complexity of any subsequent litigation and provide the option for out-of-court resolution.

The microinsurance industry is composed of different providers, each requiring distinct dispute resolution mechanism.

“We want to insure that microinsurance consumers will be protected that the Adrem processes are incorporated into the regulatory framework. And that is our commitment,” said Joselito Almario, DOF-NCC executive director

Alternative dispute resolution to make microinsurance easier

EDGE DAVAO
FRIDAY, 27 SEPTEMBER 2013 09:34 PDF
BY EJ DOMINIC FERNANDEZ

A more comprehensive dispute resolution will bring a more comfortable claiming method to microinsurance policy holders, especially from the low-income and marginalized sector, through the first leg of the Alternative Dispute Resolution for Microfinance (ADReM) seminars held here.

Insurance Commission (IC) deputy commissioner Ferdinand George Florendo in the seminar held at the Apo View Hotel yesterday, said the alternative dispute resolution they are promoting is for inclusive growth by reaching the poorest of the poor.

The ADReM first public seminar was initiated by the Department of Finance – National Credit Council (DOF-NCC), and the Insurance Commission (IC) to promote to the low-income and marginalized sector that they too can be insured in a more convenient way.

Low Cost, Accessible, Practical, Efficient, ad Timely (LAPET) are the main features of ADReM method, which makes it different from the mainstream insurance, Florendo said.

DOF-NCC director Joselito Almario said as long as the insurance policy has the seal of Microinsurance, the maximum time to claim the benefit should not exceed 10 days, otherwise, complaints can be made by the policy holder or the beneficiary.

He said, there are some 18 insurance companies selling microinsurance, including agents, brokers and cooperatives.

According to Chris Rafal of IC, there were 3.1 million micro insurance policy holders in 2009 which multiplied four times in 2012 with 12 million policy holders.

Microinsurance products have affordable premiums, the benefits correspond to the risks, and claims settlement is fast.

The seminar was the commencement of a nationwide campaign to implement the provisions of the ADReM Frawmework, launched in October 2012 by a technical working group led by the DOF-NCC and the IC, with key representatives from the industry as members and with rechnical support from the German Development Cooperation Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia Programs (GIZ-RFPI Asia).

Alternative dispute resolution mechanism for microinsurance launched

Philippine Information Agency
Information to Empower Filipinos
BY: CARINA L CAYON
Thursday 3rd of October 2013

DAVAO CITY, Oct. 03 (PIA) – The Department of Finance (DOF) and the Insurance Commission (IC) recently introduced in the region an alternative dispute resolution mechanism for microinsurance to address complaints on benefit claims outside the courtroom.

The DOF and IC created the Alternative Dispute Resolution for Microinsurance (ADReM) method aiming at minimizing expenses, time and delays of litigation, and providing option for out-of-court resolution of disputes arising from denied microinsurance claims.

The mechanism also covers addressing complaints from those not fully paid within ten working days from receipt of complete documents.

However, the implementing guidelines set by IC in its Circular Letters do not stop the parties from seeking other modes of settlement.

The implementing guidelines feature ADReM’s structural process described with the acronym LAPET which stands for least cost, accessible, practical, effective and timely.

IC deputy commissioner Ferdinand George Florendo said the ADReM processes are integrated as additional component in the country’s microinsurance regulatory framework seeking to strengthen consumer protection in the microinsurance sector whose beneficiaries are mostly from the low-income group.
The ADReM implementing guidelines were issued to microinsurance providers such as the commercial insurance companies, mutual benefit associations and cooperative insurance societies that provide small and short-term insurance coverages to low-income members.

The IC has accredited 18 life microinsurance companies that shall respond to the needs and paying capacities of the low-income sector.

As part of the mechanism, a separate Circular Letter was set for the procedures of accrediting mediators-conciliators to sit in the ADReM.

The IC does the accreditation of individuals who voluntarily seek to be accredited and whose qualifications include competence, knowledge and training in the process of mediation-conciliation.

The accredited ADReM mediators-conciliators shall abide by the Code of Conduct to include ensuring that “the resolution of a dispute rests will be the responsibility of the parties concerned and that at all times will not pressure any of the parties into an agreement or make a substantive decision on behalf of any party.”
Florendo said that they will be going around the country through public seminars to assure that people will know about the existence of ADReM.

