EIU names Phl number 1 in microfinance in Asia

By Ted P. Torres (The Philippine Star) |
Updated December 8, 2014 - 12:00am

MANILA, Philippines - The Economist Intelligence Unit (EIU) has ranked the Philippines as microfinance leader in Asia, and third best globally in a study that covered 55 countries.

Global microfinance leader is Peru, followed by Colombia. In fourth is Chile and fifth is India (second best in Asia).

The Philippines was second best in 2010, and number one globally in 2009, the first time the report was conducted.

The EIU report also noted the Philippines was ranked among the leaders in the regulation and promotion of micro-insurance. The other nations mentioned were Colombia, India and Mexico.

The strength of the top three, according to the report, lies in the presence of a financial-inclusion strategy.

“The Philippine government’s multi-year development plan includes a financial-inclusion strategy with specific commitments, many of which have been implemented, including financial-education initiatives,” EIU said.

The report noted that one of the key strengths of the Philippines is that the Bangko Sentral ng Pilipinas (BSP) is the first monetary regulator to form a body specifically for financial inclusiveness. The National Strategy for Microfinance, formed in 1997, preceded the Inclusive Finance Advocacy Staff.

In close cooperation with other agencies, the BSP also encourages a strategy that offers micro-insurance regulations to facilitate the provision of life, health and other insurance products to low-income populations.

However, the report expressed concern that most of the providers of micro-credit and microinsurance are situated in populous and urbanized areas. Only 26.6 percent of the adult population had deposit accounts, majority of which are also in urbanized areas.

Other major challenges highlighted by the report include the weak and fragile delivery and implementation.

Another stumbling block is the country’s archipelagic situation made up of more than 7,000 islands, where huge financial, security and logistical challenges exist in reaching the poor and unbanked.

The EIU said that in the country’s largest province, Mindanao, coverage for microfinance is negligible. Non-regulated financial institutions, namely, co- operatives, are not well supervised and engage in deceptive practices and charge high interest rates. Over-indebtedness is also an issue with multiple financing,

 “Financial literacy continues to be a problem, as many Filipinos do not understand or value the importance of savings,” the report added.

The EIU is an independent business within The Economist Group providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports. The group also publishes the prestigious The Economist, a business journal.

Phl leads East Asia in microinsurance

By Ted P. Torres
The Philippine Star
Updated November 25, 2014

MANILA, Philippines - Roughly 27.96 million Filipinos had microinsurance coverage in 2013, among the highest in the East Asian region, according to the Insurance Commission (IC).

Likewise, the penetration ratio (as a percentage of population) rose from 7.22 percent in 2009 to 28.62 percent last year.

The Philippines had the highest microinsurance penetration ratio and the second highest penetration, based on a 2013 study commissioned by the Munich Re Foundation.

The Philippines recorded a 20.6-percent penetration ratio or the highest among the top 10 nations covered by the study.

It was followed by the 13.9 percent in Thailand, nine percent for India, 6.1 percent for Bangladesh, and 3.7 percent for Malaysia. The rest of the countries based on ranking are Pakistan, Cambodia, East Timor, Jordan and Nepal.

In terms of penetration, India was tops with 111.1 million with microinsurance policies followed by the Philippines with 19.9 million policies.

China came in third with 11.9 million, Bangladesh with 9.4 million, and Thailand with 9.3 million. The rest of the field are: Pakistan, Indonesia, Malaysia, Nepal and Cambodia.

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

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

At the start of 2013, 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.

IC commissioner Emmanuel F. Dooc said that the numbers are expected to be greater this year, with the increase in the number of participants coming the private sector.

Dooc said that the rapid entry of financial but non-insurance institutions, such Cebuana Lhuillier, in the microinsurance environment would dramatically increase the number of individual coverage.

‘They have one of the largest distribution networks today,” he added.

Philippines ranks 3rd in global EIU financial inclusion ranking

Business, Manila Bulleting
Lee C. Chipongian
November 13, 2014

The Philippines is one of the top three countries in the world that have the most effective financial inclusion programs, based on the “Global Microscope 2014” index of the Economist Intelligence Unit (EIU) which assessed the “enabling environment” of 55 countries.

It is an improvement from the 2013’s ranking which listed the country as fourth in the world.

“Peru, Colombia and the Philippines demonstrate the most conducive environments for financial inclusion,” the report said. The Philippines improved its score to 79 (out of 100) from last year’s 67.9, trailing behind to Peru’s 87 and Colombia’s 85.

EIU highlighted the Philippines’ leadership in the micro-insurance regulation and the government’s committed and documented financial-inclusion strategy or programs. “The Philippines government’s multi-year development plan includes a financial-inclusion strategy with specific commitments, many of which have been implemented, including financial-education initiatives,” said EIU.

The report also discussed the country’s challenges to ensure long-term success such as in implementation. “While the Philippines is at the forefront of promoting and creating an enabling environment for financial inclusion, some sector experts believe that delivery and implementation are weak.”

The fragmented economic sectors are a significant financial, security and logistical challenges, in a country of 7,000 islands. The EIU said the concentration of microfinance institutions (MFIs) in urban and semi-urban areas with larger populations leads to banks charging higher interest rates on loans. “Non-regulated financial institutions, namely, co-operatives, are not well supervised and engage in deceptive practices and charge high interest rates.”

There are also areas that MFIs are too few and scarce, specifically in Mindanao where EIU said coverage for microfinance is “negligible.” The report also pointed out the multiple financing problems or over-indebtedness, however they also acknowledged efforts to improve on this with the establishment of a credit data bureau or the Credit Information  Corp. which should be in place by the end of this year. The Credit Information System Act was legislated in 2008.

“Lastly, financial literacy continues to be a problem, as many Filipinos do not understand or value the importance of savings,” said EIU. The report cited a World Bank data that only 26.6 percent of the adult population has a deposit account.

The EIU said the Bangko Sentral ng Pilipinas’ (BSP) efforts to improve and promote financial literacy as part of its financial inclusion agenda have gained traction over the years.

It noted that the BSP was the first central bank in the world to have an “Inclusive Finance Advocacy Staff” for financial inclusion.

“The BSP continues to promote an enabling environment for financial inclusion through the issuance of various regulations and circulars, which seek to encourage new entrants of financial-services providers and products that serve the poor, while also ensuring the safe provision of such services,” said EIU.

In May this year, the central bank approved a stronger consumer protection framework which includes a separate system that will be implemented by 2016.

PHILIPPINE MICROHEALTH LOGO

Gov’t. body seeks public views on health insurance

Sunstar
November 21, 2014

THE government’s Technical Working Group (TWG) on MicroHealth yesterday conducted the first of its series of public consultations on the Health Microinsurance (HMI) Framework, which will cover all people, most especially the poorest among the poor.

Joselito S. Almario, deputy executive director of the Department of Finance-National Credit Council(DOF-NCC), said the proposed HMI framework is intended to encourage private sector support to the Universal Health Care (UHC) outlined in the Philippine Development Plan (PDP 2011-2016), which safeguards equitable access to health care for all Filipinos, particularly the poor.

Almario, the TWG chairman, said the PDP envisions a National Health Insurance Program (NHIP) that encourages public-private partnerships (PPP) to respond to the current gaps in healthcare risk protection in the country.

The joint press release distributed during the press conference that followed after the morning session stated that the private sector under the proposed Microhealth Framework is expected to complement and supplement Philhealth’s social health insurance packages especially for the low income and informal sectors.

Stats

Although 82 percent of the 100 million Filipinos have some form of health coverage, the gap remains wide for healthcare financial risk protection, particularly to the most vulnerable low-income sectors.

Philhealth Chief Social Insurance Officer Maria Cristina C. Ramos said Philhealth provides basic health care packages, but has not covered medical transport, drugs and medical supplies.

Ramos said that with microinsurance, they hope all Filipinos, rich and poor, will be covered.

Almario said microinsurance offers a maximum benefit of P500,000 for a maximum coverage of P40.

The consultations aim to draw together views, concerns and support of public and private providers and practitioners in health and insurance sectors on the draft framework.

