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