“We plan to reach out to as many as we can. We will bring the mediators-conciliators to the communities,” he stated.

The IC official said that this alternative dispute resolution method has long been conceptualized, but added that it is only now that it has been formalized.

The concept, he said, is part of the government’s effort for inclusive growth in reaching out to the poorest of the poor.

Florendo disclosed that 2.9 million Filipinos are covered by microinsurance, of which figure represents slightly more than ten percent of the 25 million Filipino populace living below poverty level. (RGA/CLC/PIA-XI)

- See more at: http://news.pia.gov.ph/index.php?article=1561380787885#sthash.52EUOnHW.dpuf

Cebuana Lhuillier eyes microinsurance business

Manila Bulletinby Bernie Magkilat
September 10, 2013

Cebuana Lhuillier Insurance Solutions (CLIS), the country’s dominant microinsurance company, yesterday launched “Microinsurance-On-Wheels” for as low as P25 to far flung communities and claims processing within 24-hours in its over 1,500 branches, which are expected to shore up its policy holders to 5 million this year.

Jonathan D. Batangan, CLIS general manager, said they are eyeing to insure a million Filipinos this year to bring its total number of insured under the Alagang Cebuana program to 5 million this year.

Batangan told reporters that as of last year, they have sold a total of 12 million certificates of insurance reflecting a total of 4 million Filipinos insured or three or four insurance policies per person.

Since May this year, Cebuana Lhuillier has averaged 1.2 million insurance sales a month.

It has also settled more than P20 million claims in 2012. To date, it has already settled P75 million in total claims.

Through the Microinsurance on Wheels, CLIS aims to heighten microinsurance awareness among the low-income and vulnerable sectors and make affordable and quality insurance protection available to ordinary Filipinos using eight mobile hubs that will travel around the country.

Batangan said they will partner with local government units up to the barangay units to provide insurance to the remote places.

“This unique initiative will reach out to poor Filipinos, especially those from far-flung areas, to inform and educate them on the importance and advantages of microinsurance thus complementing the global campaign to promote microinsurance as an effective tool for social protection and financial inclusion,” he said.

Under this new unique initiative, the Microinsurance on Wheels will initially offer the Alagang Cebuana Plus – a personal accident with fire-cash assistance protection underwritten by the country’s largest insurer, Malayan Insurance. Customers are entitled to the P20,000 accidental  death/dismemberment benefit and the P5,000 fire-cash aid per Insurance Certificate for as low as P25, valid for four months. A maximum of five certificates can be purchased.

A P75 can provide insurance cover for a year.

“This is cheaper than buying one-piece Jollibee chicken,” said Batangan.

In addition, claims can be processed and released within 24 hours in any of the over 1,500 Cebuana Lhuillier branches nationwide.

In fact, Batangan reported that they have distributed insurance claims to 200 households who were affected by typhoon Pablo in Compostela Valley even if their insurance coverage did not include devastation caused by floods.

Batangan further said that Cebuana Lhuillier is also looking at other variants of their Microinsurance on Wheels to include calamities like earthquake and other acts of nature.

Insurance Commissioner Emmanuel Dooc noted at the event that there are 7.8 million Filipinos out of the estimated 27 million living below poverty line have availed of microinsurance.

Dooc expressed hope that the aggressive launch of the Alaga Cebuana microinsurance programs would further provide more opportunities for Filipinos to avail of small insurance coverage.

At present, total insurance coverage in the country is only a little over 1 percent of the country’s GDP.

But Dooc said that insurance premiums now comprise 7.5 percent of the daily minimum wage of non-agricultural sector in Metro Manila, an improvement from 5 percent. This would translate to P23 to P24 of daily premium

Cebuana Lhuillier launches ‘microinsurance on wheels’

BusinessWorld

Finance

---

Posted on September 09, 2013 08:46:12 PM

By Diana Jean B. Evite

NON-LIFE insurer Cebuana Lhuillier Insurance Solutions (CLIS) has launched a roving campaign that aims to raise financial literacy and awareness in the low-income sector, especially those in far-flung areas of the country.

Microinsurance on Wheels will deploy eight vans to key locations in Metro Manila, Luzon, Visayas and Mindanao, targeting to reach 700 barangays and educate poor Filipinos about the importance of microinsurance.

