Microinsurance Philippines

Life insurance industry sees double-digit growth this year | BusinessWorld Online Edition

2012-02-15T10:33:00.000+08:00

Life insurance industry sees double-digit growth this year | BusinessWorld Online Edition

Gabi ng Parangal at Pasasalamat sa Mga Tagapagtaguyod ng Microinsurance

2012-02-12T21:22:00.001+08:00

Pictures taken during the "Gabi ng Parangal at Pasasalamat sa Mga Tagapagtaguyod ng Microinsurance" awards night held at the Philippine International Convention Center (PICC) on January 31, 2012 in commemoration of the Microinsurance Month of January.

To access, please click this link - https://picasaweb.google.com/116777308408555490155/2012_01_31MICROINSURANCEGABINGPARANGAL?authkey=Gv1sRgCMH9y9iIxcjeSg

Insurance Commission sees more Filipinos buying microinsurance

2012-01-30T18:27:00.000+08:00

Manila Times
Saturday, January 28, 2012 00:00
by : KATRINA MENNEN A. VALDEZ

The country’s microinsurance industry is seen to grow by more than half this year because of the increasing awareness among low-income Filipinos after a series of calamities last year.

Insurance Commission (IC) Commissioner Emmanuel Dooc said that as of December last year, there were about 3.1 million microinsurance policies sold.

Such number are comprised of families, associations, individuals and group policies to cover them and their respective members from contingent events such as death, sickness, accident and environmental calamities.

“With the sheer number of low income populace in the country, the market is definitely huge and that translates to potential profits,” Dooc said.

At present, the Philippines lags behind its regional peers in terms of insurance penetration, which hovers at below 14 percent of the total population.

The country has about eight microinsurance providers from the non-life industry, seven from life and 15 from the mutual benefit association sector.

Under a micro insurance policy, an individual could cover a contingent event such as death for only P1 a day or up to P20 a day, with claims ranging from P500 up to P200,000.

Department of Finance Director Joselito Almario said that the industry starting this year is expecting to sell 5 million more policies or 60 percent more than it has sold from the previous year.

”There is indeed an increasing awareness among low-income Filipinos regarding the need for them to avail of insurance policy. We are seeing that we could make more people buy insurance products and generate an additional 5 million policies this year,” he said.

”The series of calamities made a lot of impact with regard to ordinary people’s awareness of the necessity to have themselves and their properties covered by insurance. Sales of microinsurance policies shot up since last year,” Almario added.

He said that it is only this year that microinsurance companies were required to report every month to the IC the necessary figures that would enable the government to monitor the penetration rate and equivalent value of micro-insurance products they sold.

Almario added said that to further attract low-income earners to avail of insurance, the government in partnership with the private sector will simplify the terms and conditions on the policies, and would hasten the process of approval of claims to not more than 10 days

REGULATOR TO RECOGNIZE MICROINSURANCE PROVIDERS

2012-01-28T23:30:00.000+08:00

To culminate this year’s Microinsurance month celebration, the Insurance Commission (IC) will give due recognition to life and non-life insurance entities actively engaged in the delivery of microinsurance products and services. Microinsurance, as defined by the IC, are insurance products that are affordable, simple and accessible to low-income and informal sectors of society.

Dubbed as the “Gabi ng Parangal at Pasasalamat sa mga Tagapagtaguyod ng Microinsurance”, the awarding ceremony shall be held at the Philippine International Convention Center on 31 January 2012. The month of January of every year was declared as “National Microinsurance Month” through Proclamation No. 1212 issued in 2006.

According to Insurance Commissioner Emmanuel Dooc, this year’s event will highlight “Government’s steadfast commitment, in partnership with the private sector, to uplift the conditions of our poor countrymen by providing them access to simple and low-cost protection against risks and unexpected events.” Microinsurance has been identified as one of the financial inclusion priorities of Government in its 2011-2016 Medium-Term Philippine Development Plan.

To be honored are government’s partners in the promotion and advocacy of microinsurance. These entities are insurance associations, life and non-life insurance commercial companies, mutual benefit associations and cooperative insurance entities licensed by the IC. As part of the criteria, these entities have supported microinsurance through the development of small insurance products approved by the IC and have actually sold these products to the low-income market as of 15 December 2011.

Prior to this year’s culminating event, the IC and the Department of Finance-National Credit Council (DOF-NCC) conducted a Training on Microinsurance Advocacy (TOMA) for various stakeholders on 18-20 January 2012. Participants came from both national agencies and local governments, insurance providers, microfinance institutions, support institutions, donor agencies and non-government organizations. The training is geared towards creating a core mass of advocates in the government and private sectors in increasing awareness of the general public on the importance of insurance for risk protection. Currently, the Philippines lags behind its neighbors in terms of insurance penetration which hovers at below 14 percent of total population.

On 27 January 2012, a public seminar and a press conference was conducted at the Diamond Hotel. The seminar, together with the “Gabi ng Parangal” awards ceremony, is part of the nationwide roadshow “Financial Literacy on Microinsurance” campaign spearheaded by the DOF-NCC and the IC. The financial education drive aims to cascade the knowledge and importance of microinsurance among all sectors of the economy in 16 regions all over the country. So far, two roadshows have been conducted in Tacloban City, Leyte and Butuan City, Agusan del Norte in the last part of 2011.

The government’s microinsurance initiative is provided technical assistance support from various multilateral agencies such as the Japan Fund for Poverty Reduction-Asian Development Bank (JFPR-ADB) and the German Technical Cooperation (GIZ) for its potential to help alleviate poverty in the Philippines. Designed for the low-income group, microinsurance products are priced affordably and require simple documentation for easy access by its target market.

Microinsurance sales surge as poor see need for protection

2012-01-28T23:19:00.000+08:00

Business World
Finance
Posted on January 27, 2012 08:11:34 PM

A TOTAL of 3.5 million microinsurance policies were sold last year after the government and the private sector began promoting the financial protection products for the poor.
"From January up to December 15, 2011, about 3.5 million policies were sold," said National Credit Council Deputy Executive Director Joselito S. Almario during a roundtable discussion with the media on Friday.

"And this number did not even indicate how many people were covered, since some policies were group insurance policies. They could be covering 100 or 200 people," he added.

No comparable data for 2010 is available.

Mr. Almario said the figure could easily rise to 5 million by the end of this year, as the Insurance Commission (IC) and the German Agency for International Cooperation (GIZ) continue their financial literacy campaign until August. The campaign was launched in February 2011.

"That target is attainable," he added, especially since insurers will be required to report progress on their microinsurance efforts to the IC this year.

Microinsurance is one of the key priorities of the IC and the Aquino administration. Insurance Memorandum Circular 1-2010, released in January 2010, set the guidelines for the nascent microinsurance industry. The amount of premiums, computed on a daily basis, should not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila. Also, the coverage of microinsurance policies should not be more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

There are currently eight microinsurance providers from the nonlife industry, seven from the life industry and 15 from mutual benefit associations, Insurance Commissioner Emmanuel F. Dooc said.

"We have diverse microinsurance products. For life we have, among others, the usual basic life and credit life insurance, disability benefits, medical expenses reimbursement and micro-investment products," he pointed out.

Nonlife insurers offer variants of the prototype "Buhay, Bahay, Kabuhayan" designed by GIZ and approved by IC. The product is designed to give a P10,000 coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of P30,000. A contract is good for a year.

Despite the progress, Mr. Dooc expressed hope other insurance companies will also offer insurance products for the poor.

In response, George C. Mina, the general manager of the industry group Philippine Life Insurance Association, Inc., said during the roundtable that a number of life insurers are keen to offer microinsurance.

"Nine companies have already gotten approval to offer microinsurance this year. Five are waiting for approval and six are interested," Mr. Mina said.

Life insurance to sustain double-digit growth

2012-01-24T11:54:00.000+08:00

Malaya Business Insight
Tuesday, January 24, 2012
BY ANGELA LORRAINE CELIS

The life insurance industry is expected to sustain last year’s double-digit growth this year, an industry official said.

"Barring any external catastrophic events such as a euro zone meltdown with its contagion effects on the US and Asia, we are optimistic regarding the continuing growth of the life insurance industry in 2012," Mayo Jose Ongsingco, Philippine Life Insurance Association (PLIA) immediate past president, said.

"We are projecting to sustain the 2011 growth in 2012," Ongsingco, who is also Insular Life president and chief operating officer, said.

Ongsingco said that total premiums could have grown to around 20 percent in 2011 compared with the previous year.

"This will be driven by an estimated growth in new business premiums of around 40 percent year on year," Ongsingco said.

The official 2011 figures are yet to be disclosed.

Ongsingco said that some of the factors that would influence the industry’s growth this year would include the same macroeconomic drivers last year. In 2011, the services sector was the main driver of growth.

He added that the Public-Private Partnership program’s "trickle-down effects," benign inflation, and a possible credit upgrade for the Philippines later this year will also positively affect the industry’s growth.

"Micro insurance, the expansion of the mandatory migrant workers insurance and the implementation of the PERA (Personal Equity and Retirement Account) initiative will add to the growth of the life industry," Ongsingco said.

