Asia: Six regulators declare commitment to inclusive insurance

Source: eDaily | 28 May 2013

Representatives of six Asian insurance regulatory authorities have adopted a pioneering declaration that recognises the challenges to providing risk protection to low-income individuals and enjoins the signatories to promote inclusive insurance in their respective countries.

The Cebu Declaration on Inclusive Insurance was signed by insurance regulators and supervisors from Indonesia, Mongolia, Nepal, Philippines, Thailand and Vietnam on 16 May at the recently concluded Mutual Exchange Forum on Inclusive Insurance (MEFIN), hosted by the Philippine Insurance Commission and organised by the Regulatory Framework Promotion of Pro-poor Insurance Markets (GIZ RFPI Asia) in Cebu, Philippines with support from the Asian Development Bank.

A non-binding manuscript, the Cebu Declaration on Inclusive Insurance recognises the importance of inclusive insurance as a tool for poverty reduction and social and economic development, and underlines the instrumentality of insurance industry supervision in fostering inclusive insurance markets.

Philippine Insurance Commissioner Mr Emmanuel Dooc said "the Declaration emphasises the need to develop an effective policy, regulatory and supervisory environment". He added that "while the Philippines has received praise for its regulatory environment for microinsurance, the work ahead is daunting. This Declaration is a display of the Philippine Insurance Commission's commitment to promoting pro-poor risk protection."

Signatories jointly declare that the exchange of knowledge and ideas is essential for the formulation of an enabling policy, regulatory and supervisory framework, taking into consideration the unique legal and regulatory environment of countries.

GIZ RFPI Program Director Dr Antonis Malagardis stated that "the aim of a platform such as MEFIN is to provide space for insurance regulators and supervisors in Asia to share their unique experiences in promoting inclusive insurance markets and to learn from each other."  He added that "thematic approaches such as for agro-insurance, health, pensions and disaster risk management shall feature in the cooperation that GIZ RFPI Asia and the Declaration envision to facilitate for the public and the private sectors."

MEFIN was designed to foster peer-to-peer exchange of insurance regulatory and supervisory experiences and lessons and to plot concrete actions plan for which technical co-operation could be formed. GIZ RFPI Asia is a regional programme that seeks to improve regulatory and supervisory preconditions for effective insurance protection of low-income populations in Asia.


Funded by the German Federal Ministry for Economic Cooperation and Development, the programme will support selected Asian countries to enhance insurance regulatory and supervisory capacities. Additionally, RFPI Asia will facilitate the development of innovative insurance solutions, especially in the areas of Micro, Small and Medium Enterprises (MSMEs), disaster risk management and agriculture. RFPI Asia is being implemented in close collaboration with the ADB.

Phl, 5 others ink microinsurance pact

 (The Philippine Star) | Updated May 21, 2013 - 12:00am

Click here for "Declaration" document

MANILA, Philippines - The Department of Finance-National Credit Council (DOF/NCC), Insurance Commission (IC), along with insurance regulatory body representatives from five Asian countries have signed a pioneering declaration that recognizes the challenges to providing risk protection to low-income individuals and outlines forward actions to promote inclusive insurance market in the respective countries. 

The Cebu Declaration on Inclusive Insurance was signed by insurance regulators and supervisors from Indonesia, Mongolia, Nepal, Philippines, Thailand and Vietnam at the recently concluded Mutual Exchange Forum on Inclusive Insurance (MEFIN). The forum was hosted by the IC, and organized by GIZ RFPI Asia with support from the Asian Development Bank (ADB) in Cebu. 

In a press statement, IC Commissioner Emmanuel F. Dooc remarked that the Declaration, a non-binding manuscript, “recognizes the importance of inclusive insurance as a tool for poverty reduction and social and economic development and underlines the instrumentality of insurance industry supervision in fostering inclusive insurance markets.” 

It focuses on industry and consumer protection that contributes to local as well as global financial stability. Signatories to the declaration commit to creating an enabling environment for inclusive insurance markets and contribute to developing insurance regulation that is evidence-based.  