“Hopefully, this will increase the trust of the people in microinsurance and increase the density of microinsurance,” CLIS General Manager Jonathan D. Batangan said during the launch yesterday.

Microinsurance on Wheels will initially offer Alagang Cebuana Plus -- a four-month insurance product priced at P25. It entitles policyholders to protection from accidental death, dismemberment and fire.

Mr. Batangan said CLIS sold 12 million Alagang Cebuana Plus policies last year, averaging 1.2 million policies a month.

“We are planning to increase it by 100,000 a month next year, making it 1.3 million a month,” he said.

Mr. Batangan said policyholders can also claim settlements worth P25,000 or below within 24 hours through CLIS’ Bilis Bayad Claims program.

“Policyholders can claim settlements within 24 hours from any Cebuana Lhullier branch nationwide, and they will receive cash and not a claim check,” he said, adding that there are more than 1,500 Cebuana Lhullier branches in the country.

Deputy Insurance Commissioner Ferdinand George A. Florendo said the only hurdle for the country’s nascent microinsurance industry is the lack of awareness.

“The only challenge really is for the people to be informed,” Mr. Florendo said during the launch. 

“What needs to be done is to inform the people. If they are informed, they will definitely avail of the insurance.”

The Aquino administration has made microinsurance one of its key initiatives, pushing it as a means to give the poor access to financial services.

According to data from the Insurance Commission, 11.7 million lives were protected by microinsurance in 2012.

Microinsurance under the microscope: Market clarity the key to growth

• 
• 

Business Mirror

Category: Banking & Finance

Published on Sunday, 15 September 2013 19:57

Written by KPMG Perspectives

THE last decade has witnessed strong growth in microinsurance, especially in Asia, Africa and, increasingly, Latin America. India and China have been at the forefront: India alone is currently estimated to account for 60 percent of all the individuals covered by microinsurance worldwide.

Overall, however, market penetration remains relatively small. As a result, there remains enormous growth potential. Industry estimates put the total number of possible customers at between $2.5 billion and $4 billion and value total potential revenue at about $40 billion a year. Quite apart from the direct revenues, many of these potential customers are in emerging economies and can become increasingly valuable to insurance firms as they lift themselves out of poverty, acquire assets and have surplus income to save. We believe insurers are poised to make a big difference in the lives and well-being of these people, developing innovative routes to market to tap into a viable revenue stream.

Strategically, there is a clear commercial incentive for firms to seek first-mover advantage by building positive relationships with low-income groups. In addition, many governments and insurers feel a socioeconomic and moral imperative to offer relevant products that help protect poorer people from events such as drought, the loss of a cow, or the theft of a plough, which can spell disaster. But for people living below the poverty line, who are often averse to buying an intangible service and suspicious of an insurer’s willingness to honor a claim, the question is: why spend my precious dollars on an insurance policy?

As part of national socioeconomic strategies, governments and regulators are responding to this question by raising the awareness and benefits of insurance among poorer demographics and providing the framework within which microinsurance can operate commercially. As a result, in a number of countries microinsurance regulations are being introduced that lower capital requirements for microinsurers compared to traditional regulatory frameworks. They also simplify compliance, relax constraints on distribution channels and minimize licensing and examination requirements for intermediaries.

The need for a new approach

THERE is considerable socioeconomic and regulatory momentum building behind micro-insurance and this is opening up new opportunities for profitable growth.

The key to success for insurers lies in recognizing the diversity of cultural, regulatory and economic environments across the individual countries of Latin America, Asia and Africa. This diversity means that a “one size fits all’ model for product design does not work. Insurers need to look beyond the traditional segmentation strategies around income, wealth, geography and age. Instead, they need to focus more closely on insurance needs and behavior and adapt their customer value propositions appropriately.

In Latin America, for example, and especially in Brazil, the microinsurance market is focused on goods, particularly extended warranties for such items as cell phones and refrigerators. In India and Africa, on the other hand, where 60 percent or more of the population is involved in agriculture, on low incomes and living mainly in rural areas, the main need is to insure those assets that are vital to survival—cattle and other livestock and crops—together with life cover to protect the microfinance loans with which these assets are often bought.

