Tapping microinsurance to help address health, disaster risks

Manila Times

December 3, 2014 9:47 pm

THE Philippines was recently cited as the country with the highest insurance penetration rate in Asia by a landscape study commissioned by the Munich Re Foundation in 2013.

Simply put, this means that one in every five Filipinos is protected by microinsurance. This penetration ratio also tells us that the strategy and mechanism for distribution adopted by microinsurance players in the country have been successful in providing access for the product.

Rural banks, cooperatives and microfinance institutions—as licensed distributors—have largely not efficiently reached before.

A challenge remains, however, in providing products that specifically address health and disaster risks.

Despite the protection offered by the state-run Philippine Health Insurance Corp. (PhilHealth), there is still a need to further enhance coverage in order to reduce the out-of-pocket expenditures of low-income families not efficiently reached before.

A challenge remains, however, in providing products that specifically address health and disaster risks.

Despite the protection offered by the state-run Philippine Health Insurance Corp. (PhilHealth), there is still a need to further enhance coverage in order to reduce the out-of-pocket expenditures of low-income families who typically do not have health maintenance organization (HMO) coverage to complement PhilHealth.

To address this, the Department of Finance, Insurance Commission and Department of Health partnered with the private sector to draft a framework for health microinsurance and promote a more inclusive health insurance system. The first public consultation for the framework was held in Cebu last month.

Disaster-related insurance, on the other hand, is also gaining ground as more financial institutions participate to protect the most vulnerable. When the Visayas Region was hit by a powerful earthquake and a destructive super typhoon in 2013, it revealed how defenseless communities are when faced with disasters of such magnitude.

Progressive Bank, a rural bank in Iloilo, played a critical role in helping its clients cope with the effects of the disaster through its microinsurance program, Akap. The cash benefit clients received under the program was used to finance burial expenses, house repairs and purchase of materials for their small businesses.

This proves that while micro insurance is not the silver bullet to poverty eradication, it gives individuals the chance to quickly recover from a financial loss.

Looking forward, coverage will likely continue its upward trend as awareness and the number of Filipinos who benefit from various financial inclusion programs increase. Through continuous innovations in product design and delivery mechanism, our success shall also be complemented with more stories on the positive impact of microinsurance on the lives of Filipinos.

Microinsurance responds to disaster protection

Manila Times
February 4, 2015 10:04 pm


The microinsurance industry has made its call for public and private players to effectively respond to the challenges of climate change.

In the recently concluded culminating activity of the National Micro insurance Month this January, a Microinsurance Manifesto was presented and signed by regulators and industry stakeholders as an expression of support and commitment to address the need to create measures that will allow Filipinos to cope with threats of natural disasters.

Lead agencies that signed the manifesto include the Department of Finance, Bangko Sentral ng Pilipinas, Insurance Commission, Cooperative Development Authority, Securities and Exchange Commission and the Climate Change Commission.

Among others, the Manifesto urges the government to continue providing an enabling and conducive policy environment for micro in su rance. The Insurance Commission earlier reported that there are already 28 million Filipinos covered with micro insurance by end of 2014. The country has also been cited for having the highest penetration ratio in the Asian region at roughly 28 percent.

Insurance providers, on the other hand, are encouraged to develop simple, affordable and innovative microinsurance products and services through easily accessible delivery channels.

Rural banks—because of their strategic location in the countryside—are among the ideal partners for the effective and fast delivery of mi croinsurance coverage. In support of this cause, the Rural Bankers Association of the Philippines, through its technical arm, the Rural Bankers Research and Development Foundation, Inc., has been conducting trainings to build the capacity of rural banks as effective channels of microinsurance.

To date, there are now 43 rural banks authorized by the Insurance Commission as mi croinsurance agents, providing protection to their low-income clients from financial loss including those brought by calamities.

Microinsurance has proven to be an effective tool to safeguard the poor from risks as it allows them to avail of financial security measures at low costs. By being an active provider of micro insurance, rural banks are given the chance not only to reinforce their relevance to their clients but to help the country attain a more inclusive growth, as well.