The TWG on MicroHealth is composed of IC, DOF-NCC, Philhealth, Department of Health (DOH), the insurance industry and the Association of Health Maintenance Organization in the Philippines (AHMOPI), with the support from German Development Cooperation (GIZ).

Support

The GIZ, through its regional program on microinsurance, the Regulatory Framework Promotion on Pro-poor Insurance Markets in Asia (GIZ-RFPI), is providing technical and financial support.

Almario said microinsurance responds to the financial risk protection needs of the low-income and informal sectors. While the products have affordable premiums, the benefits that correspond to the risks and claims settlement is fast.

Ferrer said the MicroHealth framework is envisioned to augment the UHC program through a viable and sustainable private sector microinsurance industry.

Ferrer said Microhealth is expected to provide every Filipino greater coverage and wider access to simple, affordable, appropriate and effective health microinsurance products and services.

Source: Sunstar

Micro-insurance gaining popularity in PH – Fitch

Manila Times
February 11, 2014 8:42 pm
by MAYVELIN U. CARABALLO
REPORTER


Micro-insurance is gradually gaining its popularity in the Philippines particularly in the poorest segment of the population, Fitch Ratings said recently.

In its special report “Philippine Insurers Show Ample Growth Potential, Face Changes,” the ratings agency noted that the Philippines continues to be plagued by poverty, with poverty incidences averaging at least 20 percent per year (2009 to 2012), and worse in times of disaster.

“This has led to a gradual increase in the popularity of micro-insurance—as it raises insurance awareness while keeping it affordable for the lower classes,” it said.

Meanwhile, Fitch lauded the Philippine government in creating various measures in regulating and promoting the expansion of micro-insurance in the country.
“The Philippines government has put in a tremendous effort to promote micro-insurance,” it said.

The agency cited that these measures include the establishment of micro-insurance websites and social media tools; the issuance of micro-insurance framework and simple prototype life/nonlife contracts; and the additional permits issued for insurers, and microfinance institutions (MFI) to enter the market.

Fitch said that these efforts have led to double-digit growth in the number of Filipinos with micro-insurance coverage. Based on the data from Insurance Commission, the ratings agency said that from 6.6 million in 2010, there were now 12.9 million Filipinos covered by micro-insurance by end-2012.

“The demand for and awareness of micro-insurance is still growing, and Fitch believes that continuous government support will continue to play a vital role in penetrating the lower-income classes,” Fitch added.

On the other hand, the ratings agency noted that despite being the 12th most densely populated nation with over 97 million people, the Philippine insurance industry remains heavily underpenetrated compared with its regional peers.

Fitch attributed the problem to the fact that the public does not fully appreciate the benefits of insurance, together with issues of insurance affordability for the low-income population.

However, with the improved economic conditions that boosted Filipinos’ standard of living and led to rising urbanization trend, the agency is positive on the expansion of the insurance industry in the coming years.

“Rising levels of income and financial literacy have led to a gradual rising urbanization trend in the last five years,” it said.

Fitch noted that the average urbanization rate in the country stood at 65 percent, marginally lower than the world’s 69 percent.

“Fitch takes a positive view on the growing urbanized trend, as this will drive higher demand for wealth accumulation and health protection products—and in turn, propel higher premium growth,” it said.

Developing microinsurance: The path taken

Business Mirror
Opinion
12 Aug 2014
The Technical Services Group of the Insurance Commission

THE Insurance Commission (IC) has taken great strides toward the promotion of microinsurance in the country, considering the initiatives and strategies undertaken over the years.

The most important of these initiatives is the crafting and issuance of the Regulatory Framework for Microinsurance, as embodied in Insurance Memorandum Circular (IMC) 1-2010. In this document, the IC defined the parameters for a microinsurance product in terms of the amount of daily premiums and face amount. But with the enactment of the New Insurance Code, the maximum amount of daily premiums and the maximum sum of guaranteed benefits of a microinsurance product have been pegged at 7.5 percent of and 1,000 times the current daily minimum-wage rate for non-agricultural workers in Metro Manila, respectively.

Another significant stride toward the promotion of microinsurance was making it more accessible to the public. Again, this was done through IMC 1-2010, in which accredited life and nonlife insurers, cooperative insurance societies, and mutual-benefit associations were allowed to issue IC-approved microinsurance products.

Moreover, to encourage their increased participation in providing microinsurance products, the IC approved new distribution channels—categorized as microinsurance agents and microinsurance brokers—which can be availed of by interested individuals and groups, including rural banks, microfinance institutions, non-governmental organizations and cooperatives, and prescribed lower capitalization requirements or a guaranty fund for microinsurance providers.

Likewise, it expanded the set of admitted assets to include premiums collected from the sale of microinsurance products, and even relaxed licensing requirements for agents solely engaged in the solicitation of microinsurance business.

In terms of customer protection, regulations were issued to ensure these microinsurance providers’ financial solvency at all times, so that they shall have the liquidity to fulfill their obligations to their insureds or members as they fall due.

Thus, the IC, together with the Securities and Exchange Commission and the Cooperative Development Authority, issued a joint memorandum circular requiring all entities engaged in informal insurance activities to formalize their operations, either by obtaining a license from the IC or by partnering with a licensed microinsurance provider. This way, the premiums and contributions of the insureds or members are safeguarded through the regulatory policies, in particular, through the circular on performance standards.

This circular prescribes a set of benchmarks or indicators that shall be used in evaluating the microinsurance operations of licensed providers, so as to ensure their stability and capability to continue offering microinsurance products and services. The performance indicators cover such areas as solvency and stability, efficiency, governance, understanding of the product, risk-based capital and outreach. Serving as an early warning system, the IC, through these indicators, can identify entities with specific concerns on the financial condition of their microinsurance operations as early as possible.

Also of great importance is the circular issued for the protection of microinsurance policyholders, the one on the Alternative Dispute Resolution Mechanism. Through the guidelines set out in this circular, claims disputes or complaints related to microinsurance contracts may be settled expeditiously and at less cost to policyholders.

The last of these activities—and this could be the most extensive that was undertaken to promote microinsurance—was the institutionalization of financial literacy. Following the creation of a document called the Road Map to Financial Literacy on Microinsurance, which detailed the campaign strategies directed toward microinsurance stakeholders,
a series of advocacy seminars and trainings, as well as news conferences, were conducted in 17 key regional centers of the country.

Support from collaborators

THE IC recognizes the fact that, by itself, it could not have achieved the feats stated above.

The Department of Finance-the National Credit Council, other government agencies, our private partners, industry associations and academe all selflessly shared their time, expertise and resources to help develop and promote our microinsurance advocacy.

Lending even more extensive support are two multilateral agencies that literally acted as the wind beneath IC’s wings, promoting our microinsurance program as a model for financial-inclusivity efforts not only in Asia, but also in many parts of the world.

The IC is most grateful to these two organizations, the Asian Development Bank (ADB) and the German Technical Cooperation (GTZ), for their wholehearted support for our microinsurance program, making it possible for millions of Filipinos to understand the value of, and have access to, insurance cover against life’s harsh blows.

That we now have about 20 million Filipinos from the low-income sector enjoying the benefits of microinsurance is a testament to the greatness that can be achieved when worthy projects are pushed by people and entities sharing a common vision and goal.

Presently, both the ADB and GTZ have ongoing projects with the IC for the continuous development of microinsurance and related endeavors.

With these collaborations, the goodness continues.

IC to issue new circular revising the SCA for MBAs

Opinion, Business Mirror
05 Aug 2014
Written by Bernandino B. Camba

NOT too many people know that the mutual-benefit association (MBA) industry has always been under the regulatory supervision of the Insurance Commission (IC). What the savings-and-loans company is to the Bangko Sentral ng Pilipinas, the MBA is to the IC.