Nor is it the case that there is consistency even within a region—an extended warranty product that is a success in Brazil cannot simply be offered on the same platform and customer value proposition in Mexico, where the appetite for extended warranties is completely different. Equally, in some African countries funerals are major events and there is a strong market for relevant insurance distributed by burial societies and funeral parlors to community clubs. In other countries, death is not a suitable topic even to be raised in discussion.

Apart from this market fragmentation, the low-income segment has other inherent features that require a new approach. In India particularly, more extensive collaborative industry models may be required, with fast-moving consumer goods companies (FMCG), telecom, cell-phone shops, local post offices, grocery stores and sellers of seeds, fertilizers and farming equipment bundling insurance cover with their products or services and sharing customer information. The distribution structures of regional rural banks, cooperatives and business correspondent models may need to be leveraged. And microfinance institutions may need to be even more engaged in selling life policies along with providing a loan. In Africa bancassurance could play an increasing role as banks initially based in South Africa expand their operations across the continent.

Despite their poverty, brands can have a powerful attraction for those on low incomes. As insurers build confidence in their own brands, many policies are being sold as add-ons to products and brands that people already know and trust. For example, UK-based MicroEnsure is now conducting most of its business in Africa through partnerships with mobile-phone companies; while high-profile retail chains that have built their businesses in South Africa are now appearing in other African countries and offer enormous potential for the distribution of financial products.

Nevertheless, the dispersed, remote nature of this customer segment means that it is difficult to reach by intermediary and few low-income people have PCs or Internet connections. However, mobile penetration in the countries of Latin America, India and Africa is already high, with aggressive marketing of the benefits of the cell phone as both a communications and a payment tool. Mobile telephony, therefore, offers a huge potential; and those insurers who are serious about the microinsurance market will have to tap into it.

Managing risk

COMMERCIALLY, the low margins achievable on each policy mean that it can only be profitable if a great many standardized products are sold and managed through highly automated business models that are focused on a large volume of transactions and a low cost of operations. However, the high degree of automation combined with the simpler operating environment being put in place for microinsurance will create challenges for insurers’ risk management frameworks. Especially since some microinsurance regulation has allowed the use of specific channels —such as microinsurance brokers, electronic direct sale channels—that involve less formal requirements and consequently will demand special attention in areas such as fraud prevention and money laundering. Another factor to be considered is risk assessment and product pricing. Given the small premium size and the lack of both actuarial data and any history of pricing, it is difficult to quantify the sales volumes required to cover the risk.

Reinsuring also becomes a problem. As a result, insurers will need to conduct greater research and analysis to achieve a better understanding of individual markets and people’s needs. The right financial models will also be required to set the best pricing margins and help ensure customers are sold suitable products at appropriate prices.

Cross-industry collaboration to share costs and risks may also be needed, such as having a central company that specializes in handling claims or distribution, or creating common industry databases for microinsurance. In India, for example, one option might be a pool of all the microinsurance revenues accrued through initiatives run by insurance companies, the government, postal services and through top-up or bundled schemes. Payment of claims could be managed by the pool based on information stored in smart cards or mobile phones.

Tailor products, lean systems

ABOVE all, product design is crucial. The concept of simply transferring existing products to these new markets may be superficially attractive, but the reality is it will not work. The opportunity is more difficult: to develop and introduce new, tailored products.

Success can only come if insurers talk to people, assess their needs and design their products to fit. In many ways, these are simple markets requiring simple products. For example, modularity may be an important principle. So instead of offering full-blown contents packages, microinsurers might offer products that enable cover for single

BSP helps out low-income Filipinos

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Business Mirror

Published on Sunday, 08 September 2013 21:55

Written by Bianca Cuaresma

THE Bangko Sentral ng Pilipinas (BSP) pushed for the further development and patronage by the various stakeholders of the microfinance framework to help the government achieve financial inclusion and alleviate poverty in the country.

At the central bank’s quarterly publication on financial inclusion, the monetary authorities declared that low-income Filipinos will be able to create, sustain and enhance even small business holdings if they are given access to financial products and services.

“The success of many Filipino micro- entrepreneurs who overcome difficulties with creativity and tenacity tells us that we are on the right track; that we should continue to work together to make the microfinance sector better and more inclusive,” BSP Governor Amando M. Tetangco Jr. said.

Microfinance, according to the BSP, is a range of financial services such as deposits, loans, payment services, money transfers and insurance for the poor and low-income households, generally for their small business, that will help them raise their income levels and improve their living standards.