"Other external events that should be watched would be the resolution of the US debt ceiling issue, the pending bill in the US congress that would curtail BPO outsourcing, and tensions in the Middle East that could disrupt oil supplies and increase prices," he said.

"Clearly, for the Philippine life insurance industry, the growth in new premiums will be mostly attributed to investment-linked product sales and will be exemplified by bank-generated production," Ongsingco said.

Ongsingco also said that one of the drivers of industry growth last year was overall economic growth.

"There is a positive correlation between GDP (gross domestic product) growth and life insurance premium growth. Despite the lingering euro zone and the US debt ceiling crisis, the Philippine GDP is expected to still grow by around 4.7 percent in 2011 although lower than 2010’s 7.6 percent GDP growth," Ongsingco said.

The Philippines’ GDP growth rate for 2011 is yet to be announced by the National Statistical Coordination Board.

The latest data from the NSCB shows, however, that the Philippine economy grew 3.6 percent in the first three quarters of the previous year.

This is less than half the 8.2 percent growth in the first nine months of 2010 and also below the government’s 4.5 to 5.5 percent growth outlook for 2011.

This year, the government expects the Philippine economy to grow 5 to 6 percent.

"The system was also very liquid with P1.6 trillion in SDAs (special deposit accounts). Some of this excess liquidity was channeled to investment-linked life insurance products," he said.

Ongsingco said that other notable drivers last year were overseas Filipino workers’ remittances, the growing BPO industry, and low inflation.

Earlier, Bangko Sentral governor Amando Tetangco said that remittances of OFWs for January to October 2011 reached $16.5 billion, a year-on-year growth of 7 percent.

Tetangco expects full-year remittances in 2011 to amount to $20.1 billion.

"For 2012, the forecast is $21.1 (billion), there will be a 5 percent growth," Tetangco said.

Inflation in 2011 was 4.8 percent, which is within the government’s 3 percent to 5 percent target.

In 2010, total life insurance premiums grew 23.56 percent to P70.727 billion. The first-year premiums, meanwhile, grew 59.38 percent to P34.28 billion.

The top five insurance companies in 2010 in terms of premium income performance were Philam Life, P11.255 billion, 16 percent of total; Sun Life, P10.63 billion, 15 percent; Philippine AXA Life, P8.36 billion, 11.8 percent; Pru Life UK, P7.36 billion, 10.4 percent; and Insular Life, P7.13 billion, 10.1 percent.

In terms of first-year premiums, the top five were Philippine AXA, P6.64 billion, 19.4 percent of total; Pru Life UK, P5.23 billion, 15.3 percent; BPI-Philam, P4.56 billion, 13.3 percent; Insular Life, P3.27 billion, 9.5 percent; and Philam Life, P2.7 billion, 7.8 percent.

The industry’s penetration rate in 2010 was only 13 percent, but Ongsingco expects this to increase as more policies are sold.

Of this rate, 10 percentage points is covered by group life insurance, while only 3 percentage points is covered by individual life insurance.

"Micro insurance, compulsory migrant workers insurance and the sale of life insurance policies as a PERA-qualified product will definitely increase the penetration rate," he said.

Ongsingco noted that micro insurance in particular will definitely improve the penetration rate as more persons will be covered by life insurance.

Micro insurance is defined by the Insurance Commission as an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events.

With most of the banks and other financial institutions centered in key areas, the Philippines is a prime spot for micro insurance and microfinance.

"The natural target markets of micro insurance are the lower-income and small individual entrepreneurs who are normally unable to access regular life insurance," Ongsingco said.

Ongsingco said that there are some life insurance companies already selling or considering micro insurance products, although the number of companies was not disclosed.

"There are however some issues to be threshed out such as in underwriting, selling and eventually, claims evaluation/settlement," he said.

"Micro insurance has been launched successfully in South America and we are studying the use of similar models for the Philippines. Moreover, BSP has allowed thrift, cooperative, and rural banks as distribution channels for micro insurance," he said.

The BSP, aiming to increase public access to needed financial services, approved in 2010 the marketing, sale and servicing of micro insurance products by rural, cooperative and thrift banks as well as other financial institutions.

Life insurers told to form ‘critical number’ for mergers

2011-11-27T13:17:00.000+08:00

Business World
Finance
Posted on November 24, 2011 10:41:40 PM

LIFE INSURANCE companies mulling a merger need to form a “critical number” to secure the approval of the Insurance Commission (IC).

“Five insurers have already signified interest to merge,” Insurance Commissioner Emmanuel F. Dooc said in an interview yesterday, although he declined to identify the parties involved.

“We told them to come up with a critical number so they can better pool their resources. The ideal number for the merger is eight to 10 firms,” he added.

Talks of a merger among life insurers began last month, as smaller firms face higher capitalization requirements.

The IC has mandated all insurers to have a minimum paid-up capital of P175 million by the end of this year, increasing to P250 million by the end of next year.

The regulator is also eyeing a further hike in their capitalization to P750 million to P1 billion by the end of the Aquino administration in 2016.

“I don’t think many of the small companies can comply,” Mr. Dooc said.

But even the larger players hesitate when it comes to a merger, as some are family-owned or closely-held, and the owners do not want to let go their businesses, he added.

Some insurers also enjoy niche businesses that they will have to give up in a merger as products and services will have to be pooled in the surviving company, Mr. Dooc said.

Nevertheless, the IC is holding talks with the boards of insurers to ask them to consider a merger. It has also reiterated to the companies that the capitalization requirements will be implemented as scheduled.

“Whatever happens, the proposed merger must be finalized by next June, in time for the issuance of the CA (certificate of authority) to licensed insurance companies,” Mr. Dooc said.

There are currently 30 life insurance companies licensed to operate for 2011 to 2012, down from last year’s 34. -- Diane Claire J. Jiao

Manulife eyes micro insurance

2011-11-15T23:33:00.000+08:00

Malaya Business Insight
BY Angela Lorraine Celis
November 10, 2011

AFTER the Insurance Commission approves its proposal, Manulife Philippines, an American firm, will start selling what it calls micro insurance specifically for the low income group.

The proposed product will have life cover value ranging from P10,000 to P20,000, according to Indren Naidoo, president and chief executive of Manulife. He declined to specify the premium rate but declared that the cover is valid for as short as a month to three months.

As is the practice, the insured is paid double the value of the cover if he dies in an accident.

"We’re hoping to get approval from the regulator this month," Indren Naidoo said.

"After we get the approval, we will sign up our first contract in Davao. We want to keep our promise that we will sign up our first client before the year is out," Naidoo said.

Naidoo added Manulife expects to penetrate the market that rarely has access to insurance products.

Based on government data, the penetration rate for life insurance in the Philippines was only 13 percent as of 2010.

"Part of our overall obligation is to expand life insurance for the less fortunate," Naidoo said.

The initial targets of the company’s micro insurance product are Cebu and Davao. Eventually, Manulife will move to other areas.

Naidoo also announced yesterday that as of end-September, Manulife Philippines’ total premiums had grown around 20 percent.

"The reason for our success is really the expansion of our agency network, particularly in … Davao, Cebu, Baguio, and more recently in Iligan and in Quezon City," Naidoo said.

"We’re really happy that we’re a large sales force of 3,000 agents, growing around 31 percent over the same period last year. That shows that our expansion strategy is working," he explained.

Manulife Philippines’ total new business for the first nine months of 2011 was 54 percent higher than for the same period last year.

"We’re very happy with that, particularly when you look at the half year, when the market was growing only 29 percent. So we’re extremely happy with the way we’re growing," Naidoo said.

Philippines to offer microfinance record

2011-11-09T09:46:00.000+08:00

Business World
Top Story
Posted on November 09, 2011 12:24:47 AM

OFFICIALS will present the Philippines’ microfinance experience during this week’s Asia-Pacific Economic Cooperation (APEC) meetings in preparation for the creation of a financial inclusion strategy to be adopted by the body’s member economies.

“The Philippines is taking an active role in the APEC Economic Leaders’ Meeting. We have been asked to present the developments in our microfinance initiatives because we are very much advanced compared to other countries,” Finance Undersecretary Rosalia V. de Leon yesterday said in a telephone interview.

The presentation will illustrate the country’s microfinance policies and regulatory regime. These will also be used as a reference as the APEC drafts its National Strategy for Financial Inclusion for its 21 member economies.

“Financial inclusion is actually an initiative of the United States in APEC, but it saw that the Philippines is advanced in that perspective,” Ms. de Leon said.

The APEC Financial Inclusion Initiative aims to encourage countries to increase the poor’s access to affordable financial services, such as savings, payment, credit and insurance.

The Philippines devised a National Strategy for Microfinance as early as 1998 to institutionalize the provision of small loans to the poor to jumpstart entrepreneurial projects.

This paved the way for the establishment of wholesale microfinance initiatives, providing funding for institutions such as rural banks, nongovernment organizations and cooperatives.
The private sector, for its part, is responsible for retail microfinance or extending credit directly to borrowers from the lower-income sector to help alleviate poverty.

The government released a total of P168.693 billion in microfinance loans from 2001 to 2009 to nearly 7.14 million borrowers. A separate P82.53 billion was also extended from 2004 to 2009 to create 2.83 million jobs.

