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

Please click here to view

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.

Cebuana Lhuillier rolls out 1st batch of mobile branches

SunStar
Home » Cebu » Business
Thursday, January 16, 2014


CEBUANA Lhuillier broke new ground in the microfinancial industry when it rolled out its first batch of mobile branches in 2013, the first of its kind in the Philippines.

Dubbed Cebuana Lhuillier on Wheels (CoW), the program brings the company’s products and services more accessible to more Filipinos, going around cities and villages all over the Philippines where clients can do their transactions—pawning, remittance, micro insurance—wherever they may be.

“The CoW is an unprecedented development for the microfinance industry. We pioneered this system of doing business because, having gone around to different towns in the Philippines, we saw the need of the people, especially in the low-income and vulnerable sectors of the country, for access to micro lending facilities and other microfinancial products. This demographic represents a big percentage of Filipinos who are working hard and making do with their limited resources to provide for their families,” said Cebuana Lhuillier’s President and CEO Jean Henri Lhuillier.

“This service also enables the low-income market to maximize their time and resources by eliminating the need to travel to our branches, the costs of which can eat up a portion of their meager budgets. Instead of them going to us, we are the ones to go to them,” he said.

The CoW was initially launched last September as the Microinsurance on Wheels, which aimed to reach people in far-flung villages to inform them about the importance of getting insurance coverage, and to introduce Cebuana Lhuillier’s innovative and affordable insurance packages.

The CoW has been to different barangays in Metro Manila, Laguna, Pampanga, Pangasinan, Cebu, Iloilo, and Davao.

“And we plan to go farther and further this year. The Cebuana Lhuillier brand has been associated with quality and innovative products and services for years, and we intend to keep offering the best to our clients, whether in our branches or virtually at their doorsteps. This is the Cebuana way,” Lhuillier said. (PR)

Published in the Sun.Star Cebu newspaper on January 17, 2014

When micro means big (Second of Two Parts)

SunStar
Home » Manila » Opinion

By Atty. Ignacio R. Bunye
Speaking Out
Sunday, January 12, 2014


THE Bangko Sentral ng Pilipinas (BSP) been tracking the growth of microfinance in the recent years, at least in so far as the banking system is concerned.

It is important to note, however, that there are also private and non-government institutions offering microfinance, so there may actually be more Filipinos in rural and far-flung areas that are able to access and benefit from microfinance products and services.

What we are certain about is that the industry continues to grow, and its products have gone beyond just credit and savings. Some microfinance groups also offer housing and house repair microfinance loans, health-related microfinance loans, and microinsurance.

This January, we are actually celebrating the National Microinsurance Month, an official event that has been observed since 2007. Following the same logic behind microsavings and microcredit, it offers affordable insurance - with smaller premium than the usual insurance products out there - to low-income individuals, so that their losses are covered in times of death or emergency.

It was first introduced around 2005, the National Strategy and Regulatory Framework for Microinsurance were finally signed and issued in 2010.

Although it is the Insurance Commission and not the BSP, that is the main government agency overseeing microinsurance activity, the BSP is still active in creating policy and regulation on microinsurance, at least for institutions under its jurisdiction, such as rural, cooperative, and thrift banks.

In his speech at the 2013 Citi Microentrepreneurship Awards (CMA) Awarding Ceremonies last December, BSP Governor Amando M. Tetangco Jr. emphasized to the various microfinance stakeholders in audience the importance of having insurance protection.

He said that microinsurance can protect the hard-earned gains of microentrepreneurs, especially amid destructive natural calamities that occur in the country, like the recent super typhoon.

Indeed, in trying times, for people with less or none at all, microfinance and all related micro- products and services can do wonders. That’s when we can say that micro is big.

Gov’t working on new response to disasters

BusinessWorld

Posted on January 01, 2014 10:55:48 PM

THE FINANCE department is pushing for several mechanisms in a bid to help the national government, local communities and the private sector weather the impact of climate-related disasters.

Finance Secretary Cesar V. Purisima told reporters last week that the department was working with agencies under its oversight, government corporations and industry groups on measures that would help the country deal with climate change at several levels.

“We’re working on the details right now, we should be ready to formally announce everything by the first few months of 2014,” Mr. Purisima said.

On the national level, he said the government was looking at the establishment of a climate resiliency fund. “The climate resiliency fund is going to be a true special fund. It will be used to climate-proof the Philippines, to make the Philippines more resilient.”

The fund, Mr. Purisima explained, can be used for initiatives such as strengthening -- or even relocating -- public buildings in order to help these withstand massive storms like last November’s Yolanda, or resettling people.

“For example, the Tacloban airport is in a vulnerable zone. The question is, do you keep it there or do you move it somewhere else? These types of questions and expenditures are best dealt with if you really build a fund. That would be intended to do that,” Mr. Purisima said.

“If we want to reduce the vulnerability of the country in the future, we have to manage extremes. There are times there will be too much water, so flood and water management. There will be times when there will be droughts, so we should look at funding projects to address that.”

The Finance chief said the government was studying schemes to implement this and also build resources.

“Meanwhile, at the lowest level, at the grassroots level, we’re actually studying right now, together with the GOCCs (government-owned or -controlled corporations), the BAP (Bankers’ Association of the Philippines), the GFIs (government financial institutions), and the Insurance Commission (IC), the creation of viable, affordable, sustainable insurance products,” Mr. Purisima said.

He noted that a large part of the damage caused by super-typhoon Yolanda was to private property -- houses, offices and farms.

“The natural thing in the future is to set up insurance mechanisms. So we’re studying that, and I think to make it viable, it has to be done in a way that there is maximum participation, so there will probably be government assistance.”

The department is likewise looking at creating a guarantee fund for lending institutions, Mr. Purisima added, to help increase industry access to credit after disasters.

“Banks operate for business. The risks they face when they lend to entities that have lost everything is higher ... So we’re working towards the creation of a guarantee fund,” he said.

“We’re looking at PhilExim (Philippine Export-Import Credit Agency) and other GFIs, like [the Trade department’s] SB Corp., to be able to offer guarantees to banks so they can offer very low interest rates ... and maybe part of this is not just lower interest rates, maybe periods where there will be no payments, grace periods.”

Lastly, the department, along with the IC, is studying mandatory disaster risk insurance for local government units (LGUs).

“This will require legislature [to pass a requisite law] ... but we’re studying this mechanism, where the premium will be taken from [LGUs’] calamity funds ... Most likely, we’ll ask the GSIS (Government Service Insurance System] to be the one to manage this,” Mr. Purisima said.

This measure, he added, can be expanded so that all key facilities -- like markets, municipal buildings and schools -- are insured.

Yolanda (international name: Haiyan), described as the most powerful storm to make landfall, pummeled several provinces in central Philippines last November.

The death toll currently stands at 6,155 individuals with 1,785 still missing. The storm also caused an estimated P36.69 billion in damage to farms and infrastructure.

The government last month unveiled its P361-billion Reconstruction Assistance on Yolanda Plan, which details the recovery road map that will be implemented up to 2017. -- Bettina Faye V. Roc