“The typical clients of microfinance are the economically active, entrepreneurial poor….  Helping the poor help themselves is the essence of microfinance,” the central bank said.

It also said it has actively taken steps to push for a more accessible microfinance framework in the country.

According to the BSP, microfinance is now “fully mainstreamed” in the financial system, compared to earlier years when microfinance was just provided by a handful of banks and other non-governmental organizations (NGO).

The monetary authorities also said microfinance products have now diversified as micro-deposits, micro-insurance, micro-enterprise loans, housing micro-finance loans and micro-agri loans compared to the past when microfinance was limited only to microcredit.

“The experience of the Philippines in microfinance has proved that a previously unserved market can be profitably and viably served. Lessons learned in a microfinance provided basis toward a broader objective of financial inclusion,” the central bank said.

Earlier this year, Tetangco said 186 banks with microfinance operations were operating as of end-March this year. They cater to over 1 million clients.

He also said the combined microfinance savings totaled P8.2 billion, marking the first time the total microfinance savings exceeded the total microfinance loan portfolio of only P8 billion.

Bianca Cuaresma

Microinsurance dispute resolution guidelines issued

Source: eDaily | 14 Aug 2013

The Philippine Insurance Commission (PIC) has issued concrete guidelines to implement the Alternative Dispute Resolution for Microinsurance (ADReM) framework. ADReM aims to provide options to resolve disputes outside the courtroom and to minimise the expense and delay of litigation.

The guidelines for the implementation of ADReM will require all insurance entities, agents and brokers  which are engaged in the microinsurance business to follow mediation-conciliation processes of claims dispute based on parameters under the banner, “Least cost, Accessible, Practical, Effective and Timely” or “LAPET”.

“The ADReM is another milestone for initiatives on microinsurance. With it, we can ensure consumer protection to the more than four million lives covered by microinsurance,” Insurance Commissioner Emmanuel Dooc said.

“The ADReM is about building bridges, closing the distance – physically and administratively – between conflicting parties and the insurance regulator,” said Mr Joselito Almario, National Credit Council Director in the Department of Finance.

To implement the resolution procedures, the PIC will accredit a pool of mediator-conciliators from which the parties in dispute can make their selection. The conflict will then be settled through a graduation of levels, beginning at community-level mediation, prior to reaching the PIC level, if necessary.

Distinct ADReM procedures have been designed for commercial insurance companies, for mutual benefit associations, and for cooperative insurance societies.

The ADReM Framework is a product of a public-private collaboration through a working group composed of the DOF-NCC, life and non-Life insurance associations (PLIA and PIRA), Rural Bankers Association of the Philippines, Chamber of Mutual Benefit Associations, Microfinance Council of the Philippines, Society of Independent Insurance Intermediaries of the Philippines, Life Underwriters Association of the Philippines and MicroEnsure Insurance Brokers Philippines. The Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ, or German Society for International Cooperation) has been providing technical assistance and funding.

The information dissemination campaign for the ADReM will be rolled out in seven regions in the Philippines beginning in September, said GIZ-RFPI Programme Director, Dr Antonis Malagardis. The new guidelines take reference from the ADReM Framework adopted by the PIC and the industry in October 2012 after a series of stakeholder consultations around the country.

Philippines: Proposal made to make quake insurance mandatory

Source: eDaily | 02 Aug 2013

The Philippine insurance regulator has said that it is pushing for legislation requiring homeowners and small businesses to insure their properties from earthquakes.

Insurance Commission Chief, Mr Emmanuel Dooc, says that the agency is working to establish a company that will provide compulsory earthquake insurance. "It's like an ordinary insurance company. It will be formed by getting equity contributions from the public and the private sectors, and this will require huge capital," he said.

"All residential property owners and small and medium-sized enterprises shall be required to get earthquake insurance. It will basically be a public-private partnership because this will require huge or substantial capital," he told reporters.

"This type of Bill requires some expertise and technical knowledge, but we are prepared to provide a technical briefing to those who will help us get this Bill enacted," he added.

The Asian Development Bank is backing the proposal, and is ready to provide a US$70-million loan for the purpose. However, "this will require counterpart funding from the private sector," he said, citing non-life insurers as possible partners for the venture

56 ARB organizations in Bicol benefit from APCP/AIP credit and insurance

Catanduanes Tribune

August 1, 2013.