The Philippine Development Plan 2011-2016, the economic blueprint of the country under the Aquino administration, identifies microfinance as one of the strategies to build a resilient and inclusive financial sector.

Among the priorities are microinsurance, which provides affordable risk protection against financial distress caused by accidents, death and natural catastrophes. The plan also champions the Credit Surety Fund, a facility from which cooperatives can source funding for micro, small and medium enterprises.

The APEC’s annual meeting is being held this year in Honolulu, Hawaii. Preliminary discussions are already being staged and the event will culminate in a leaders’ summit on Sunday.
APEC has 21 member economies which account for about 40% of the worldís population, approximately 54% of world gross domestic product and about 44% of world trade.

BRAZIL HOSTS 7TH INTERNATIONAL MICROINSURANCE CONFERENCE

2011-11-05T01:15:00.000+08:00

Event will gather over 400 experts and worldwide delegates to push issues forward
Approximately 135 million people in developing countries already use microinsurance as a means of managing risk for the poorer social classes, according to a Lloyd’s of London report, and this number is only going to grow. In Brazil, the situation is no different and this line of insurance will play a key role in reducing the vulnerability of the low-income households. This issue will be one of many debated topics during the 7th International Microinsurance Conference, which will place from November 8th to 10th in the Sheraton Leblon Hotel, in Rio de Janeiro, Brazil.

The already confirmed participants are as follows: the Mayor of the State of Rio de Janeiro, Sérgio Cabral; the Chairman of Munich Re Foundation, Thomas Loster; the Chair of Microinsurance Network and ILO’s Microinsurance Innovation Facility, Craig Churchill; the Superintendent of Susep (Superintendence of Private Insurance), Luciano Portal Santanna; and the President of CNseg (National Confederation of General Insurance Companies, Social Security and Life, Complementary Health and Capitalization), Jorge Hilário Gouvêa Vieira.

The event will bring together more than 400 delegates and experts from over 50 countries to discuss challenges and opportunities in microinsurance, while also focusing on lessons learnt and emerging issues. Organised by Munich Re Foundation and Microinsurance Network, the 7th International Microinsurance Conference will be supported by the Brazilian Confederation of Insurers (CNseg), the Superintendence of Private Insurance (Susep), GIZ/BMZ and Georgia State University.

With 22 sessions and over 70 speakers addressing key questions in the field, the conference represents the largest gathering of microinsurance experts in the world. The issues to be discussed during the conference include an economic analysis of market opportunities and barriers, national and regional strategies for microinsurance development in relation to various parts of the globe, and innovative approaches that improve microinsurance distribution.
“As a host country Brazil is a perfect fit for the 7th International Microinsurance Conference,” said Dirk Reinhard, Vice Chairman of Munich Re Foundation and Chairman of the Conference Steering Committee. “The country is striving to improve access to insurance for the poor through a variety of avenues. With around one fifth of the population in Brazil living around or below the poverty line, Brazil’s impressive economic growth over the past decade, as well as a dedicated insurance industry, have put the country in a strong position to provide the poor with more effective risk management tools to break the cycle of poverty.”

The conference also marks the occasion when the Brazilian National Congress will vote on a law that will incorporate specific regulation on microinsurance activities to enhance the access to insurance for the low-income population of Brazil.

“The rising income over the last years in Brazil and the availability of credit has made the ascension of lower income groups (classes C and D) possible. Nevertheless, it is fundamental to create conditions that protect the equity of such families. Microinsurance is a lawful instrument to ascertain such accomplishments as well as to create the saving habit designed to finance education, thus indispensable to create saving habits among Brazilians” said Jorge Hilário Gouvêa Vieira, President of CNseg.

Microinsurance in Brazil and worldwide

The Microinsurance Committee of CNseg projects that the current premium percentage of the Gross Domestic Product (GDP) will increase from 3.5% to 7.5% in 2017 with the implementation of microinsurance regulation. The current estimation of microinsurance clients in Brazil is between 23 to 33 million clients according to a study by the Centre for Financial Regulation and Inclusion (Cenfri). The expectation is that over the next 20 years microinsurance in Brazil will touch close to a 100 million clients.

Data from the MicroInsurance Centre, a product development, research and advocacy institution, estimates that over the next ten years, the global microinsurance market will reach around one billion new consumers, equivalent to a third of the market potential. Climate change, population growth, urbanisation and a leveraging technological of innovations are determining factors for the expansion of this market.

According to Craig Churchill, the Chair of the Microinsurance Network, the expansion of microinsurance to protect the poor is coming from a diverse range of institutional arrangements. In the Philippines, for example, where the conference was held in 2010, the commercial insurance company, Malayan, expanded its outreach from 4.1 million to over 5 million low-income people from 2007 to 2009 by distributing cover through pawn shops, while Country Bankers Life covered 800,000 persons through rural banks. During that same period, other models also achieved significant outreach. For example, MicroEnsure, a specialised broker, facilitates the cover for 1.2 million lives, and PhilHealth’s scheme to extend social protection to workers in the informal economy covers at least 28,000 persons. However, the mutual benefit association of the NGO CARD eclipses them all, covering seven million low-income persons. “Now that we are seeing models that are successful in reaching huge numbers,” said Churchill, “we need to focus more on ensuring that the poor are actually benefiting from the cover.”

MICROINSURANCE – A SLOW-ONSET REVOLUTION

2011-11-05T01:09:00.000+08:00

Innovation Flash
Issue 11, November 2011
The Newsletter of the ILO’s Microinsurance Innovation Facility

The Microinsurance Network will soon become a teenager. After nearly a decade of work, we can be proud of what this group has achieved. It has facilitated the creation of organizations such as the ILO’s Microinsurance Innovation Facility and the Access to Insurance Initiative. Both these organizations have advanced research into and the development of microinsurance pilot projects and the bases for a sound regulatory environment. The 7th International Microinsurance
Conference to be held in Rio de Janeiro from 8 to 10 November 2011, hosted jointly by the
Microinsurance Network and the Munich Re Foundation, will attract five times more participants than the initial conference in 2005.

Microinsurance has brought about change in the industry. Companies such as Zurich, Swiss Re and
Allianz have created teams to find ways to enter the low-income market. MicroEnsure now serves
millions of clients. Leapfrog’s success in attracting substantial capital to be invested in microinsurance shows that access to capital is not the key issue.

Yet have we seen the big breakthrough in developing profitable microinsurance solutions that provide good client value for large numbers of clients? Perhaps not. Should we be disappointed? Clearly not!

The development of microinsurance cannot take place independently of economic development, improved healthcare and education, and political stability. Since the lack of local experts seems to be a major obstacle to development, the insurance industry needs to invest in the education and training of such experts. What the developed world took several hundred years to accomplish cannot be replicated within a decade even given all the new technology and knowledge
that is now available.

What is needed, moreover, are strategic, country-wide approaches such as the one adopted by the Philippines, in which the insurance industry, government, donors and organizations representing the clients join forces. The challenges are often too great to be met by individual players alone, and the now mature Microinsurance Network will continue its work to catalyse cooperation throughout the industry.

Dirk Reinhard
Vice Chairman, Munich Re Foundation and Member of
the Executive Committee of the Microinsurance Network
I

Microinsurance Developments in the Philippines

2011-10-22T00:06:00.000+08:00

Music video on Microinsurance

2011-10-21T23:58:00.000+08:00

Philippines: Insurance reform in public utility vehicle sector

2011-10-20T20:41:00.000+08:00

Asia Insurance Review

Operators of public utility vehicles will soon pay cheaper insurance premiums for passenger insurance coverage while there will also be an increase in insurance benefits accorded to dependents of victims of fatal road accidents.

These measures follow a decision by the Quezon City regional trial court to uphold the Department of Transportation and Communications’ (DoTC) initiative to institute reforms in the Passengers Personal Accident Insurance Programme of the Land Transportation Franchising and Regulatory Board (LTFRB).

The court dismissed a petition for a temporary restraining order against LTFRB’s move to open up accreditation for providers of passenger insurance service from two to five insurers. Prior to the decision, the industry was dominated by only two players— PAMI for those registering odd-numbered plates and by UNITRANS, even-numbered plates.

LTFRB chairman, Mr Jaime Jacob, will now move forward to open up insurance coverage. He has been talking with eight insurance companies who are willing to compete for the right to provide cover. He says that the new insurance terms will require the five accredited insurance players to offer an “all risk, no fault” insurance policy. This policy ensures that any passenger who meets with an accident will be paid by a PUV operator regardless of who is at fault in an accident.

“We have set a maximum premium and minimum benefit for the accreditation process. Those applying for accreditation will now compete in order to bring down the premium and raise the benefit,” says Mr Jacob.

Government abandons prototype for life microinsurance product

2011-10-14T15:39:00.000+08:00

Finance
Posted on October 12, 2011 09:33:57 PM

BY ANN ROZAINNE R. GREGORIO, Reporter

THE GOVERNMENT no longer pushed through with its plan of coming up with a prototype microinsurance product combining life protection and savings, choosing instead to leave it up to market players to design it.
Rino C. Asuncion, senior adviser at the German Agency for International Cooperation (GIZ), said the government “called off” the plan after holding focus group discussions with representatives of the life insurers’ association, Philippine Life Insurance Association, Inc. (PLIA), and microfinance institutions (MFI) last February.