As a key stakeholder in the country’s national strategy for the development of microinsurance, MBAs are key in providing every Filipino with equal access to insurance. In contrast to regular insurance companies, MBAs are nonstock and nonprofit organizations that offer social, economic and/or educational programs for their members (and their families) to ensure the protection and development of the same. Accordingly, the IC recognizes the role that MBAs have in the government’s program for inclusive growth and development and, thus, provides the necessary regulation to help them grow and stay stable.

In 2006 the IC issued IC Circular Letter 33-2006, which revised the old Standard Chart of Accounts (SCA) for life-insurance companies, and introduced a Uniform Chart of Accounts for both life-insurance companies and MBAs. This circular lists the uniform account titles to be used by an MBA in recording similar transactions. Each account’s nature described adopted the latest International Financial Reporting Standards (IFRS)/Philippine Financial Reporting Standards (PFRS) rulings and issuances.

The issuance of the circular formalized the accounting review processes for MBAs. This reduced queries and complaints from MBAs during the audit period and standardized account-reporting.

However, with the updates and changes in the IFRS and PFRS in the last eight years, it is again necessary to review and revise the SCA, align it with the latest IFRS rules, and differentiate the account titles for for-profit and not-for-profit organizations. The proposed issuance of the IC circular for the new SCA is one way to ensure that the differences between regular insurance companies and nonprofit organizations are recognized.

There are three major changes:

1) Accounting for fund balances is now unique for an insurance company and an MBA. For example, before, “retained earnings” were used to describe accumulated earnings for MBAs. Now the term “fund balance” is used.

2) “Legal policy reserves” required for insurance companies are now classified into two accounts for MBAs: “Liability on individual equity value,” which represents the total amount of obligations set up by the MBA on membership certificates pertaining to the 50-percent equity value; and “Basic contingent benefit reserves,” which represents the total actuarial reserves set up by the MBA pertaining to the basic life benefit that is in force at the end of the accounting period.

3) In the Assets Section for MBAs, several accounts were also added. These include the Unremitted Member’s Contributions, Dues and Fees account for the unremitted collections on membership fees at the end of the period, and the Unremitted Premiums account for the unremitted collections on all optional policies at the end of the period.

The IC, with the help of the Department of Finance, the MBAs and funding from the Asian Development Bank, has already finished its consultations with various industry stakeholders and, as of last week, conducted its seminar for IC examiners and other employees. The next step is to organize seminars in Luzon, the Visayas and Mindanao for the MBAs to be familiar with the proposed new SCA for MBAs in time for the IC circular’s official publication.

With the completion of the nationwide seminars for MBAs, the IC expects that it will improve financial-data collection, reporting, accuracy and comparability across the industry, and will also provide full disclosure of its financial standing and position to its members and other regulators.

*****

Bernardino B. Camba is a member of the Financial Examination Group of the Insurance Commission.

Rural banks to serve more Filipinos with increased microinsurance benefits

Manila Times
July 23, 2014 9:57 pm


The havoc created by Typhoon Yolanda in the Visayas late last year underlines the value of having security against unexpected hazards. Fortunately, the realization has snowballed into the implementation of measures that seek to increase the coverage of microinsurance.

Under the new Insurance Code, benefits that may be derived from a microinsurance policy have been raised to up to 1,000 times the minimum daily wage of non-agricultural workers in Metro Manila or up to P466,000. Premium, meanwhile, is now computed at 7.5 percent of the same daily wage.

The Bangko Sentral ng Pilipinas likewise issued BSP Circular 841 to reflect the change in the maximum amount of premiums and benefits in the manual of regulations for banks.

The increase in the cap of microinsurance benefits expands protection while ensuring that products remain affordable to the low-income sector. To illustrate one of its benefits, a microinsurance credit life product may now be linked to a client’s loan amounting to P300,000. In case of death of the client, the family will not be burdened with the payment of the loan balance.

The same can be said of a microinsurance product linked with a bank’s micro-deposit account. To encourage clients to save more, a microinsurance policy is tied up to the client’s savings account and the amount of insurance benefit may be computed based on the average daily balance of the deposit.

Noteworthy at this point are previous BSP issuances increasing the amount of loan to microenterprises and small businesses through Microfinance Plus and the average daily balance of microfinance savings account from P15,000 to P40,000.

To increase insurance coverage in the country and to provide the low-income sector access to insurance products, rural banks have been allowed by regulators to market and sell microinsurance products to their clients.

Strategically located nationwide, rural banks are seen as effective distribution points in providing protection to the most vulnerable sector of the society. In fact, rural banks with offices and branches in provinces hit by Yolanda contributed to the relief efforts in the aftermath of the deadly typhoon.

Industry reports show that by end of 2013, there were 40 rural and cooperative banks licensed as microinsurance agents, serving about 1.3 million Filipinos with active microinsurance policies.

Microinsurance is seen as vital in providing protection in the agriculture sector where farmers and fisherfolk are most vulnerable to natural calamities.

An average of 20 typhoons hit the Philippines annually and experts predict stronger typhoons as a result of climate change. When Yolanda struck the country last year, it incurred $13 billion in economic losses but only $1.5 billion insurance losses due to the fact that the areas hit by the typhoon had very low insurance penetration. With measures such as the increase in benefits, we can expect that microinsurance will gain ground even more.

Typhoon Rammusan skipped Manila; insurance loss low

Source: AIR eDaily | 18 Jul 2014

Typhoon Rammasun which made landfall in the central Philippine province of Sorsogon on Tuesday and was seen as heading towards Manila, later shifted away from the capital towards China. Insurance losses are not expected to be significant.

US-headquartered catastrophe modelling firm AIR Worldwide noted that, “although smaller and much less intense than deadly and highly destructive Super Typhoon Haiyan - which devastated parts of the Philippines in November 2013 -Typhoon Rammasun nonetheless prompted sizeable evacuations and resulted in some disruption of transportation, as well as school and office closings. Widespread damage is not expected, but some areas could experience storm surge flooding, flash flooding, and/or mud slides, as well as wind damage.”

More than 423,000 fled to emergency shelters, according to the National Disaster Risk Reduction and Management Council. Rammasun caused at least 20 deaths compared to more than 6,300 in the case of Haiyan. Many areas lost power and telephone connections.

In an alert posted at Rammusan's landfall in the Philippines, AIR said that “typhoon and flood damage are usually covered together in the Philippines and are given under separate fire policies with named perils extensions. Insurance penetration varies by region. Typhoon Rammasun will affect some densely populated and urban areas, including Manila, where insurance penetration for residential lines would be around 5-10%, 25-30% for commercial/industrial. Still, given that insurance penetration in this area is around 10% to 20%, insured losses are not expected to be significant as a result of this typhoon.”

In a post-landfall report, AIR noted that Rammusan weakened as it crossed Luzon and passed to the south of Manila.There have been no reports of major flooding to the Metro Manila area.

Rammasun is the seventh typhoon to lash the Philippines this year. About 20 typhoons and storms hit the Philippines each year, making it one of the world’s most disaster-prone countries

Microfinance borrowers raise size of loans to P8,000 average

Manila Bulletin
by Lee C. Chipongian
June 18, 2014

The country’s microfinance sector on average release about P8,000 per borrower, a gradual increase compared to P6,150 per borrower seven years ago.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. assures that the microfinance sector remains on an upward trend, with P8.1 billion total microfinance loans released to 1,017,351 local borrowers as of end of the third quarter 2013.

“The microfinance sector continues to grow and empower more microentrepreneurs,” said Tetangco during yesterday’s 2013 Citi Microentrepreneurship Awardees event, with the Microfinance Council of the Philippines.

“In other words, bank loans to microenterprises increased by 102 percent in seven years, while the number of microentrepreneurs who accessed micro loans from banks increased by 56 percent,” he noted.  Over the same period, average micro loans increased by 30 percent as well.

Tetangco remarked that in 2013, the accumulated bank savings of microentrepreneurs totaled P8.8 billion, about 525 percent more from P1.4 billion in 2006. This means the average deposit per microentrepreneur increased from P2,000 in 2006 to P8,650 in 2013, an increase of 332 percent in seven years.

“We realize these are cold figures. However, the stories behind these figures prove the power of microfinance to transform and improve lives,” said Tetangco.