A total of 56 agrarian reform beneficiary organizations (ARBOs) in Bicol are now assured of credit and insurance program assistance under the Agrarian Production Credit Program (APCP) and the Agricultural Insurance Program (AIP) respectively, after completing the documentary requirements in the recently concluded series of training-workshops this month. 

Around P150 million in program funds were accessed by the eligible ARBOs in the region under the APCP: Albay – P16,350,000.00 covering seven (7) ARBOs; Camarines Norte – P10,500,000.00 benefiting six (6) ARBOs; Camarines Sur A – P7,740,000.00 aiding six (6) ARBOs; Camarines Sur B – P59,000,000.00 involving 22 ARBOs; Catanduanes – P2,500,000.00 for two (2) ARBOs; Masbate – P39,000,000.00 for six (6) ARBOs; and Sorsogon – P14,000,000.00 funding seven (7) ARBOs.

APCP aims to provide credit assistance to agrarian reform beneficiaries (ARBs) or ARB household through organizations or other conduits which were not given the chance to access credit from other lending institutions, to support individual or communal crop production.

Aside from loans to finance crop production, APCP ensures sustainable production of crops and increase the income of ARBs household members to strengthen ARBOs, and improve the capabilities of ARBs through the provision of institutional capability building. Moreover, the program requires preparation of ARBOs to become credit conduits and priority is given to provinces with high records in land acquisition and distribution (LAD).

Data would show that only 57% of farmers have access to credit from financing institutions while one in three ARBs in ARCs is in need of credit. Further, new ARB organizations may still not qualify under the credit assistance program of the program beneficiaries development (CAP-PBD) of DAR and LBP regular lending program and some ARB organizations still require organizational strengthening to make them credit worthy. These situations prompted the launching of APCP by pooling the resources and expertise of DA, DAR and Landbank to help ARBs access affordable credit, development assistance and marketing support.

The Agricultural Insurance Program (AIP), on the other hand, aims to enhance agricultural productivity of ARBs, mitigate agricultural losses due to pests, diseases and natural calamities, and improve access to credit. This insurance assistance covers rice and corn, high-value crops, and livestock production. It generally covers the total premium requirements of ARBs covered by agrarian reform communities connectivity economic support services (ARCCESS), borrowers in APCP and other farmer-beneficiaries.

Trainings for ARBOs as underwriters have already been conducted this July 2013 which is part of the preparations to avail the AIP. DAR Bicol Regional Director Maria Celestina M. Manlagnit-Tam, CESO III, stated that immediate completion of the requirements is urgent to set the program in motion to coincide with the onset of the cropping season of the farmers’ chosen yield.

It can be recalled that early this year, the national government allocated P1 billion for the APCP which is a joint undertaking of the Department of Agrarian Reform (DAR), Department of Agriculture (DA) and the Landbank of the Philippines (LBP), and another P1 billion for the AIP to be implemented by the (DAR) together with the Philippine Crop Insurance Corporation (PCIC).

Meanwhile, The Center for Agrarian Reform and Rural Development (CARRD) lauded the Minalabac, Mataoroc, Sagrada, San Jose, Baliuag Viejo (MASSBA) agrarian reform community (ARC) Cooperative in Camarines Sur for its micro-finance initiatives in launching a credit program in their locality.

“According to CARRD, they were so impressed with the very remarkable achievement of MASSBA ARC Coop for the savings generation that is utilized to give out loans to fellow farmers,” RD Tam related.
MASSBA ARC Cooperative was able to reach beyond 400,000 total deposits coming from the investments of its member-farmers for the savings generation project in barely three months when it started the program in April this year. “According to its records, the total amount of 497,000 was already availed through its credit or loan program,” she added.

CARRD is a non-government organization initially formed in 1987 to provide technical assistance to peasant organizations and formally established in 1989 to advocate for agrarian reform and rural development agenda. (With Reports from DARRO-5 Information Office

- See more at: http://www.catanduanestribune.com/article/3EC3#sthash.SbLgOdAG.dpuf

Rizal Microbank to open more branches, microbusiness offices this year

July 23, 2013 5:24pm

Rizal Microbank, a subsidiary of Rizal Commercial Banking Corp., will open four more branches and eight microbusiness offices (MBOs) within the year to expand its share of the country’s microfinance market.