Government, private sector ink microinsurance manifesto

 (The Philippine Star) 

Updated February 24, 2015 - 12:00am

Beltran

MANILA, Philippines - A manifesto outlining the country’s masterplan for microinsurance was launched recently involving six key government agencies.

The one-page document spells out the country’s goals for insuring low-income Filipinos as protection for risks brought about by climate change.

Finance Undersecretary Gil Beltran said that microinsurance is one of the best tool for poor countrymen to help them adapt to climate change.

“With microinsurance, they have a better chance of recovering from financial shocks caused by typhoons, floods and other natural or man-made calamities,” he added.

Microinsurance is insurance sold in sachet form. It cost as low as P25 and provide payouts as low as P5,000. It sold to farmers, fisherfolk, vendors, and other low-income groups.

Beltran said the signing of the manifesto signals a more active cooperation among government agencies, and between government and the private sector for the continued development of microinsurance.

Aside from the Department of Finance, the agencies that signed the manifesto were the Insurance Commission, the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Cooperative Development Authority, and the Climate Change Commission.

Representatives from the Japanese and German governments as well as more than 200 private companies with microinsurance products witnessed the signing.

Beltran added that the number of Filipinos with microinsurance has already grown tremendously from a low of three million in 2008 to unofficially 28 million as of end of 2014.

This is the reason why the Philippines now leads Asia Oceania in the percentage of population with microinsurance.

He also cited the P700 million paid by microinsurance for those who suffered from Typhoon Yolanda, was the highest microinsurance payout for a single incident so far.

Yet despite these achievements, there was still so much work to do.

“More than 80 percent of the population is at risk of the negative impact of climate change. We must ensure that all of them are protected,” he said.

Non-traditional channels being tapped to distribute microinsurance

BusinessWorld

Posted on February 02, 2015 08:45:00 PM

By Raymund Luther B. Aquino, Reporter

MICROINSURANCE must be a cornerstone of the Philippines’ climate change adaptation strategy, officials said on Friday at the launch of a manifesto enjoining both public and private sectors to work toward wider microinsurance penetration.

The call went out at even as the Philippines leads the region in terms of microinsurance penetration -- with pawnshops in particular driving growth, according to regulators.

In an event called “Challenging the Climate, Responding to Change” at the Philippine International Convention Center Friday, Department of Finance (DoF) Undersecretary Gil S. Beltran highlighted the need to be “creative and innovative” in the face of climate change-related risks.

Mr. Beltran pointed to microinsurance’s contribution to the rebuilding of communities following super-typhoon Yolanda’s (International Name: Haiyan) devastation of parts of central Philippines in November 2013, with more than P700 million in payoffs logged by microinsurance providers as a result of the disaster.

But even with the end-2013 figure of 27.9 million Filipinos covered by a microinsurance policy -- at almost 28% penetration of the population, the highest in Asia and Oceania, Mr. Beltran noted -- the “majority [of Filipinos] still have not bought or even have not heard such a thing.”

This is a cause for concern since “76.6% of our land area is considered hazard prone, and 83.5% of our population is exposed to life-threatening risks brought by climate change,” Mr. Beltran said.

Joselito S. Almario, deputy executive director at DoF arm National Credit Council, read out the microinsurance manifesto to the audience before its signing. Among the signatories of the manifesto present at the event were Mr. Beltran, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr., and Securities and Exchange Commission (SEC) Chairperson Teresita J. Herbosa, as well as other state officials, insurance industry representatives, and delegations from the German and Japanese embassies.

“We believe in the important role of microinsurance for climate change adaptation,” Mr. Almario said, reading the manifesto. “Microinsurance will not stop typhoons, will not stop flooding, it will not even stop death or injuries... It is not a tool for mitigation. It is a tool for adaptation.”

Among the manifesto’s main points are: for the government to provide an enabling and conducive policy and regulatory environment for microinsurance; for microinsurance players to develop, design and create simple, affordable and innovative microinsurance products and services; and for donors, multilateral institutions and the international community to provide technical and other forms of assistance to those concerned.

At the press conference following the launch of the manifesto, the BSP’s Mr. Espenilla noted that the banking sector is also being primed for the growth of microinsurance.