Tetangco said the BSP continues to improve the regulatory environment for banks with microfinance operations. The most significant of these policy changes are the increase in the the average daily balance of microdeposits, microinsurance now cover families of microfinance clients and improved procedures in the product approval of housing microfinance loans and micro-agri loans.

Earlier this month the BSP also approved revisions to the way banks report microfinance and microenterprises loans to improve data capture. These should improve the quality of data reported by banks which would “serve as inputs in formulating policies to further enhance the present regulatory environment in support of MSME (micro, small and medium enterprises) lending.”

There are 186 banks offering microfinance services and products. Filipinos’ access to microcredit, said Tetangco, is the first step to gaining financial independence.

The BSP still face the challenge of financial inclusion especially since only 20 percent of Philippine households have bank accounts out of a population of 100 million.

Philippines in top five of insurance coverage

Mindanao Daily Mirror
https://www.facebook.com/MinDailyMirror
Posted May 29, 2014

A microinsurance agent-company reported that the country now ranks in the top five with insured informal sector at 21.37 percent of the 91 million Filipinos since the government launched the program through the Department of Finance (DOF) in partnership with the Asian Development Bank of the Philippines.

Cebuana Lhuillier MicroInsurance (CLMI) regional manager Eduardo Flores said the company alone has already issued 1.5 million certificates last March to its clients, mostly families of migrant workers and pawnshop customers, complementing the government’s program to promote social protection and financial inclusion.

CLMI, which is acting as broker for seven accredited insurance providers, also covered public utility vehicle drivers. It is targeting seven million of its clients in Mindanao.

Last month, CLMI opened its Mindanao office in Davao City as part of its expansion to reach out to more people outside of its branches.

”We would like to bring into the people’s awareness, particularly those who are in the financially-challenged and vulnerable sector, that insurance need not make a big dent on one’s budget,” Flores said.

In 2012, DOF’s National Credit Council advocated for microinsurance coverage among fishermen, drivers, construction workers and other informal income earners, who are touted as “goldmines” for microinsurance coverage if providers have the right product and right pricing.

According to DOF, the past years showed that 66 percent of the more or less 30-million employed informal sectors are not insured but, are source of millions for microinsurance companies. DoF sees the informal sectors as a huge market considering that 99.6 percent of the total number of businesses is micro and small-medium enterprises and 96 percent of these have workers on job contracts.

The poor are considered “high risk” market in terms of vulnerability to unforeseen circumstances such as natural calamities. Microinsurance is designed to address the poor constituents, who do not normally buy insurance products because it beyond their means.

One flagship product of CLMI is the Alagang Cebuana Plus (ACP), which is selling one million certificates per month, offering affordable personal accident coverage for only P25. Those who avail ACP are assured of a P20,000 accidental death , dismemberment and disability and P5,000 fire-cash assistance, valid for four months.

Last month, 10 families who were victims of the Isla Verde fire incident were awarded their cash assistance even if they have just availed of the ACP.

AYAN C. MELLEJOR/MDM

Microcredit Impact Revisited

Huffington Post
Tilman Ehrbeck Headshot
CEO, CGAP
Posted: 04/29/2014 11:50 am EDT Updated: 04/29/2014 3:59 pm EDT

A few years ago, a storm was raging in the microcredit world. Nobel laureate Muhammad Yunus, a pioneer of the idea behind giving small working capital loans to groups of mainly poor women based on social collateral, had promised that microcredit would end poverty and "put it in the museums." But in an influential 2010 study, a group of researchers who spearheaded the concept of randomized-controlled trials (RCTs) in development economics, found no evidence that microcredit was making poverty history. What followed was a heated debate about the impact of microcredit that occasionally flares up even today. Microcredit proponents and practitioners pointed to their experience and cited earlier research showing the benefits of microcredit. The RCT researchers dismissed that earlier work, mainly on methodological grounds.

While the technical arguments might seem arcane, the underlying question of the impact of a development intervention is an important one. This is particularly true when scarce philanthropic or tax-payer money is used to subsidize the initial stage of a market development. After all, the money could be used elsewhere. So, the development community decided to gather more evidence across a broader range of settings of financial access for the poor and compare it with the best understanding of economic thinking.

Some 20 RCTs later, a more nuanced picture has emerged, which supports broad financial inclusion efforts: mounting evidence shows that on the whole, access to financial intermediation helps poor families in developing countries improve their lives.

To better understand the impact of financial access for poor families in the developing world, it is important to realize that they live and work in the informal economy -- not by choice, but by necessity. Traditional economic thinking distinguishes between the objectives and needs of individual households and firms. Individuals are selling their labor in the market and strive to smooth consumption over the life-cycle. When people are young, they need to invest; at the prime of their earnings power, they save; and in old-age, they spend what they have saved. On aggregate, households are net savers. Firms, on the other hand, compete for investible funds to finance their operations and growth. On aggregate, firms are net users of savings. Financial markets are supposed to make the match between savers and users and to allocate capital towards the highest productive uses.

But for poor households in the informal economy, this distinction is not meaningful. In economic terms, they are consumption-smoothing households and capital-seeking small enterprises at the same time. They need a broad range of financial services -- and as the growing body of "financial diary literature" has shown, they use these services too. Without access to formal financial services, poor households have to rely on the age-old informal mechanisms such as the rotating savings club or the money-lender, which can be unreliable and very expensive.

A growing body of evidence suggests that access to formal credit helps poor families with their often subsistence-enterprise activities, but its impact on broader family welfare measures is less clear. Formal savings, on which there are fewer studies to date, seem to have a more unambiguously positive impact. It helps to manage cash flow spikes and to smooth consumption, but it also helps as a mechanism to accumulate working capital with more lasting household welfare improvements.

Insurance is another financial product that can help poor households mitigate risk and manage shocks. The impact studies on insurance to date have looked at agricultural insurance for smallholder farmers. Agricultural micro-insurance seems to have a strong impact on the underlying farming activity and household welfare. Studies showed that insurance made smallholder farmers switch to higher-yielding cash crops and use more land and inputs such as fertilizer. The resulting higher yields and income led to fewer missed meals and school days for their children. But these traditional insurance designs suffered from low uptake due to key barriers, such as lack of trust and liquidity constraints.

Increased evidence on the impact of financial services for the poor also includes intriguing examples of improvements to local economies. For example, Banco Azteca in Mexico in 2002 rolled out over 800 new low-cost branches overnight in conjunction with a retailer. Comparing the impact of these new branches on their communities with similar ones not covered by the roll-out, researchers found increased local economic activity and higher income in the roll-out locations.

Policymakers at the global and national level have increasingly embraced financial inclusion as an important soft infrastructure ingredient for social and economic progress. The G20 has made financial inclusion one pillar of its development agenda and some 50-plus countries have made explicit financial inclusion commitments. There is macroeconomic evidence to show that economies with deeper financial intermediation tend to grow faster and reduce income inequality. This explains why G20 leaders have made financial inclusion a global development priority. More recently, World Bank President Jim Kim has called for universal access to basic transaction services as a building block for economic development by 2020. The growing evidence clearly supports the underlying rationale for the efforts and aspiration of these policy makers.

While the "does microfinance work" debate might continue between proponents and skeptics, the emerging bigger picture around impact is quite clear. We are seeing more and more examples of how appropriate financial services can help improve individual and household welfare and spur small enterprise activity. This broader look seems to answer the question of whether and how financial inclusion can improve the lives of the poor and will also help us to focus and sharpen our future market development efforts.

Follow Tilman Ehrbeck on Twitter: www.twitter.com/@TilmanEhrbeck

Insurance Commission advocates least cost in microinsurance disputes

Philippine Information Agency
BY: LEONARD T. PINEDA I
Tuesday 1st of April 2014

ILOILO CITY, April 1 (PIA6) --- Over a hundred stakeholders and institutional partners in Western Visayas were educated on alternative dispute resolution on microinsurance (ADReM) through a seminar held recently at the Smallville21 Hotel here.