In January, the Department of Finance, the National Credit Council, along with the Asian Development Bank and GIZ, announced they were developing a prototype product combining microinsurance and savings, with insurance premiums to be deducted from savings accounts. The product, as well as a non-life microinsurance product called “Buhay, Bahay at Kabuhayan,” was envisioned to give a boost to the nascent microinsurance industry.

“The result of the FGDs made us decide to not pursue with our plan to create a prototype product that would combine life insurance and savings,” Mr. Asuncion said.

PLIA, during the FGDs, asked to “leave the product specifications to them” as some life insurers already offer a life insurance product with a savings component.

“PLIA wanted the freedom to construct the savings component of the product. It was just a matter of adjusting their existing products with a savings component to fit the microinsurance market,” Mr. Asuncion said.

PLIA also pointed out the difficulty of administering the savings component of the product.

“Aside from working as an insurance company, they would have to work as a ‘bank’ because of the savings component. So it would require insurance companies to either work with a bank or buy a new system or invest in a technical support group, which would be costly for them,” he said.

MFIs, meanwhile, opposed a microinsurance product combining life protection and savings as this would “directly compete” with their savings products.

MFIs are composed of rural banks, cooperatives and nongovernment organizations.

Mr. Asuncion said PLIA and MFIs instead asked the GIZ and the other institutions to come up with a simplified and standardized contract for a life microinsurance product, so a consumer could easily understand the product he or she was purchasing.

Contracts that covered insurers’ existing products were long and complicated.

“We came up with a contract and PLIA submitted it to the Insurance Commission (IC) for approval,” he said.

The contract was approved “months ago,” he said.

For his part, National Credit Council Deputy Executive Director Joselito S. Almario, in a phone interview, said: “We decided to leave to the insurance providers the decision to come up with a microinsurance life product with savings.”

“We didn’t want the industry players to have the impression we were dictating to them what product to sell. We didn’t want that,” he said.

Insurers at present are allowed to design their products in line with their target market’s demand and their products are considered microinsurance products as long as they comply with the IC’s definition for such products.

According to IC’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.

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

Fifty microinsurance products have been approved since the circular was issued in January 2010. Of these, 33 were life products while 17 were non-life products.

BPI microfinance bank ventures into microinsurance

2011-10-14T15:37:00.000+08:00

Business World
Finance
Posted on September 30, 2011 07:35:24 PM

MOBILE MICROFINANCE bank BPI Globe BanKO will begin offering microinsurance after partnering with two other subsidiaries of the Bank of the Philippine Islands.
In a statement, BPI Globe BanKO said it has partnered with BPI Philam Life Assurance Corp. (BPI-Philam) and BPI-Mitsui Sumimoto Insurance Corp. (BPI/MS) to offer insurance products that are affordable and targeted at low-income earning Filipinos.

BPI-Philam, the bancassurance arm of BPI, is an alliance between BPI and the Philippine American Life and General Insurance Co., the country’s biggest life insurance company.

BPI/MS is a joint venture between BPI and Mitsui Sumimoto Insurance Co., a non-life insurance company based in Japan.

BPI Globe BanKO on Friday launched three microinsurance products, namely, PondoKO, PuhunanKO and PaniguroKO.
PondoKO entitles an individual to life insurance and to a 1% interest rate per annum on his or her deposit once this reaches P2,000.

In the event of death -- regardless of the cause -- his or her beneficiary will get five times of the amount of cash in the account.

PuhunanKO provides both life insurance and loan coverage. An individual who purchases this will entitle his or her beneficiary to P10,000 and to 100% loan coverage in case he or she dies.

PondoKO and PuhunanKO are offered in partnership with BPI-Philam.

PaniguroKO, offered in partnership with BPI/MS, gives the account holder access to a life insurance policy that costs only P365 for a one-year coverage.

With PaniguroKO, an account holder is entitled to a P50,000 coverage for accidental death, P5,000 assistance in case of fire and P2,500 assistance in case of flood, typhoon and earthquake. This insurance can be purchased through mobile phones, thus doing away the need to fill out documents.

"Through BanKO’s ’banking the unbanked’ concept, the market that other banks have failed to reach will be given options and this is a very good way of giving back. We at BPI-Philam are hoping that more from the lower income segment will be empowered and will appreciate the need to save," Stephen James Clark, BPI-Philam president and chief executive officer, was quoted as saying in the statement.

"Getting an insurance used to be expensive or at least that’s what a lot of people think, especially those who are not familiar with it. Through the BanKO-BPI/MS partnership, we hope more people will realize the value in securing one," Mr. Takaaki Ueda, BPI/MS president and chief executive officer, was also quoted as saying in the same statement.

In the same statement, BPI Globe BanKO said it had partnered with the German Agency for International Cooperation to conduct financial literacy seminars nationwide. This is in line with the bank’s objective to educate depositors on the importance of insurance. The seminars will begin in the fourth quarter of this year and will run up to next year.

BPI Globe BanKO is a savings bank that handles the mobile microfinance operations of BPI, the country’s third largest in terms of assets.

It is a shared venture between BPI, Ayala Corp. and Globe Telecom, Inc. The bank uses Globe’s GCash platform to electronically transfer funds to microfinance institutions and individual borrowers. -- Ann Rozainne R. Gregorio

Cash transfer beneficiaries targeted for microinsurance

2011-10-13T21:28:00.000+08:00

Economy
Posted on October 03, 2011 11:42:32 PM

TACLOBAN CITY -- Beneficiaries of the government’s conditional cash transfer program -- supposedly some of the poorest of the poor -- are being targeted for microinsurance coverage next year, a senior economic official said here recently.

Finance Undersecretary Gil S. Beltran, executive director of the National Credit Council, said in a recent interview here that the Department of Finance is in talks with the Department of Social Welfare and Development to tap cash transfer beneficiaries who are part of state livelihood programs.

“With livelihood programs in place for beneficiaries, the third stage in the process is microinsurance,” Mr. Beltran explained in the interview.

Microinsurance involves low premium payments as well as simpler application and claim processes.
“Through this scheme, they will be protected from calamities and they won’t slide back to poverty,” Mr. Beltran added.

The cash transfer program, formally called Pantawid Pamilyang Pilipino Program, has 2.3 million household beneficiaries this year. Their ranks are targeted to increase to three million next year.

Reynaldo M. Vergara, who heads the Insurance Commission’s Actuarial Division, said in a separate interview that the government aims to insure about a fifth of the population by the end of 2012 from 16.65% currently. -- S. Q. Meniano

IC to formalize unlicensed providers this year

2011-09-24T23:15:00.000+08:00

Please click here for link

Roadshow on microinsurance advocacy opens on Friday

2011-09-24T23:10:00.000+08:00

Please click here for link

Microinsurance Roadshow kicks off in Eastern Visayas

2011-09-24T23:02:00.000+08:00

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IC stepping up campaign against unlicensed insurers

2011-09-24T22:46:00.000+08:00

BusinessWorld
Finance
Posted on September 21, 2011 09:59:40 PM

TACLOBAN CITY -- The Insurance Commission (IC) wants the registration of unlicensed insurance providers completed by the end of this year as part of efforts to convince poor households to avail of microinsurance.

Ma. Lourdes L. Ramos of the IC’s public assistance information division said the regulator has been stepping up the enforcement of the joint memorandum circular issued by the IC, Cooperative Development Authority (CDA) and Securities and Exchange Commission (SEC), that sets the government’s policy on informal insurance activities.

“Unlicensed insurance activities are usually done by cooperatives.

These are the groups that think it’s okay to do that. We want them to be formalized, place them on the mainstream and regulate their activities,” Ms. Ramos said in an interview during the three-day financial literacy roadshow on microinsurance in this city.

Under the joint IC-CDA-SEC Memorandum Circular 1-2010 issued January 29, 2010, all entities engaged in insurance activities are required to secure a certificate of authority from IC.

Informal insurance schemes should have closed by January, while those that want to formalize and continue to engage in the insurance business have up to this year to secure a certificate of authority.

“We want to protect the interest of members [of these informal insurance schemes] by regulating their activities. That way, clients are assured that they will get what’s due them,” Ms. Ramos said.

Joselito S. Almario, Department of Finance-National Credit Council (DOF-NCC) deputy executive director, said 2.9 million Filipinos are covered by informal insurance schemes not certified by the regulator.

“Formalizing these unlicensed insurance providers will help people appreciate the importance of securing insurance and assure their benefits,” Ms. Almario said -- S. Q. Meniano

Road show aims to increase awareness of microinsurance

2011-09-24T22:37:00.000+08:00

Business World
Finance
Posted on September 19, 2011 04:24:17

TACLOBAN CITY -- The government yesterday kicked off a road show aimed at increasing awareness of microinsurance and risk protection.

Joselito S. Almario, deputy executive director of the Department of Finance-National Credit Council (DOF-NCC), said financial literacy seminars will be held in 15 other regions after Eastern Visayas.

Through this road show, he said the government is hopeful microinsurance would reach the poor communities.

“It has been an impression that insurance is only for those who are in the higher class. We are promoting microinsurance because this is intended for the low-income families. Premium on this product can be as low as P30 a month,” Mr. Almario told BusinessWorld at the sidelines of the seminar here yesterday.