GIZ RFPI program director Antonis Malagardis stated that the aim of such a platform such as MEFIN is to provide space for insurance regulators and supervisors in Asia to share their unique experiences in promoting inclusive insurance markets and to learn from each other.

He added that thematic approaches such as for agro-insurance, health, pensions and disaster risk management would feature in the cooperation that the declaration envision to facilitate for the public and the private sectors.

Organized through the Regulatory Framework Promotion of Pro-poor Insurance Markets (GIZ RFPI Asia) program, MEFIN was designed to foster peer-to-peer exchange of insurance regulatory and supervisory experiences and lessons and to plot concrete actions plan for which technical cooperation could be formed. 

This display of commitment is aligned with the long-standing efforts in the insurance industry to enhance knowledge exchange and learning among insurance regulators and policymakers.

The declaration could translate into concrete applications of the Insurance Core Principles espoused by the International Association of Insurance Supervisors (IAIS), the global standard-setting body for the industry. 

Asian insurance industry stands at the threshold of a leap into an exciting phase of global exchange, and will serve as a major fulcrum for promoting risk protection to its vast population of low income households and small business by providing access to insurance services,” remarked Arup Chatterjee, Senior Financial Sector Specialist at Asian Development Bank.

GIZ RFPI Asia is a regional program that seeks to improve regulatory and supervisory preconditions for effective insurance protection of low-income populations in Asia.

Funded by the German Federal Ministry for Economic Cooperation and Development (BMZ), the program supports selected Asian countries to enhance insurance regulatory and supervisory capacities. Additionally, RFPI Asia will facilitate the development of innovative insurance solutions, especially in the areas of micro, small and medium enterprises (MSMEs), disaster risk management and agriculture.

Microinsurance coverage nearly doubles to 12.9 M

By Ted P. Torres (The Philippine Star) | Updated May 14, 2013 - 12:00am

Dooc

MANILA, Philippines - From 6.6-million Filipinos with microinsurance coverage in 2010, the number almost doubled to 12.91 million by the end of 2012, according to the Insurance Commission (IC).

That means that from just 7.25 percent of the country’s population with microinsurance coverage, it has risen nearly twice or to 13.22 percent of the population of 97.6 million.

IC Commissioner Emmanuel F. Dooc said that in January 2010, the country’s finance leaders launched the Microinsurance Program making insurance products affordable and accessible.

It likewise tapped the private insurance sector in targeting the 27 million in the so-called marginalized sector, or those who need but are unable to tap the formal life insurance products.

Before 2010, mutual benefit associations (MBAs), with a few exceptions among the larger life insurers, sold the low-cost informal insurance products.

But the microinsurance program, with all its regulatory and actuarial improvements, changed all that.

In the last quarter of 2012, there were 80 microinsurance products – 54 are classified as life products and 26 as non-life products – approved by the IC.

Offering microinsurance products are 19 insurance companies and 17 MBAs with approved microinsurance products.

In fact, 14 of the 17 MBAs are focused solely on IC-approved microinsurance products. About two million MBA members have microinsurance products.

Already, the program benefited more than 95,000 clients/beneficiaries, with payments reaching P1.87-billion in death and disability benefits.

Dooc said that the increasing number of Filipinos getting microinsurance reflect government’s success in instilling financial literacy among the low-income segment of the population, and in empowering them to participate in areas that have long been enjoyed only by the wealthy.

The low-income population is most vulnerable to risks, such as illness, physical injury, accident, death, lose of property and loss of livelihood.

“That these are given at a time of dire need when an uninsured would have dipped with his savings, or use his small business fund, or even resort to high-interest loans, then microinsurance definitely has proven itself a very effective and potent tool for poverty alleviation,” Dooc said.

In a report released early this year, the Asian Development Bank (ADB) said that 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.”

The Economist Intelligence Unit (EIU) also recognized the Philippines as one of the countries in Asia with very strong regulatory regimes and good prospects for microfinance institutions (MFIs) to enter the sector and perform effectively.

In the 2010-2011 period, the country was adjudged as having the best microfinance regulatory framework among 54 countries.