In a media release, Insurance Commission (IC) Deputy Commissioner for Financial Services Ferdinand George Florendo said that they have been going around the country presenting the latest circulars by the IC with respect to consumer protection for microinsurance clients particularly the low-income Filipinos.

“The objective of the seminar was to reach out to stakeholders and institutional partners to get feedback, get information, and learn what work and what problems to be addressed,” he said.

The ADReM is a mechanism devised by the Department of Finance – National Credit Council (DOF-NCC) and the IC, together with the Technical Working Group from representatives of insurance associations, stakeholders, including the German Development Cooperation (GIZ), to protect the poor.

During the seminar, participants and partners from the microinsurance industry in Western Visayas were educated on the circulars issued to encourage various insurance providers to develop insurance products for the poor and expand their coverage.

The seminar also emphasized the operational elements of making redress mechanism for microinsurance claims disputes through the Least-cost, Accessible, Practical, Effectively and Timely resolution of disputes (LAPET).

The ADReM circulars are initiatives of the Insurance Commission and the Technical Working Group of ADReM to provide an enabling policy and regulatory environment for microinsurance, primarily for consumer protection.

According to Florendo, the Philippines is being looked at as good practice for microinsurance in Asia. At present, almost 20 million Filipinos out of the 97 million populations are covered by microinsurance.

Meanwhile, Dr. Antonis Malagardis, Regulatory Framework Promotion of Pro-poor Insurance Markets (RFPI-Asia) program director, said they have been working in the country for the last five years to support
and facilitate the process of developing inclusive insurance with the Philippines as a priority.

Malagardis also highlighted the Philippines’ achievement in the last four years with 20 percent of Filipinos covered through microinsurance compared to only three percent in 2008.

“The challenge is not only to increase the coverage further but to make it sustainable in the years to come,” he added. (JCM/LTP/PIA-Iloilo)

- See more at: http://news.pia.gov.ph/index.php?article=2421396329450#sthash.WNRXG7Gg.dpuf

Empowering Filipinos through microinsurance

April 2, 2014 8:58 pmManila Times

The first quarter of 2014 has gone quite peacefully, if you would discount the usual political disturbances. Filipinos probably heaved a sigh of relief at this as many still struggle to recover from the previous year’s tide of unpleasant experiences.

Last year was rather unforgettable, as natural disasters battered the country and caused damage worth billions of pesos. It was a painful eye-opener but it taught us one thing—the value of preparation. This is where microinsurance enters, as a hero with a promise that while you cannot control the acts of nature, you can control how much pain it will cause you.

As of end-2013, the Insurance Commission (IC) noted that the number of Filipinos insured surged 72 percent to almost 23 million from 10 million in 2009. This remarkable feat is attributable to the growing number of financial institutions offering affordable insurance policies to their clients.

The rural banking industry leads the pack in this endeavor, playing a key role in mainstreaming microinsurance, given its exposure to microfinance and its army of over 2,000 branches strategically located in far-flung areas where the usual takers of the product reside.

The Bangko Sentral ng Pilipinas further affirmed the significance of the industry when it issued Circular 683 in 2010, granting rural banks the authority to market microinsurance products deeming it as a “necessary and complementary component” of their primary business.

Microinsurance is a critical component of inclusive growth because it allows the poor to avail of life and property insurance coverages at low premium rates. By being an active provider of microinsurance, rural banks are not only reinforcing their relevance to their clients but the nation as well.

Stepping up to this responsibility, the Rural Bankers Association of the Philippines (RBAP), through its technical arm, the Rural Bankers Research and Development Foundation, Inc. (RBRDFI), has been conducting trainings to build the capacity of rural banks as effective channels of microinsurance.

The training program conducted by the RBRDFI aims to educate attendees on the fundamental principles of microinsurance, regulatory documents that govern engagement to such and viable marketing strategies. At the end of the two-day training, participants also take a qualifying exam required by the IC for microinsurance licensing.

On March 27 and 28, the RBRDFI held the 24th batch of microinsurance training at the RBAP office, bringing the number of rural banks trained and qualified for microinsurance licensing to 213 from 14 in the program’s pilot batch in 2011. There were also 485 bank officers certified to be appointed as soliciting officers.

The role of the rural banking industry in the growth of microinsurance also goes beyond the supply side of the equation. The RBAP-BRDFI likewise takes part in the development of regulatory frameworks and financial literacy programs to educate the public.

One of the initiatives done in partnership with RBAP is the development of the Alternative Dispute Resolution for Microinsurance (ADReM), a settlement program that seeks to resolve claim disputes outside courts to cut down the costs and expedite the process. As part of the Technical Working Group that drafted the framework of ADReM, RBAP provided first-hand information on settling client disputes and maintaining an effective client-agent relationship.

All these efforts, both from the government and the private sector, emphasize how much the country wants to achieve its goal of financial inclusion. As microinsurance continues to gain ground with the help of the rural banking industry, we might be a step closer to that goal.

CBIG pays claims of Yolanda victims

Manila Bulletin
Mon, Mar 24, 2014

Country Bankers Insurance Group (CBIG) has paid, as of February 21, 2014, P5.67 million to benefit 956 policy holders who have been displaced or disadvantaged due to typhoon Yolanda, according to Eileen Infante-Enobal, assistant vice president for Claims & Microinsurance of Country Bankers.

CBIG clients have benefitted from their purchase of CB Kalinga, a microinsurance product which protects the insured in risks associated with losses such as death, illness, or injury of a family member. Its benefits include Financial Assistance for irreparably damaged houses and Instant Abuloy for families who lost lives.

A substantial amount of claims covered fisherfolk, farmers, vendors and members of the marginalized sector in the areas of Leyte, Cebu, Iloilo, Biliran, Sorsogon, Catanduanes and in other affected areas in the Visayas.
CBIG is composed of Country Bankers Life Insurance Corporation (CBLIC), a life insurance company that has been around for 48 years now, and Country Bankers Insurance Corporation (CBIC), a non-life insurance company serving its clients for the past 53 years.

Meantime, CBIG, thru its Senior Vice President and General Manager Geraldine Desiderio-Garcia said the company is committed not only to make insurance affordable but accessible through solid partnerships with rural banks and microfinance institutions all over the country.”

CBIG, through its microinsurance products aims to help educate Filipinos on the value of insurance by promoting insurance consciousness to a broader market.

It is committed to promote measures that would protect the disadvantaged, which carries the heavier burden in times of catastrophe, in times of financial distress.

CBLIC offers a wide range of products from life insurance for CEOs and executives to individuals and families, including credit group life and microinsurance for small entrepreneurs, farmers, and fishermen. On the other hand, CBIC provides insurance products such as fire, motor vehicle and personal accident, to name a few.

Microinsurance industry girds for Asean 2015

Posted by Positive News Media
Mar 29, 2014 in Business News | 0 comments

ILOILO CITY, March 29 (PNA) — With the 2015 integration of South East Asian nations nearing, the microinsurance industry is looking at the possible implications that may arise from the establishment of a single-marketcommunity.

“We are currently working with the Department of Finance (DOF) on (that issue),” said Ferdinand George Florendo, Deputy Commissioner for Financial Affairs of the Insurance Commission (IC).

He added that the IC is developing dialogues with mutual benefit associations and microinsurance providers in confronting the challenges linked with the looming integration. They are weighing the possible opportunities and threats that go along with the lessenedtrade restrictions and the elimination of tariffs that highlight the Asean 2015 integration plan.

Florendo noted two scenarios. The first is that microinsurance providers may expand to other markets in the South East Asian region. On the other hand, microinsurance providers abroad may come to the Philippines and take a large market share.

There are at least 19 million Filipinos, most of whom belong to the “poorest of the poor,” who are covered by microinsurance.

Florendo said that there is a need to study these challenges and analyze their potential effects to the Philippine microinsurance industry.

“The IC has come up with talks on what to get from our Asean neighbors, and what they can get from us,” Florendo said, adding that there is a need to strengthen the local microinsurance industry through the national government, local government units and the private sector.