Only 13% of the country’s population has life insurance while only 1% is covered by non-life insurance, he noted.

Since the government introduced microinsurance last year, however, he said commercial insurance companies have gained some two million clients.

After the financial literacy seminars, Mr. Almario said the government aimed to form a corps of microinsurance advocates from government, insurance companies, civil society, support organizations, and donors.

“These future microinsurance advocates are envisioned to help address two causes of low insurance coverage among the low-income sector -- the lack of awareness of insurance and low financial literacy level,” he said.

The road show is being held by the Insurance Commission with assistance from the DOF-NCC, German International Cooperation-Microinsurance Innovations Program for Social Security (GIZ-MIPSS) and Asian Development Bank-Japan Fund for Poverty Reduction (ADB-JFPR).

GIZ-MIPSS senior finance adviser Dante O. Portula said in a separate interview the international agency has been assisting the government under a four-year program that will expire in 2012.

“We have to popularize microinsurance. Disasters such as illnesses, injuries, or even death of family members, loss of property or natural catastrophes could happen to anybody -- but low-income families have to cope even harder with these risks because the effect on their limited financial possibilities could be fatal,” Mr. Portula said.

He said GIZ has been assisting the government capacitate insurance providers. -- Sarwell Q. Meniano

Philippines: Eight life insurers consider forming "super brokerage"

2011-08-18T22:31:00.000+08:00

Asia Insurance Review

Eight life insurers in the Philippines are jointly seeking a permanent solution to their capitalisation problem which is to increase their minimum paid-up capital to PHP125 million (US$2.95 million) each as required by a ruling of the Insurance Commission and the Department of Finance.

To meet this target, these insurers are considering forming a "super brokerage", according to the Philippine Star. While the "super brokerage" will be a single entity, the individual stakeholders will still write their own policies. Another option is to consolidate through mergers and acquisition (M&A) among two or three insurers.

The eight insurers comprise one major player ranked between sixth and 10th in the industry in terms of premium income last year, two medium sized life insurers ranked from 11th to 20th, and five smaller companies.

The stakes for them will rise further because by the end of the year, the minimum paid-up capital requirement for an insurer will be PHP175 million. The capital increase programme started in 2006 and will culminate in a PHP250 million minimum paid-up capital level by 2015. By then, the Asean Free Trade Agreement (AFTA) will take effect, breaking down barriers for doing business among Asean member nations.

At present, Philippine insurers are seen as being at a possible disadvantage because they rank second lowest, if not the lowest, among their Asean counterparts in terms of capital. Of the 32 players in the Philippine life insurance industry, the top 10 players, which are mostly foreign-controlled and account for nearly 80% of total premiums, have already exceeded PHP1 billion in terms of capital.

The movement for microinsurance

2011-07-30T19:56:00.000+08:00

(The Philippine Star) Updated June 13, 2011 12:00 AM Comments (0)

MANILA, Philippines - As microinsurance gains more ground in mainstream banking and finance circles, more and more organizations have now taken strides to provide products that are affordable and accessible to members who need it the most. Pioneer Life, recently the first to be granted approval by the Insurance Commission for their microinsurance programs has found partners in organizations such as NGOs, microfinance associations, banks, cooperatives and direct selling companies for various tailor-fitted needs. Whether it’s accident, life or property coverage — safety and protection is now well within their reach.

“We have always strived to produce savings and insurance products that are affordable and easy to acquire. This is in line with our vision to become a model Filipino enterprise,” shares President and CEO of Pioneer Life Lorenzo Chan, Jr. “In order to do that, we have to go beyond serving the standard A-B and corporate markets. For us, microinsurance is a natural progression to bring a useful product to people who need it most.”

One of the biggest microfinance institutions in the country, GM Bank sealed its partnership with Pioneer Group for the provision of Property Insurance Coverage, including fire, flood, and earthquake assistance, as well as Personal Accident Insurance to its many associates and members. GM Bank, Inc. is composed of two of Nueva Ecija’s most respected rural banks; Munoz Rural Bank, Inc. and Community Rural Bank, Inc. The Protektahan program was specifically designed for the needs of not just GM Bank associates but their clients and members as well.

A direct selling marketing company has gained ground for various products that promote personal health and wellness – the 7-in-1 Vera Coffee, and V7 Grape Seed Oil Extract. It’s only fitting that the officers, staff and members of Vera7 be protected for their financial wellness too. This is the partnership agreement signed between Vera7 and Pioneer where a special savings and wellness program was developed for the coverage of Personal Accident with Accidental Death and Disablement Benefit (ADDB).

Providing insurance coverage for eligible bank borrowers under a Group Credit Life Insurance Policy, Cantilan Bank is another big name in the field of rural banks that have decided to give their trust to Pioneer. The specialization of the bank includes banking and countryside development services in the northern and southern part of Mindanao.

World Kitchen Workers Service Cooperative, made up of some 80 kitchen workers and individuals part of the food service industry and other restaurants, has signed up for protection with Pioneer. Eligible borrowers of the cooperative will automatically be covered under a Group Credit Life Insurance Policy as well as Tr3asure Principle Accumulator Program, another Business Development initiative that implements a savings component, too.

Through these various partnerships, Pioneer Life aims to strengthen its foray into microinsurance and take a step closer in the end goal that is transforming every Filipino into a saver. In partnership with NGOs and institutions offering microfinance, Pioneer’s offerings of microinsurance programs meet the peculiar needs of this market and tailorfit to the requirements of a group. This early, the claims made by beneficiaries have helped keep kids in school and widows get back on their feet. “Microinsurance is an opportunity for us to reach out to more people regardless of where they are or what they do,” says Pioneer Life VP for Microinsurance Geric Laude. “We develop our programs only after we truly understand what their needs are.”

Philippines: Life market to spurt ahead this year

2011-07-29T21:29:00.000+08:00

Philippines: Life market to spurt ahead this year
The Philippine life insurance sector expects to grow significantly this year, citing positive economic indicators suggesting an increase in demand for insurance products.

Mr Mayo Jose Ongsingco, President of the Philippine Life Insurance Association (PLIA), says: "In 2010, our first-year premiums grew by 59%, while total premiums grew by 23%. We expect that the growth this year will be close to that." PLIA data show that the industry's total premium income increased by 23.5% to PHP70.7 billion (US$1.7 billion) while first-year premiums rose by 59.4% to PHP34.28 billion last year.

"The economic fundamentals of the country are very strong. Inflation is in check, the fiscal deficit is under control. Despite all the troubles in the Middle East and North Africa, remittances are also strong," he points out. With favourable economic conditions, people have more personal disposable income to purchase insurance, he says.

The debt crises in the United States and Europe have also boosted the Philippine insurance industry by pushing capital to emerging markets. These have buoyed bond and equity markets, increasing insurers' yields on investments. However, Mr Ongsingco also warns that a US default would send ripples to markets across the globe, similar to the global financial crisis in 2008.

Currently, the penetration rate of insurance is still small in the Philippines, Mr Ongsingco says. At present, insurance premiums collected by the industry are equivalent to just 0.75% of the country's gross domestic product. He says that the ratio could substantially increase through the promotion of micro insurance.

Nonlife insurers urged to lobby for tax breaks

2011-06-16T09:16:00.000+08:00

BusinessWorld
Finance
Posted on June 12, 2011 09:54:47 PM

THE INSURANCE Commission (IC) has urged nonlife insurers to lobby for the removal of taxes on its policies to make these more affordable for consumers.
“We will support any move of the nonlife insurance industry to lower or eliminate the taxes on their policies,” Insurance Commissioner Emmanuel F. Dooc told BusinessWorld at the sidelines of a Commission on Appointments hearing at the Senate on Wednesday.

Nonlife policies are levied an array of taxes, including a 12% value-added tax (VAT), 12.5% documentary stamp tax, 2% fire service tax and between 0.15-0.75% local government tax.

Mr. Dooc compared this to the life insurance industry, which was able to successfully lobby for a reduction of the premium tax to 2% from 5%.

The amendment to the National Internal Revenue Code of 1997 was carried out through Republic Act No. 10001 enacted in Feb. 2010.

“[The life insurance industry] enjoyed a good 2010 and a good first quarter this year. This is the impact of the benefits of tax relief,” he said.

“Premiums have gone down, and there are more people who are interested because [policies] are more affordable. Almost all companies have restructured their premiums after the taxes were lowered,” Mr. Dooc added.

The IC chief rued that the nonlife industry, led by the Philippine Insurers and Reinsurers Association (PIRA), did not join the Philippine Life Insurance Association when it appealed for tax breaks in Congress in 2009.

“Nobody thought the bill could be passed so quickly,” he pointed out.

The law also provided that no tax on life insurance premiums would be collected by 2015, right in time for the lowering of trade barriers in the Association of Southeast Asian Nations (ASEAN), that will enable the free flow of goods and services, including insurance, among member nations.

“The nonlife industry could face a lot of competition in 2015, especially with other ASEAN countries enjoying better tax regimes,” Mr. Dooc pointed out.