“We have actually already adopted very liberalized rules for our banks to distribute microinsurance products,” Mr. Espenilla noted. The central bank has for more than a decade now been taking steps to liberalize rules on the banking system’s engagement with the insurance industry.

In August, the BSP issued Circular 844, which relaxed rules on the cross-selling of simple -- i.e., non-investment-linked -- insurance products. Under the relaxed rules, simple insurance products are now allowed to be “cross-sold” inside bank premises regardless of whether the insurance provider is part of the same financial conglomerate as the bank or not.

“Based on the most recent data, more than 40 banks have been allowed to distribute microinsurance. More than that, we have more than 80 banks in the pipeline waiting to be accredited to distribute microinsurance... The target here really are the smaller banks,” Mr. Espenilla said at the press conference. These banks are “mostly located in the provinces.”

But the major growth driver of microinsurance has proven to be non-bank distribution channels, like pawnshops.

“Pawnshops are under the regulation of the BSP, and the BSP has also enabled pawnshops to distribute insurance products in accordance with the rules of the Insurance Commission,” Mr. Espenilla said. “The reason we take that very liberalized view [of pawnshop distribution] is precisely because we are very aware that many municipalities that may be unbanked is actually well served by our pawnshops.”

“The penetration rate of pawnshops is much deeper than our banks,” Mr. Espenilla said. “Today, for example, there are more than 17,000 pawnshops all over the country.”

However, local insurers are now starting to look even beyond the ubiquitous pawnshop.

Philippine Insurers and Reinsurers Association Chairman Michael F. Rellosa shared: “One of our members companies is now dealing with the distributors of fertilizer. We discovered that that’s another possible channel of distribution of microinsurance.”

How Microinsurance Works

Low-income Filipinos can rely on microinsurance when disaster strikes

Manila Times
February 18, 2015 8:42 pm

THE domestic insurance industry posted a stellar growth performance in the past year, registering an estimated 28 million Filipinos protected by microinsurance.

Microinsurance has proven to be a great tool in promoting affordable security in the Philippines with its significant contribution to the increase in insurance penetration, which hit 28 percent, one of the highest rates in the Asian region.

The recent calamities that shook the country highlighted the importance of having insurance protection, especially for the poor who are the most vulnerable. When Super Typhoon Yolanda struck the country in November 2013, over half a billion pesos in microinsurance claims were settled and given as benefits to families to cover calamity assistance for damaged crops, hospitalization and death.

Now that its wide-ranging impact is known, microinsurance is currently seen as an important component of risk management, complementing the government’s disaster prevention and rehabilitation program.

To support the industry’s growth, providers are encouraged to look into designing more products that will provide comprehensive coverage to the lives and livelihood of low-income people. One example of this is crop insurance offered by public insurance agencies in partnership with private providers.

There is a need to develop such products to cushion the effects on the low-income segment whose livelihoods and income sources are threatened when calamities strike. When such losses occur, the ability of an individual to bounce back from a calamity is severely affected, thus also affecting the productivity of their segment in the broader economy.

Delivery channels like the rural banks, cooperatives and other microfinance institutions should respond to these needs by providing access to a product that will provide security over losses at an affordable rate. Support and development institutions like industry associations, donors and other development-oriented agencies, on the other hand, should do their part by providing assistance in building the capabilities of various delivery channels to provide quality microinsurance services to the low-income sector.

For its part, the Rural Bankers Association of the Philippines is continuously providing training and licensing and other forms of technical assistance to its member banks. To date, a total of 223 rural banks and over 500 staff have already undergone microinsurance training provided by the RBAP’s training arm, the Rural Bankers Research and Development Association.

Bank staff who completed the course are qualified to act as their institution’s soliciting agent, which is part of the program to empower institutions as access points for clients to avail of microinsurance.

With continuous partnership between the private and the public sector, microinsurance will soon emerge to be a vital component of disaster risk management, benefiting more Filipino lives in the coming years.

PH Microinsurance: Challenging the Climate, Responding to Change

Watch how Microinsurance in the Philippines helped the victims of Typhoon Haiyan (Yolanda).  https://www.youtube.com/watch?v=MjICODBAudE&feature=youtu.be