In the meantime, the IC is putting much focus on protecting insurance clients as well as helping marginalized sectors access microinsurance products.

The IC is also targetting that insurance shares have a three percent penetration rate in the country’s gross domestic product for it to be at par with other nations in the South East Asian region. (PNA)
CTB/AJP/RCA/VLO

Alternative dispute resolution seminar set

Sunstar
Monday, March 24, 2014


THE Department of Finance-National Credit Council (DOF-NCC) and the Insurance Commission (IC) will hold Alternative Dispute Resolution Microinsurance (ADReM) seminar for stakeholders in the Visayas on Thursday, March 27.

The one-day seminar is the final leg in the series of seven nationwide information dissemination campaigns. ADReM series steered to discuss options and microinsurance mechanisms to address complaints on benefit claims outside the courtroom.

Participants and partners from the microinsurance industry will be educated with videos and interesting presentations about microinsurance initiatives, circulars, financial literacy, ADReM process and accreditation procedures for mediators-conciliators.

In addition, participants will be engaged in discussions with Insurance Commission Deputy Commissioner Ferdinand George Florendo and DOF-NCC director Joselito Almario.

Microinsurance is insurance for low income earners to protect them against specific perils. It comes with affordable premiums, guaranteed benefits correspond to the risks, and claims settlement is fast. Today, 19 million Filipinos out of the 97 million populations are covered by microinsurance.

The ADReM method is now formalized to support the Philippine Government’s effort for inclusive growth by reaching out to the poorest of the poor. It aims to minimize expenses, time and delays of litigation, and provides options for out-of-court resolution of disputes arising from denied microinsurance claims.

The ADReM structural process, according to IC Deputy Commissioner George Florendo, will further promote microinsurance through the principles of Lapet, or Least-cost, Accessible, Practical, Effectively and Timely resolution of disputes.

The DOF-NCC and IC worked in collaboration with key representatives from the microinsurance industry with technical support from the German Development Cooperation through its regional program, Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia to help implement the provisions of the ADReM Framework.

The ADReM Framework was launched last October 2012 with the intention of ensuring consumer protection by microinsurance clients. (PR)

Micro insurance is within reach of everyone

BY: LEONARD T. PINEDA I
Thursday 27th of March 2014

ILOILO CITY, March 27 (PIA) --- Farmers and other minimum-wage earners are urged to avail of microinsurance to protect their fragile livelihoods and lives against inevitable risks and unexpected catastrophes.

In a seminar organized by the Department of Finance- National Credit Council and the Insurance Commission (IC) held Thursday, IC Deputy Commissioner Ferdinand George Florendo said said there are still a number of Filipinos who have not insured themselves although the microinsurance was introduced in the country way back in 2006.

Florendo said that financial literacy is important to raise awareness on how insurance for the low-income households works and how it can benefit them.

According to the National Strategy for Microinsurance and the Regulatory Framework, microinsurance caters to the low-income sector and a means to meet their needs for risk protections and relief against distress or misfortune.

Microinsurance offers protection against various risks including death, accident and illness, fire and other extended perils, calamities, disasters, casualty and other contingent events.
The amount of premium or contribution per microinsurance policy can range from less than P1.00 up to P19.00 per day. This means that the premium on microinsurance product can be as low as P30.00 per month.

Under the framework, the guaranteed benefit of one microinsurance policy shall not exceed P190,000. It is estimated that for a poor family, this amount can already provide 16.5 months of lost income resulting from a contingent event happening to it.

Florendo said that with the increasing 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.

He added that microinsurance is considered an important contributor to the national poverty alleviation strategy. (JCM/LTP/PIA-Iloilo

- See more at: http://r06.pia.gov.ph/index.php?article=2421395909020#sthash.WvhnuT9V.dpuf

Micro insurers to seminar on alternative dispute resolution

BY: LEONARD T. PINEDA I
Monday 24th of March 2014

ILOILO CITY, March 24 (PIA) --- Stakeholders from the microinsurance industry in the Visayas can take part in an Alternative Dispute Resolution Microinsurance (ADReM) Seminar on Thursday, March 27, 2014 at Smallville 21 Hotel here.

In a media release, the one-day ADReM seminar is the final leg in the series of seven nationwide information dissemination campaigns conducted by the Department of Finance-National Credit Council (DOF-NCC) and the Insurance Commission (IC).

The ADReM series steered to discuss options and microinsurance mechanisms to address complaints on benefit claims outside the courtroom.

The seminar will educate participants and partners from the microinsurance industry about microinsurance initiatives, circulars, financial literacy, ADReM process and accreditation procedures for mediators-conciliators through videos and interesting presentations.

IC Deputy Commissioner Ferdinand George Florendo and DOF-NCC Director Joselito Almario will also engage participants in discussions on microinsurance.

Microinsurance is insurance for low income earners to protect them against specific perils. It comes with affordable premiums, guaranteed benefits correspond to the risks, and claims settlement is fast. Today, 19 million Filipinos out of the 97 million populations are covered by microinsurance.

The ADReM method is now formalized to support the Philippine Government’s effort for inclusive growth by reaching out to the poorest of the poor. It aims to minimize expenses, time and delays of litigation, and provides options for out-of-court resolution of disputes arising from denied microinsurance claims.

According to Florendo, the ADReM structural processwill further promote microinsurance through the principles of Least-cost, Accessible, Practical, Effectively and Timely resolution of disputes.

The DOF-NCC and IC worked in collaboration with key representatives from the microinsurance industry with technical support from the German International Cooperation thru its regional program, Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (GIZ-RFPI Asia) to help implement the provisions of the ADReM Framework.

The ADReM Framework was launched last October 2012 with the intention of ensuring consumer protection by microinsurance clients. (JCM/LTP/PIA-Iloilo)

- See more at: http://news.pia.gov.ph/index.php?article=2421395646149#sthash.2906JgvT.dpuf

Asia: Markets, whatever the penetration, beckon health insurers

Source: AIR eDaily | 25 Feb 2014

In several high medical insurance ownership markets in Asia, people are still eager to buy medical insurance, though they are looking for better products than those they currently own, in terms of reimbursement rates and coverage. In low ownership markets, people want easy entry products or those that supplement government coverage, according to global reinsurance giant Swiss Re.

Value-added features in a health insurance plan (eg coverage for family) are of particular importance to consumers in high medical insurance ownership markets. In low ownership markets, increased education combined with products that are simple to issue and tailored to meet consumers’ immediate needs, may be a catalyst for purchase

In its study on medical insurance in China, Hong Kong, India, Indonesia, Malaysia and Thailand, Swiss Re found that consumers in all these markets exhibit a very high level of awareness of medical insurance products, but penetration varies significantly. The penetration gap is significant in markets like Indonesia and India, but less so in markets like Malaysia and China, where it is somewhat negated by group medical coverage or basic government coverage. “The challenge for insurers is to translate awareness into ownership, especially in markets where a huge gap exists,” said Swiss Re.

Irrespective of the level of medical insurance penetration and the extent of government support, patients still rely very heavily on personal funds or family support to pay medical expenses in the markets surveyed. There is thus a need to better educate the consumers on the value of medical insurance.

Not surprisingly, household income level has a direct bearing on medical insurance ownership. Across all of the markets surveyed, medical insurance ownership is the highest among those in the top 30-percent income bracket. Ownership is also the lowest among those in the bottom 30-percent income bracket – for example, it is almost negligible among those in this income bracket in Indonesia. Similarly, ownership is high in the top 30-percent income bracket in Thailand (78 percent), but extremely low in the bottom 30-percent income bracket (7 percent).

Across all the surveyed markets, claimants’ experience is generally good, with the majority thinking that their claims have been settled fairly. More than two-thirds of respondents in Thailand, Indonesia and China who have made a claim in the past 12 months are satisfied with their experiences. However, claimant satisfaction is lower in Malaysia.