PIRA general manager Mario C. Valdez earlier stated that Philippine nonlife insurers shoulder a 26.5% tax burden on premiums. In comparison, Singapore charges only a 7% VAT for every policy, while Thailand charges only 3.9% for personal accident policies and 7.4% for all other types. Indonesia charges 0.4%. -- Diane Claire J. Jiao

Micro-insurance seen picking up

2011-05-28T02:13:00.000+08:00

Manila Bulletin
Business Option
By FLOR G. TARRIELA
May 26, 2011, 12:22am

MANILA, Philippines — “We can cheat death once or twice but we cant get out of this world alive.” Tatay Andro and his wife are engaged in dress-making business.

On September 26, 2009, Andro drowned while crossing a wooden bridge somewhere in Pasig at the height of typhoon Ondoy. Last July 2010, Luningning Cruz, a mother of 4, engaged in the rag making business, was hit by a motorcycle, suffered head injury and died upon reaching the nearest hospital.

Anthony Samson, eldest in a brood of 11 children of Elenor Samson, was devastated when his parents died in an accident while doing business last January.

Under ordinary circumstances, the Batuampos, Cruzes, and Samsons would have very little savings to draw upon in order to settle funeral expenses, much less, cope with the loss of livelihood because of the untimely death of the family breadwinner.

But because they had earlier decided to participate in a micro-insurance program, their families received substantial benefits that allowed them to cope with the loss more graciously.

What is micro insurance? From the Insurance Memorandum Circular 1-2010 issued by the Insurance Commission, micro-insurance is an activity providing specific insurance, insurance like products and services that meet the needs of the low income sector for risk and relief against distress, misfortune or other contingent events.

The minimum capital requirement is P5 million. To date the Insurance Commission has approved the establishment of 16 micro insurance Mutual Benefit Association (MBAs). It has also approved 4 regular insurance companies to offer micro-insurance. The Bangko Sentral ng Pilipinas (BSP) has granted approval for rural banks, thrift banks and cooperatives to sell micro-insurance.

In the above particular cases, they had enrolled in the micro-insurance program of TSPI MBA TSPI (Tulay sa Pag-Unlad Inc.) is a Christian micro-enterprise NGO involved in micro-lending and micro-insurance. In the case of Tatay Andro, TSPI MBA awarded his family P180,000 in benefits.

Currently, Tatay Andro’s wife, Nanay Liza and their 3 children continued what the head of the family previously started. With the help of her co-members in TSPI, Nanay Luningning’s claim was filed, documentary requirements were completed and within a week, benefits amounting to P165,000 were given to her beneficiaries.

As for Anthony, he was somehow comforted when he received benefit claims amounting to more than P100,000. The sadness that he and his siblings experienced from the loss of both their parents was lessened because of the help that TSPI extended to them through micro-insurance.

As can be seen from the above incidents, the poor are very vulnerable to risks such as death caused by illness or accident, disability and property losses; especially when it is the death of the family’s breadwinner. In the past, life insurance would be available only to the middle and upper levels of society. The poor have little to save.

However, the creation of micro-insurance products has provided a tremendous blessing to the poor.

With micro-insurance, the poor can set aside as little as P5 per week to pay for their insurance premiums, which, depending on the offering of the micro-insurance provider, can pay out natural death benefits of P40,000 or more.

There are many institutions that are now offering micro-insurance, many of the pioneers being associated with those who already offer micro-lending services to the poor.

Such is the case with the TSPIMBA. While serving the poor by offering them a variety of enterprise and livelihood loans, TSPI desired to extend more services and assistance to their clients. They saw micro-insurance as a feasible and viable service that the clients desired.

TSPI MBA was set up in order to extend financial assistance in the form of death benefits, loan redemption assistance, disability benefits and other services to the borrowers of TSPI and their immediate family members.

Becoming a member of the TSPI MBA will cost the member a fee of only P240.00 per year. This entitles a member to death benefits for the member, spouse and 4 qualified children, accidental death and dismemberment benefits for the member and his/her spouse, total and permanent disability for the member and equity value also for the member.

Moreover, if the member is also a borrower of TSPI, subject to an additional premium of P1.00 per thousand of loan availed, the member is also entitled to loan availment benefit package composed of death benefit, accidental death benefit, accidental dismemberment, credit life and funeral assistance.

It has only been 4 years since TSPI MBA started its micro-insurance operations. it now has more than half a million members as of December 2010. Micro-insurance is relatively new. Already it is showing to be a viable and promising business proposition. And clearly a big help to the poor.

* * *

Ms. Tarriela is Chairman of Philippine National Bank. She is a director of TSPI NGO and TSPI MBA. She was formerly Undersecretary of Finance and Vice President Citibank N. A

Microinsurance Can Help Poor Prepare for a Better Future - Experts Say

2011-05-21T23:40:00.000+08:00

News Release
Asian Development Bank
6 May 2011

Panel discusses how to promote microinsurance in Asia

HA NOI, VIET NAM- Microinsurance is a key tool to help the world’s poor cope with unexpected setbacks, a panel of experts said today.

The panel, speaking at the Asian Development Bank’s (ADB) 44th Annual Meeting of the Board of Governors here, said microinsurance provides a prime opportunity for private sector insurers to help a large, underserved customer base and still make a profit. The seminar was titled “Protecting the Bottom Billion the Private Sector Way.”

Many of the world’s poorest remain mired in poverty because a sudden illness or death in the family, crop failure, or natural disaster causes an unexpected loss of income or large expense. Others can be pushed back into poverty by these same events. Microinsurance -- low-cost insurance for low-income people – can help the poor cope in such times of difficulty, allowing them to plan for a better future.

President Bill Clinton, founder of the William J. Clinton Foundation and 42nd President of the US delivered an introduction to the seminar via video.

Microinsurance is not yet available to the vast majority of the nearly 2 billion who live on less than $2 a day in Asia and the Pacific. In part that is because regulation and supervision, where it exists, does not support insurance products aimed at the poor. Private insurers have been slow to provide microinsurance given the regulatory uncertainties and the difficulties of delivering policies and paying small claims on such a vast scale.

Those companies already offering microinsurance, by contrast, report strong demand and predict growth in the sector. That suggests there is interest in using such products when regulatory circumstances allow. Low-income clients also look for policies that are offered at a price they can afford and in a way they can understand and use, the panel said.

“There is a huge untapped market for microinsurance for lower-income households. The commercial sector will drive the dramatic expansion of the industry, but we will have to address it in a systemic way across the value chain,” said Michael McCord, President of the Microinsurance Centre.

ADB has, in recent years, spent $4.4 million to promote microinsurance in Sri Lanka, Bangladesh, the Philippines, and elsewhere. In 2010, it allocated $750,000 to help develop the nascent microinsurance markets in the People’s Republic of China and Mongolia where there are over 200 million potential clients.

The panel was moderated by Dean Karlan of Yale University, a noted evaluation expert on tools for access to finance, and, as well as Mr. McCord, comprised Doug Barnert, Executive Director of the Group of North American Insurance Enterprises; Evangeline Crisostomo Escobillo, Advisor to the Board of Phil Plan Inc. and former Insurance Commissioner of the Philippines, Tilman Ehrbeck, Chief Executive Officer of the Consultative Group to Assist the Poor; and Andrew Kuper, Founder and President of LeapFrog Investments.

Wider coverage expected due to microinsurance

2011-04-27T22:15:00.000+08:00

Business World
Finance
Posted on April 25, 2011 11:51:19 PM

A FIFTH of the population could be insured by the end of the year as insurers gear up to answer a pent-up demand for protection among the country’s poor.

“Microinsurance is getting a lot of attention. Everybody is interested.”

IC Chief Insurance Specialist Reynaldo M. Vergara told BusinessWorld in a phone interview last Wednesday.

“We could have 20% of the population insured by the end of 2011.”

According to the latest IC data, only 13.90% of the population was insured in 2009. The insurance penetration rate -- total premiums as percentage of gross domestic product -- was a mere 1.02% that year.

The microinsurance market is growing because there are small, medium and large providers of the low-cost insurance products now, Mr. Vergara explained.

Four insurers -- Pioneer Life, Inc., Philippine Prudential Life Insurance Company, Inc., Asian Life & General Assurance Corp. and Manila Bankers Life Insurance Corp. -- as well as 12 mutual benefit associations (MBAs) are just some of the providers that have submitted microinsurance products for the IC’s approval, he said.

“Manulife (Manufacturers Life Insurance Co.) and Philam Life (Philippine American Life and General Insurance Co.) have also expressed interest and have made courtesy calls to us to inquire about microinsurance,” Mr. Vergara added.

The government’s push for microinsurance -- designed to protect the poor who are most vulnerable to personal or natural catastrophes -- began with the release of the National Strategy and the Regulatory Framework for Microinsurance in January 2010.

The IC then came out with Insurance Memorandum Circular 1-2010 that defined microinsurance. Together with the Securities and Exchange Commission and the Cooperative Development Authority, it issued another circular closing down informal insurance or insurance-like activities.

The Bangko Sentral ng Pilipinas also came out with a circular allowing rural, cooperative and thrift banks to market and sell microinsurance products within their premises.

In January, the IC approved the performance standards governing the microinsurance industry.

Insurers will be evaluated and monitored according to standards or indicators grouped under the acronym SEGURO, which stands for: solvency and stability; efficiency; governance; understanding of the product by the client; risk-based capital; and outreach.