This was bared Tuesday by Rizal Microbank president Lourdes Pineda, who said the expansion will be in southern Luzon and Mindanao.

“We are opening four bank branches in Mindanao and eight MBOs, four both for Luzon and Mindanao,” Pineda said at a press briefing.

She added there is a very strong growth potential in Mindanao that is why Rizal Microbank decided to expand in that region. The MBOs in Mindanao will be located in Cagayan de Oro, Butuan, Valencia in Bukidnon and General Santos City.

In the other hand, the MBOs in Luzon will be located in Cabuyao, Sta. Cruz, and San Pablo in Laguna, and Lipa in Batangas.

Pineda said some P4 million has been allotted for the bank expansion per branch and P2 million for each MBO.

Rizal Microbank, which formed through the merger of RCBC’s Makati-based thrift bank Merchant with J.P.Laurel Bank in Batangas in 2011, currently has 14 branches—10 in Luzon and four in Mindanao. The expansion will bring to 26 Rizal Microbank’s total branches in the country.

Deposit portfolio

Pineda said the bank’s deposit portfolio as of June this year stood at P300 million, while total resources hit P900 million. Meanwhile, total loan portfolio hit P100 million, a 79-percent improvement compared to the same period last year.

“Sixty-two percent of our clients are into wholesale and retail business. But one of our requirements is for loan applicants to be operating for at least a year… we don’t want startups,” Pineda said.

Rizal Microbank offers four microfinance products such as microfinance loans, micro deposits, small business loans and micro insurance. It has disbursed over P800 million in microfinance loans since it started its microfinance operation in July 2009. — KBK, GMA News

ADB cites good prospects in Phl microfinance

By Ted P. Torres (The Philippine Star) 

Updated July 12, 2013 - 12:00am

MANILA, Philippines - The Asian Development Bank (ADB) has cited as “highly relevant, highly effective, high efficient, likely sustainable, and significant” its microfinance project in the Philippines which it funded through a $150-million loan.

In a report released yesterday, the multilateral funding institution said it extended a $150-million loan for the country’s Microfinance Development Program in 2005. At the end of the program in 2008, the number of active microfinance clients in the country doubled from 2.4 million in 2006 to 5.5 million. During the same period, about 2.6 million jobs were created.

The ADB said the program took a wider view of microfinance than simply lending.

This included helping to increase the number of microfinance institutions that offered micro-savings and micro-insurance services. There were six mutual benefit associations (MBA) offering microinsurance to 518,307 policyholders.

Data from the Bangko Sentral ng Pilipinas (BSP) indicate that there are four million families responsible for microloans amounting to P41 billion.

“ADB helped the Philippines expand its use of microfinance and learned some valuable lessons along the way,” it said.

Microfinance, or the provision of financial services such as loans to poor families, is recognized as a potent method of directly improving the lives of those most in need. When managed correctly, these small loans can be used to build small businesses and develop other income-generating activities that have a long-lasting impact.

“The program helped make microfinance institutions in the Philippines more sustainable by assisting in the adoption of performance standards by government regulatory agencies and those doing business related to microfinance,” the ADB said.

These standards promoted legal and ethical practices within the microfinance industry, whose clients can be vulnerable to exploitation.

Working in coordination with the Philippine government, the program promoted the use of electronic banking, particularly with mobile phone technology. This lowers costs and saves time for microfinance clients, who often make multiple small loan payments a month. Rather than physically visiting a microfinance office, or relying on a go-between, the client can pay quickly and cheaply using their mobile phone.

It also helped create new legislation, bolster a government regulatory agency and produced a consumer protection guidebook that helped improve the oversight of the industry and while increasing the financial understanding of clients.

There are now 200 banks and another 2,000 microfinance institutions (MFIs) in the Philippines servicing at least seven million microfinance clients.

The ADB said the Philippines is considered one of the countries in Asia with a relatively developed microfinance industry that provides financial services to the low-income sector.