Notwithstanding the high ownership of medical insurance and a reasonable level of government support, respondents in China, Hong Kong and Malaysia show a high intention to purchase a new medical policy or upgrade their existing policy in the next 12 months. The fact that many of them are already policy owners indicates that their existing plans may be insufficient to meet their requirements. In India, Indonesia and Thailand, despite low penetration, the purchase intention is lower than in other markets, but still reasonable at around 30 percent. Lack of knowledge and price/affordability are major barriers when it comes to respondents’ intention to buy, said Swiss Re. There is also a tendency among both Indonesians and Thais to rely on public healthcare/government healthcare/insurance schemes.

The study polled 2,561 respondents aged 20 to 70 years in the six markets to gauge their current medical care situation, medical claims experiences and preferences, as well as future intentions and preferences for product features and channels

Philippines: Microinsurance coverage highest in Asia

Source: AIR eDaily | 04 Feb 2014

One out of five Filipinos is covered by microinsurance, making the Philippines the country with the highest coverage in Asia.

The Department of Finance (DOF) says that micro-insurance coverage in the Philippines hit 19.95 million last year, or 20.4 percent of the population, from only three million in 2008 when only 3.3 percent of the population was covered.

Citing figures from the World Bank, the DOF said that the microinsurance penetration rate in the Philippines last year was ahead of Thailand’s 14.1 percent, India’s 8.9 percent, Bangladesh’s 5.1 percent, Malaysia’s 3.6 percent, and Pakistan’s 3 percent. The penetration rate of microinsurance stood at only 0.9 percent in China, 0.5 percent in Indonesia, and 0.2 percent in Vietnam.

Mr Emmanuel Dooc, chairman of the industry regulator, the Insurance Commission, has said that the government has set a goal of further increasing the penetration rate of microinsurance over the medium term.

He said that an estimated 27 million poor Filipinos should be covered by microinsurance by 2016. This would be achieved through more partnerships between insurers and cooperatives which have been the driving force behind marketing microinsurance in the country.

MICRO INSURANCE PAYS P500M TO YOLANDA VICTIMS

Malaya Business Insights
January 30, 2014

Microinsurance providers paid victims of typhoon Yolanda P500 million within 10 days after claims were submitted, according to Finance Undersecretary and Chief Economist Gil Beltran helping the victims recover faster.

Beltran said the Philippines has the highest microinsurance coverage among Asian emerging economies in 2013, with 20.4 percent of the total population covered by microinsurance.

Insurance cover for the Yolanda victims include damage from floods, and also life insurance.

According to the Department of Finance’s  latest economic bulletin, microinsurance coverage rose from three million in 2008 or merely 3.3 percent of the population, to 19.95 million  last year, a six-fold increase over five years.

In an interview with reporters at the sidelines of the Capacity Building for Microinsurance Project Launch, Beltran said the industry can tap a lot of clients, especially since the Philippines is often hit by typhoons and other natural calamities.

“We make sure that the providers are all legal. They are subject to regulation by the Insurance Commission, so they are monitored very closely,” Beltran said. The DOF said that there are 17 life insurance companies, 18 non-life insurance companies, and 19 mutual benefit associations offering microinsurance products.

Ranked next to the Philippines are Thailand and India, with 14.1 percent and 8.9 percent of its population covered by microinsurance, respectively.

According to the DOF, microinsurance refers to “the insurance, insurance-like, and other similar business activity of providing specific products and services that meet the needs of the poor for risk protection and relief against distress, misfortune, or contingent event.”

“Since microinsurance products and services are intended to meet the risk protection needs of the low-income sector, affordability of premium payments is low,” the DOF said.

The agency said for microinsurance products, the amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed five percent of the current daily minimum wage rate for non-agricultural workers in Metro Manila.

It also said the maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

A microinsurance contract shall cover the insured, and at his or her option, may include his or her immediate family, as well as his or her assets.

The DOF said that a microinsurance contract may cover any of the following: death; accident and illness; fire and other extended perils; calamities, disasters, and other catastrophic events; casualty such as personal accident; and other contingent events as may be determined by the concerned regulator.

IN ASIA AND OCEANIA REGION; PH HAS HIGHEST MICROINSURANCE

Malaya Business Insight

The Philippines has the highest microinsurance coverage ratio in the Asia and Oceania region at 21.3 percent, an international report showed.

In the Philippines these are life insurance coverages that average at P10,000.

According to the briefing note titled, “The Landscape of Microinsurance in Asia and Oceania 2013,” there are 19.9 million Filipinos covered by microinsurance in the Philippines.

The report was jointly published by Munich Re Foundation and Deutsche Gesellschaft für Internationale Zusammenarbeit.

“Bangladesh, China, India, Thailand, and the Philippines are leading in the (Asia and Oceania) region, the Philippines being the country with the highest microinsurance coverage ratio,” the report said.

The microinsurance coverage ratio is the total number of insured people as a percentage of the total population.

According to the briefing note, while India and the Philippines led the way, microinsurance specific regulations are evolving constantly in countries like Bangladesh, China, Cambodia, Indonesia, Nepal, Pakistan, and Vietnam.

“Only four countries have a microinsurance coverage ratio of  greater than 5 percent: the Philippines, Thailand, India, and Bangladesh,” the report said.

“The countries in Asia and Oceania are varied in terms of size and development of their microinsurance sectors. However, even the small countries have started innovations which will eventually contribute to the advancement of the sector in a sophisticated way,” it added.

Thailand has a microinsurance coverage ratio of 14 percent, followed by India and Bangladesh with 9.2 percent and 6.2 percent, respectively.

This was followed by the countries of Malaysia (3.8 percent), Fiji (3.5 percent), Pakistan (3.1 percent), Cambodia (2.1 percent), East Timor (1.6 percent), and Jordan (1.5 percent).

In terms of number of people covered, India leads the Asian microinsurance market with 111.1 million.

The briefing note said that there are 172.8 million individuals and properties identified as having microinsurance coverage in the region.

According to the report, life insurance emerged as the main type of coverage in Asia and Oceania covering 83.9 million people.

This was followed by accident insurance which covers 77.8 million people, and health insurance which covers 28 million individuals.

Category:
Business News

PH now a model of microinsurance promotion in Asia

Philippine Inquirer
Home > Business > Headlines
By Michelle V. Remo
1:08 am | Friday, January 31st, 2014

The Philippines emerged on top of emerging economies in Asia in terms of microinsurance promotion, insuring 20.4 percent of its population, or 19.95 million Filipinos, by the end of 2013.
The Department of Finance (DOF) said other emerging economies in the region lagged far behind the Philippines in the area of microinsurance. Now, the country is serving as a model for other emerging economies.

Citing figures from the World Bank, the DOF said that the microinsurance penetration rate in the Philippines last year was ahead of Thailand’s 14.1 percent, India’s 8.9 percent, Bangladesh’s 5.1 percent, Malaysia’s 3.6 percent, and Pakistan’s 3 percent.

The DOF also said other emerging economies covered by the survey performed much worse. The penetration rate of microinsurance in China stood at only 0.9 percent, in Indonesia it was 0.5 percent, while in Vietnam, it was 0.2 percent.

Finance Undersecretary Gil Beltran said the penetration rate of microinsurance in the Philippines grew substantially from only 3.3 percent in 2008.

He said the growth of microinsurance in the country was credited largely to the model involving cooperatives.
Microinsurance products are commonly marketed among members of cooperatives.
Unlike regular insurance, microinsurance caters to low-income earners. Its premium is much cheaper and its benefits smaller.

Also, the microinsurance products sold through cooperatives are hybrid in nature, having the features of both life and non-life insurance. This means the products grant benefits in case of death or loss of property.
In particular, the premium for microinsurance products is not more than 5 percent of the current daily minimum wage, while benefits amount to no more than 500 times the daily minimum wage.

According to Emmanuel Dooc, head of the Insurance Commission, the government has set a goal of further
increasing the penetration rate of microinsurance over the medium term.

He said the estimated 27 million poor Filipinos should be covered by microinsurance by 2016.

“We want to attain this goal by the end of President Aquino’s term,” Dooc said.

More partnerships between insurance firms and cooperatives would help the commission attain its goal of further increasing the penetration rate of microinsurance in the country, he said.