The IC and the Department of Finance last week wrapped up training for IC personnel on how to monitor the performance of microinsurance providers.

“We need to train the regulator because it is the first time we are using these performance standards. But our experience in monitoring insurance products will help us,” Mr. Vergara said.

The training of the IC will then be followed by training for the life and nonlife insurers, as well as MBAs.

The performance standards will be applied to insurers’ 2011 performance, as reflected in their 2012 annual reports.

Mr. Vergara added that as training is being conducted, the nationwide financial literacy campaign to bring insurance education to barangays would be rolled-out.

The campaign seeks to teach low-income Filipinos the basics of insurance, the responsibilities of insurers and the benefits entitled to clients.

Earlier, the IC also approved a prototype product for nonlife microinsurance dubbed “Buhay, Bahay, Kabuhayan.”

The product is designed to give P10,000 worth of coverage against death from accidents or damage to property/business from natural calamities. Consumers can buy up to three units for a total coverage of P30,000. A Buhay, Bahay, Kabuhayan contract is good for a year.

For life insurance, on the other hand, the government is already developing a prototype product that would combine life protection and savings for clients.

With all the preparations being completed to promote the microinsurance industry, Mr. Vergara said he was optimistic a significant expansion would be created. -- Diane Claire J. Jiao

BSP: Not all banks can issue microinsurance

2011-03-31T23:19:00.000+08:00

Business
GMA News TV
Posted March 28, 2011

Not all banks can engage in the business of microinsurance, the Bangko Sentral ng Pilipinas (BSP) said Monday, noting that only "trained and documented" financial institutions should do it.

In a recent advisory to banks, BSP Deputy Gov. Nestor Espenilla Jr. said only authorized banks are allowed to engage in the "presentation, marketing, sale and servicing of microinsurance products."

He said banks can act as microinsurance agents only of insurers authorized by the Insurance Commission. Banks passing a qualifying exam and prescribed training course may act as microinsurance agents, and their articles of incorporation (AOI) should be amended to reflect this fact, Espenilla said.

"In view of the latter requirement, applicant banks shall amend their articles of incorporation by including a secondary purpose of acting as a microinsurance agent, and shall submit simultaneously the amended AOI to the BSP and Insurance Commission," he said.

The central bank will only issue a "No Objection" notice after banks have complied with the requirements, according to the BSP official.

The notice is a requirement by the Insurance Commission before issuing a license to engage in microinsurance, the official said.

The licensed bank shall submit the approved AOI on or before June 30, 2012, otherwise, the license shall no longer be renewed, according to Espenilla.

The "unauthorized conduct of microinsurance as well as other insurance-related activities shall subject a bank and/or the responsible directors and/or officers of the bank to the applicable sanctions and/or penalties under existing banking laws, rules, and regulations," according to the BSP.

Microinsurance is an important advocacy started by former BSP Gov. Rafael Buenaventura that BSP Gov. Amando Tetangco Jr. is now pursuing.

It is a highly regulated business as it impacts on the financial welfare of small borrowers whose trust and confidence in the system forms the bedrock of banking, especially in the countryside, the central bank said.

Caraga solon claims creation of micro-insurance for Filipinos timely, badly needed

2011-03-30T22:35:00.002+08:00

SURIGAO CITY, March 29 (PNA) -- There is a need to establish a micro-insurance system in the country that would make insurance accessible and affordable to all particularly in rural and poor communities.

Surigao del Norte Second District Representative Guillermo Romarate Jr. on Tuesday said that the establishment of micro-insurance in local government units is now very timely to protect lives and properties especially the poor which suffer the biggest brunt during the onslaught of unpredictable disasters.

Romarate, chairman of the House Committee on Insurance and member of the House Committee on Banks and Financial Intermediaries, recently conducted a committee hearing with private insurance company officials including former Central Bank Governor Jose Cuisia, who is now Philippine American (PhilAm) Life Insurance president, and the officials of the Insurance Commission here.

Insurance Commission Commissioner Atty. Emmanuel F. Dooc, Deputy Commissioner Atty. Vida Chiong and lawyers from the Insurance Commission were also present at the committee hearing.

The Insurance Commission met with bigwigs of the insurance industry to discuss possible amendments on the Insurance Code that will be relevant with the needs of the times.

Romarate said that despite of the great need to insure farms, life and properties at times affected by disasters, only 12 percent are now insured according to statistics.

Romarate said many think that insurance on farms, properties and even lives is an additional expense, attributing the apprehensions especially the marginal poor to the high cost of premiums.

“That is why there is a need to establish a micro-insurance system in this country to make provision of insurance accessible and affordable that will allow cheaper insurance premiums available to all," Romarate said.

On his part, Dooc said the clamor for establishment of micro-insurance in the country have been increasing over the years.

“The Quezon City Government is a great example who gave greater importance on micro-insurance for their constituents under the leadership of former Mayor Sonny Belmonte now Speaker and now Mayor Herbert Bautista. The Q.C. government has taken the lead for local government units to provide insurance through micro systems for their constituents” Dooc told the PNA in an interview.

Romarate said he will study the Quezon City Government experience on micro-insurance on how they partnered themselves with private insurance providers in providing very cheap premiums.

“We will duplicate this Quezon City experience to our LGUs in Surigao del Norte under my district,” Romarate said. (PNA)
DCT/LAM/BS/mec

IC issues rules for microinsurance agents

2011-03-10T23:46:00.000+08:00

BusinessWorld
Finance

Posted on March 07, 2011 08:35:27 PM

THE INSURANCE Commission (IC) has come up with looser licensing requirements for microinsurance agents in a bid to boost the nascent microinsurance industry.
IC released Insurance Memorandum Circular No. 6-2011 dated February 15, but uploaded to its website only last week, exempting microinsurance agents from the required regular licensure examination for insurance agents.

“The applicant for agent’s license shall, in lieu of the examination, undergo an approved and prescribed microinsurance training course and pass the qualifying examination at the end of the course,” the circular said.

IC issues licenses to agents before they can sell products, and this is renewed yearly. Insurance agents are required to pass a written examination by the insurance regulator.

Microinsurance agents, however, will just have to take a course designed by the microinsurance provider, Deputy Comissioner Vida T. Chiong explained to BusinessWorld in a phone interview yesterday.

The training course must cover basic concepts such as the importance of insurance, product types, standard policy provisions and obligations of insurance companies and agents, such as market conduct, claims settlement and the revocation of licenses.

The president of the insurance company and the trainer shall jointly submit to IC a list of those who passed the examination, within five working days after the conduct of the microinsurance training course.

The regulator relaxed the requirements because microinsurance only deals with limited premiums and limited coverages, IC Chief Insurance Specialist Reynaldo M. Vergara told BusinessWorld in a phone interview yesterday.

Insurance agents, in contrast, have the power to charge unlimited premiums and provide unlimited coverage, and therefore are covered by more stringent rules.

The new policy could also act as an incentive for more players to venture into microinsurance.

“[The policy] will encourage microfinance institutions rural banks, cooperatives and nongovernment organizations -- and other community-based institutions to be delivery channels for microinsurance products,” National Credit Council Deputy Executive Director Joselito S. Almario told BusinessWorld in a text message yesterday. “Even civic-oriented groups and sari-sari stores can join the fray!”

With more microinsurance providers, the poor would have greater access to these products, he added.

More microinsurance providers could also bring down delivery costs and consequently reduce premium costs. -- Diane Claire J. Jiao

Manulife eyes mutual funds, microinsurance

2011-03-08T06:29:00.000+08:00

By TPT (The Philippine Star)
Updated March 01, 2011 12:00 AM Comments (0) View comments

MANILA, Philippines - The Manulife Financial Philippines is opening two new business sectors as part of its aggressive organic growth in the Philippine market.

First, it has launched its first micro-insurance operations areas in Mindanao.

Second, it launched a study on the feasibility of putting up its own asset management firm to manage mutual funds.

“We will create pilot areas in one or two provinces in Mindanao, to be spearheaded by the Philippine operations with the help of Manulife’s regional office,” David Wong, Manulife Financial senior vice president and regional executive for Malaysia, Philippines, Thailand and Vietnam, said.

Wong described the microinsurance market in the Philippines as “informal” as compared to other nations in the Asia Pacific region. But he said that the country was a leader when it comes to mandating microinsurance, under the so-called Regulatory Framework for Microfinance.

Leading the country’s microinsurance parade are the mutual benefit associations (MBAs), while the life and non-life insurance industry are still looking for the right formula.

MBA cater to the under-banked, un-banked and the lower segment of society.

“We would encourage a new and formal system of microinsurance, but we will pilot test these first,” Wong said, adding that each economy had its own peculiarities and culture.

However, the challenge for microinsurance is not so much the micro-products but the distribution and the collections of premiums processes. MBAs are by itself both the distributors and users of microinsurance.

Life and non-life insurance companies are tapping the banking sector to reach out to the microinsurance sector, since rural banks have already been catering to the microentrepreneurs.

Microfinance institutions (MFIs) as well as cooperatives and non-government organizations (NGOs), all cater to the same market for microinsurance.