Inclusive growth? Jollibee cites 'chickenjoy' supply chain

Rappler BUSINESS

BY AYA LOWE

POSTED ON 11/26/2012 1:17 PM  | UPDATED 11/26/2012 2:26 PM

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FOOD GIANT. Jollibee is the biggest buyer of chicken in the Philippines. Photo by AFP

MANILA, Philippines – Homegrown food giant Jollibee Foods Corp. is doing its part in addressing poverty in the Philippines through its massive supply chain program, a top official of the company said.

Jollibee chief finance officer Ysmael Baysa highlighted at an Asian Development Bank forum on Monday, November 26, that the food service company's P6 billion annual purchase of chicken from farmers in various parts of the country creates sources of income.

"Our contract [growing program] helps the poultry industry and helps to build livelihood in the area often where the most impoverished sectors in the country are,” Baysa said.

"We make poultry farmers grow chicken for the company. They also dress and cut the chicken for us which increases the value of their corporation," he added.

“We provide them with a sure demand of their produce, access to financing, access to management training. Some have been able to pay off their debts, send their children to college and buy farming equipment," Baysa said.

Under its own "Inclusive Business Program," the country's biggest buyer of chicken deals and buys 80% of chicken supplies directly from local poultry farmers. It is only during the Christmas that Jollibee imports from the US.

This business strategy involves 250 local poultry farms and around 2000 farmers located throughout the country.

Jollibee's "chickenjoy" products are among the food retailer's bestsellers. Chicken accounts for the largest portion of its raw material supplies.

Entrepreneurship program

Jollibee also has a Farmer Entrepreneurship Program for raw materials other than chicken.

"Practically all of our raw materials, outside of packaging materials, are agricultural base," Baysa said. Majority of Jollibee's agricultural needs for its burgers, soup, french fries, and other food offerings are now bought from rural producers.

Since 2005, farmer cooperatives have been supplying Jollibee with green and red bell pepper, lettuce, tomato and potato.

For enterprise training and organizational needs of farmers, the company works with US relief services. To develop financing for famers through a network of micro financing institutions, Jollibee works with state-owned National Livelihood Development Corp.

"We’re also convincing other corporations to buy from our farms. We persist in organizing the farmers and helping them in agro enterprise training to help improve their livelihood and help in our own way the development of agriculture in our country,” the executive shared. .

This year, the entrepreneurship program involved 400 farmers in 13 communities some in central Luzon, central provinces and Mindanao.

P39-worth lunch

Bulk of Jollibee’s consumers are middle class, poor and very poor, he added. "That’s the center gravity of our business. They spend on average P39 on lunch."

The company recently posted a 9-month net earning of P2.47 billion up 20.4% from the same period in 2011. According to Baysa, their sales grew at 30% with a return on equity consistently hovering around 17.5% to 18% year-on-year.

“We serve the poor and make money. So it is possible,” said Baysa.

Every year, the group opens at least 100 retaurants in the Philippines. By working with local suppliers and relying on volume for their profits, the business has maintained a strong year-on-year growth.

Jollibee, the Philippine’s largest food service company, operates the largest food service network in the Philippines. As of September 30, 2012, it was operating a total of 2,040 stores in the Philippines: Jollibee 765, Chowking 383, Greenwich 201, Red Ribbon 209, Mang Inasal 457 and Burger King 25.

In foreign operations, the group had 541 stores: In China, Yonghe King 288, Hong Zhuang Yuan 52, San Pin Wang 39; in the US, Jollibee 27, Red Ribbon 32, Chowking 18, Chow Fun 3; in Southeast Asia and the Middle East, Jollibee 60 and Chowking 22 for a total of 2,581 stores worldwide.

Crop insurance

Baysa said furthering their corporate inclusive business program will need another support leg: crop insurance.

“What kind of incentive would we have on our wish list from the government? Two words; crop insurance."

"The crop insurance in the Philippines is very inhibitive and expensive. It’s a function of the low uptake in the Philippines. We have been trying very hard to insure our farmers against crop failures and have been working already with the largest insurance not just in the Philippines but in the world. It is very tough so we have not solved this problem. Our farmers have told us that if they can get a proper crop insurance they can invest more,” said Baysa.

Jollibee was recently mentioned at the ASEAN Business Awards on November 18 as an ‘outstanding Philippines company’ that has contributed to regional economic growth. At the ceremony held in Phnom Penh, the company said sales growth was broad-based and volume driven resulting from better-value-for-money recognition by consumers on its products and services. – Rappler.com