Read more: http://business.inquirer.net/162435/ph-now-a-model-of-microinsurance-promotion-in-asia#ixzz2s2Cycnte

Microinsurance coverage rises

BusinessWorld
Economy
Posted on January 30, 2014 10:13:48 PM

OVER 19 million Filipinos are covered by microinsurance, more than six times the number recorded five years ago, the Department of Finance yesterday reported.

“Microinsurance coverage in the Philippines is the highest among Asian emerging economies at 20.4% of the total population,” Finance Undersecretary Gil S. Beltran said in an economic bulletin released by the department yesterday.

The country is followed by Thailand (14.1%), India (8.9%), Bangladesh (6.1%), Malaysia (3.6%), Pakistan (3%), China (0.9%), Indonesia (0.5%) and Vietnam (0.2%).

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

Microinsurance is said to be one of the key priorities of the Insurance Commission (IC) and the Aquino administration.

Based on the commission’s Insurance Memorandum Circular 1-2010, microinsurance products are those whose daily premiums do not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

Also, the maximum sum of guaranteed benefits should not be 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

The report showed that only 3.1 million Filipinos were covered by microfinance in 2008, but this has grown sharply to 19.95 million as of end last year.

Various reforms adopted in 2010 led to the strong adoption of microinsurance in the country.

“First, it (the country) adopted a National Strategy for Microinsurance in 2010. This defined microinsurance, identified microinsurance providers and started the process of formalizing informal products,” Mr. Beltran said.

A regulatory framework for microinsurance also contributed to the growth, he said, noting that the guidelines served as the basis for the issuance of regulations by the IC and Bangko Sentral ng Pilipinas.

“Third, it adopted performance standards to be used by the IC in regulation and the providers to gauge their performance versus the whole industry. It also served the mutual benefit association chart of accounts to make it more relevant and useful to the needs of the industry,” Mr. Beltran said.

Financial literacy programs and training on microinsurance also boosted the industry’s penetration rate, he added.

“Lastly, an alternative dispute resolution mechanism to protect both consumers and providers and resolve disputes in a non-adversarial way” also contributed to the sector’s growth.

Moving forward, the DoF and IC will further increase the coverage of microinsurance through conducting financial literacy campaigns in partnership with local government units, Mr. Beltran said.

For his part, IC Commissioner Emmanuel F. Dooc, in an interview yesterday, said: “The IC will conduct more trainings to enhance its employees’ competency on microinsurance with the technical assistance and grants from Japan through the Asian Development Bank.”

“We also plan to expand the coverage of microinsurance to health, crop insurance and disaster insurance,” he said.

As of end-2013, there were 17 life insurers, 18 non-life companies and 19 mutual benefit associations licensed by the IC to sell microinsurance products. -- Ann Rozainne R. Gregorio

Microinsurance helped keep ‘Yolanda’ victims stay liquid

Business Mirror
Banking & Finance
30 Jan 2014
Written by David Cagahastian

The microinsurance industry released P500 million worth of claims to the insured victims of Supertyphoon Yolanda in 2013, helping Eastern Visayan residents stay liquid and claw back from their misfortune, the Department of Finance (DOF) said on Thursday.

Finance Undersecretary Gil Beltran traced the insurance payout to the increasing number of Filipinos who are now aware of the benefits of an insurance cover and actually make the decision to go out and buy one.

“As a result, Yolanda-ravaged areas were able to generate a cash infusion of P0.5 billion after private micro-insurance providers paid out damage claims within the required 10-day period. This hastened typhoon recovery from the disaster,” Beltran said at the launching of the Capacity Building for Microinsurance Project of the Asian Development Bank (ADB).

In the Philippines a microinsurance policy mean benefits no higher than P190,000 and calculated on the basis where premium payments do not exceed P30 a month.

The Philippines ranks first in the Association of Southeast Asian Nations (Asean) in terms of the percentage of Filipinos with microinsurance cover, according to Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

In 2013 some 19.95 million Filipinos, or 20.4 percent of the population, already have microinsurance cover. This figure represents a sixfold increase from figures in 2008 during which only 3.3 percent of the population had micro-insurance cover.

Beltran said the increase in the number of Filipinos covered by microinsurance was brought about in part by the government’s focus on microinsurance as one of the means to extend benefits and relief to the poor during times of natural calamities and other misfortunes in their lives.

“The impetus to the growth of the industry came after the country adopted microinsurance reforms since 2010. The DOF and the Insurance Commission will promote further increase in microfinance coverage through more financial literacy campaigns in coordination with local government units. They will continue to support the development of more microinsurance products especially those that reduce agriculture and disaster risks,” he said.

Insurance Commissioner Emmanuel Dooc said the Philippines aims to maintain its rank as the country with the highest percentage of the population who have micro-insurance coverage, and that companies would eventually want to tap the market for microinsurance of neighboring countries, especially when the Asean economies start integrating by 2015.

ADB-JFPR Microinsurance Project Launch Presentations, Diamond Hotel, Jan 30, 2014

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Philippines: Life premiums rise 41% to US$3.8 bln in 2013

Source: AIR eDaily | 30 Jan 2014

The Philippine life insurance sector collected PHP169.8 billion (US$3.76 billion) in total premiums last year, 41 percent higher than the PHP120.3-billion figure for 2012, according to the Insurance Commission.

Insurance Commissioner Emmanuel Dooc, who was speaking at the Philippine Life Insurance Association (PLIA)’s annual general meeting earlier this week, said that preliminary figures for 2013 also showed that the total net income of the life insurance sector grew by 31 percent to PHP13.8 billion. He attributed the performance to the country's economic growth, according to local media reports.

He added that although only about half of the companies in the non-life sector had submitted figures to the Insurance Commission, he esimated that the combined premiums of both life and non-life sectors will hit PHP200 billion for 2013. “We may be a couple of billion more or a couple of billion less. Anywhere from PHP190 billion to PHP202 billion,” the Business Mirror cited him.

He said that industry growth in the fourth quarter of last year slowed down because of the impact of Super Typhoon Haiyan which struck the central Philippines last November.

For 2014, he predicted growth of 15-20 percent for the entire insurance industry.

Philippines: New approach to disaster risk funding mooted

Source: AIR eDaily | 22 Jan 2014

Global insurance giants, Munich Re and Willis Re, have teamed up with the United Nations Office for Disaster Risk Reduction (UNISDR) to propose a major new approach to catastrophe risk financing for the Philippines in advance of this year's typhoon season as the country continues to deal with the economic fall-out of US$13 billion in losses from Typhoon Haiyan which struck last November.
The catastrophe scheme developed by Munich Re and Willis Re, the Philippines Risk and Insurance Scheme for Municipalities (PRISM), is a fast track way of providing budgetary support in the aftermath of a major natural disaster.

In a statement, Mr Rowan Douglas, CEO Capital, Science and Policy Practice, Willis Group, explained: “Contrary to traditional insurance, the payment of claims is not based on actual losses but on a pre-agreed amount when a specific trigger is met. For example, insurance will be paid out in the event of rainfall exceeding a certain amount, or wind speed exceeding a certain threshold.” Mr Douglas is a member of the UNISDR Private Sector Advisory Group.

Mr Ernst Rauch, head of the Corporate Climate Centre of Munich Re, said: “These parametric triggers are based on industry standards and can evolve as more information becomes available. Once one trigger has been exceeded, a payment will be made through the scheme manager to the local government unit and this can be used for rescue, relief, recovery or re-building depending on needs assessments. It can become a key part of broader national catastrophe risk management programme. Cover can be adjusted to reward disaster risk reduction efforts undertaken by municipalities.”


The head of UNISDR, Ms Margareta Wahlström, said: “The Philippines is hit by over 20 typhoons every year. What is needed is a simple scheme which will provide valuable protection to people and municipalities before the next typhoon season. In order to be successful it will require mandatory take-up by local government units but it will make them masters of their own destiny when it comes to responding to relief and recovery needs in the wake of a major disaster event." UNISDR is the UN office dedicated to disaster risk reduction.