Last year, the country’s entire insurance industry posted a 56.13-percent increase in premium production, generating P150.38 billion, a major leap from P96.32 billion in 2010.

It was also the first time that the life insurance sector, which accounts for 80 percent of the total industry premium, or P120.3 billion, surpassed that P100-billion mark.

That meant an increase in the insurance penetration rate and life insurance coverage.

In 2010, insurance penetration, or the contribution of the insurance sector to the national economy, stood at 1.04 percent of gross domestic product (GDP). The percentage has since increased to 1.42 percent as of end-2012.

But Dooc admitted that the Philippines have still a long way to go compared to its Asean nations.

In Malaysia, the insurance penetration rate was already at 4.8 percent, Singapore at 6.1 percent, and 4.3 percent in Thailand, all in 2010.

The ADB said that in 2009, the insurance penetration rate in Vietnam was 1.55 percent and it was 1.3 percent in Indonesia.

Philippines cited for promoting microinsurance

By Ronnel W. Domingo

Philippine Daily Inquirer

5:26 am | Monday, April 29th,

MANILA, Philippines—International experts cited Philippine achievements in promoting microinsurance, even as they called for global efforts to protect consumers as the industry continues to develop.

According to a report on the 8th International Microinsurance Conference held in Tanzania last November, the high illiteracy rate among potential customers makes them vulnerable to fraud.

“A main concern of regulators…is consumer protection,” said the 98-page report that the Germany-based Munich Re Foundation released in March.

“Some clients do not even know they are buying insurance, as it is known, with credit life,” the report said. “Those who know they have it often do not understand it.”

Credit life is a policy meant to ensure that a borrower’s debt, such as a mortgage, is paid off if he or she dies.

During the forum, the Insurance Commission—represented by Evelyn Singun, head of the IC’s investment division—shared the Philippines’ experiences in promoting microinsurance.

The IC defines microinsurance as insurance with premiums of not more than 5 percent of the daily minimum wage for non-agricultural workers in Metro Manila. Also, the insured amount should not be more than 500 times this minimum wage.

With such wage currently set at P456, microinsurance premium should not exceed P22.80 and the amount insured should not exceed P228,000.

According to the IC, there are 93 insurance products and more than four million policies that comply with this definition.

The government has set a goal of every Filipino having insurance protection by 2020.

In the Philippines, “the main delivery channels for microinsurance are brokers, insurance agents, microfinance institutions, rural banks and cooperative banks,” Munich Re said.

BSP hikes limit for micro-deposits

By Prinz Magtulis (The Philippine Star) | Updated April 23, 2013 - 12:00am

MANILA, Philippines - Small bank depositors living in the countryside will be able to save more money after the Bangko Sentral ng Pilipinas (BSP) raised the deposit limit for micro-banking offices (MBOs).

A single depositor will now be allowed to save up to P40,000 in their micro-accounts, more than double the original P15,000 per depositor account, BSP Deputy Governor Nestor Espenilla Jr. told reporters last Friday.

“People in the countryside are now saving more and more and they want to deal with MBOs because they are accessible to them,” he explained.

“This gives MBOs greater flexibility to service deposit requirements of micro-customers,” he added.

Under Circular 694 issued on Oct. 14, 2010, MBOs are defined as offices that “primarily cater to the banking needs and services of microfinance clients and overseas Filipinos and their beneficiaries.”

Clients, as defined under the circular, include those involved in the agriculture sector such as farmers and fishers, small entrepreneurs and members of the informal sector such as street vendors. Among others, they are allowed to open micro-deposit accounts with less than P100 maintaining balance and avail of micro-credit from MBOs for personal and business purposes.

MBOs, on the other hand, may perform customer care services, accept loan payments, receive and pay out remittances as well as host on-site automated teller machines for those which are connected with bigger banks.

Espenilla said the increase in average deposit balance considered the “increasing” capability of rural workers to generate more revenues for them and their families, most of which are kept with the MBOs.

According to latest central bank data, there were a total of 108 banks which applied for 822 MBOs from January to August last year. These offices covered 63 municipalities out of the 1,634 nationwide.