In fact, the Bangko Sentral ng Pilipinas (BSP) has already allowed thrift and rural banks to help market microinsurance.

Meanwhile, Wong also admitted that they have formed a review team looking up the feasibility of putting up an asset management firm. Asset management companies put up mutual funds for the retail investors as well as investments of the insurer.

The leading asset management firms with huge mutual funds are lead by life insurers.

The Bank of the Philippine Islands (BPI) and the defunct Ayala Life Assurance Co. manages the ALFM mutual funds. Sun Life Financial has an asset management subsidiary called Sun Life Asset Management Co. (SLAMC).

Regulator approves Pioneer microinsurance programs

2011-03-08T06:17:00.000+08:00

Manila Bulletin
March 6, 2011, 12:54am

MANILA, Philippines – The Insurance Commission recently approved Pioneer Life’s micro-insurance programs – Group Credit Life Microinsurance and Group Personal Accident Microinsurance (long and short scale). Pioneer was one of the first to receive approval based on Insurance Memorandum Circular 01-2010, which emphasizes “the need for microinsurance, promoting its importance, defining its features and implementing regulations to ensure the safe and sound provision of microinsurance products to the poor.”

Pioneer has been spearheading industry efforts to make insurance available to the mass market, creating programs that are within reach of low income workers. It began conducting financial wellness sessions in 2006, to groups of both adults and the youth, sharing basic concepts of saving and investment. By 2008 Pioneer introduced savings and insurance products that are affordable and easy to acquire. Microinsurance was the logical next step. “Our vision is to become a model Filipino enterprise,” shares President and CEO of Pioneer Life Lorenzo Chan Jr. “In order to do that we have to go beyond serving the standard A-B and corporate markets. For us, microinsurance is a natural progression to bring a useful product to people who need it most.”

In partnership with NGOs and institutions offering microfinance, Pioneer has been offering microinsurance programs that meet the peculiar needs of this market such as the need to be covered for accidents, fire and flood. This early, the claims made by beneficiaries have helped keep kids in school and widows get back on their feet. “Microinsurance is an opportunity for us to make the customer our universe,” says Pioneer Life VP for Microinsurance Geric Laude. “We develop our programs only after we truly understand what their needs are.”

With the Insurance Commission’s approval of its programs, Pioneer is set to move fast forward towards a sustainable microinsurance business

Aquino proposes adoption of new microcredit tack

2011-03-04T08:48:00.000+08:00

BusinessWorld
Top Story

Posted on March 04, 2011 12:15:17 AM

BY DIANE CLAIRE J. JIAO

THE AQUINO administration wants to reverse the existing state policy on microfinance, saying government agencies should stay away from direct lending to the poor as this could be exploited for political purposes.

"We will work to institutionalize the National Strategy for Microfinance that was formulated in 1998. We will also make sure that microcredit will not be used as a tool for political patronage," President Benigno S. C. Aquino III said in a speech last week.

Asked if this meant drafting a microfinance law, Sec. Ricky A. Carandang of the Presidential Communications and Development Strategic Planning Office said: "We will wait first for the recommendations from the Cabinet."

The Palace could also draft its own Executive Order or push for a bill from Congress, National Credit Council (NCC) Deputy Executive Director Joselito S. Almario told BusinessWorld.

The NCC is the arm of the Department of Finance focused on creating a credit policy framework that will improve the delivery of financial services to the low-income sector.

In 1998, then President Joseph E. Estrada issued Executive Order (EO) 138 setting the National Strategy for Microfinance. It was in reaction to the government’s experience with direct lending programs to the poor, which resulted in many defaults.

EO 138 limited microfinance programs to government financial institutions (GFIs) such as the Development Bank of the Philippines and the Land Bank of the Philippines that lent wholesale to microfinance institutions (MFIs) such as rural banks, nongovernment organizations and cooperatives.

The directive, however, was repealed in 2006 by Mr. Estrada’s successor, Gloria Macapagal-Arroyo, through EO 558. Amid the public outcry that followed, she issued EO 558-A that allowed the Department of Social Welfare and Development (DSWD) to carry out their own microcredit programs in unserved areas. Government non-financial agencies state firms could also launch their own microcredit initiatives with the approval of the Office of the President.

"This is open to political patronage because these loans can be given to the poor as dole-outs," PinoyME Foundation President and CEO Danilo A. Songco told BusinessWorld.

Mr. Aquino made his statement in last week’s 5th anniversary of PinoyME, a non-stock, non-profit organization that provides funding and training to microfinance institutions. It was founded by his mother, former President Corazon C. Aquino, in 2006 along with business and academic leaders.

Messrs. Almario and Songco agreed with making EO 138 permanent via a law. "[Senator Teofisto D. Guingona III] filed a microfinance bill as a congressman, and we are hoping that he can do the same now in Senate," Mr. Songco said. Mr. Almario said he sent a proposed microfinance bill to the office of then-Senator Aquino in 2008, adding this could be used as a reference for Malacañang’s initiatives.

"An EO will be more expedient and will set the policy direction of the government. But, we have seen how easy it is to revoke an EO, so we also need a microfinance framework made permanent through a law," he said.

Industry players stressed the importance of a national strategy, saying GFIs are the best providers of credit programs for the poor. "In the past, when all government agencies had their own lending programs, they suffered from low payback rates," said Benel P. Lagua, president of state lender Small Business Corporation. The government is effectively creating a deficit by "throwing money to unproductive programs," NCC’s Mr. Almario added.

Mr. Aquino said during his speech that his administration would consolidate remaining credit programs for the poor under "more competent branches of government" to make them more efficient.

In an e-mail, meanwhile, Social Welfare Secretary Corazon J. Soliman told BusinessWorld that their Self-Employment Assistance Kaunlaran (SEA-K) lending program had a national repayment average of 72-75%.

According to the department’s 2009 annual report, SEA-K released a total of P189.452 million to more than 1,600 livelihood projects nationwide, benefitting more than 35,000 families.

The DSWD also provides lending windows for the poor in far-flung areas where microfinance institutions cannot enter, Undersecretary Celia C. Yangco told BusinessWorld.

But NCC’s Mr. Almario argued that these areas had bigger problems that lending alone cannot solve. "They try to go to regions without banks and cooperatives, like the uplands. But the reason why there are no microfinance institutions there is because there is no infrastructure, no market, no economic activity," he said.

The government has to come into these areas not to lend money to the poor but to create an environment where economic activity can thrive first, Mr. Almario said. "We need farm-to-market roads in the uplands. We need peace and order in Mindanao," he said. "When we have these, MFIs will naturally enter these municipalities."

GFIs also oppose the lower interest rates used by government credit programs, saying they are unable to compete. "The subsidy is disguised in the lower interest rates," the NCC’s Mr. Almario explained. "This distorts the market because people think, ‘Why is this interest rate lower than the others? I’ll just borrow here instead’."

Moreover, subsidized credit isn’t sustainable, PinoyME’s Mr. Songco said.

The DSWD’s Ms. Yangco said GFIs and the private sector were pricing themselves out of the market but the NCC’s Mr. Almario argued that high interest rates were not obstacles, citing the prevalence of loan sharks.

"The most effective way of helping the low-income sector is not by bringing down interest rates, but by making credit accessible to them," he said. "GFIs can focus on the lending, and the government can focus on creating the best environment for microfinance to thrive. It’s a partnership."

Insurers adapt to changing climate

2011-02-28T23:46:00.000+08:00

BusinessWorld
Posted on February 28, 2011 10:57:18 PM
BY DIANE CLAIRE J. JIAO

AMID forecasts of a stormy summer, the insurance industry is gearing up to provide the public with better protection from typhoons and floods after the devastation wrought by Ondoy and Pepeng in 2009.

"We are more prepared than before because we’ve already gone through very strong typhoons," non-life insurer Federal Phoenix Assurance Company, Inc. President Ramon Y. Dimacali told BusinessWorld yesterday.

"It’s a common practice now for the protection from acts of God to be automatically costed into the premiums of insurance products," he explained. "Then, it is up to the consumers if they want to opt out of it."

Non-life insurance typically only provides coverage from accidents and theft for cars and fire and lightning for property. Protection from damage caused by natural disasters such as typhoons, floods and earthquakes, which are considered acts of God, is not included.

An estimated 75% of all property losses caused by typhoons Ondoy and Pepeng were uninsured for acts of God, Lacson & Lacson Insurance Brokers, Inc. managing director Salvador L. Lacson said in a text message yesterday.

Since then, awareness has spiked, Mr. Lacson said.

"For our company, all our insured have coverage for natural disasters," he said. "Brokers also make it a habit to advise the insured about the importance of acts of God coverage."

Banks have also began to require acts of God coverage for property acquired through housing and car loans, Mr. Dimacali said. Companies are also insuring their car fleets against natural catastrophes.

But this awareness may be short-lived given the additional costs, warned Mario C. Valdez, general manager of the non-life group Philippine Insurers and Reinsurers Association (PIRA).

While rates may vary among different insurers, annual premiums usually cost 1% of the value of the property. Acts of God coverage costs an additional 0.5%, he said. A car worth P1 million would effectively be charged P15,000 in premiums per year.

"Filipinos are very aware now, but after two or three years of paying premiums, they could think, ‘Forget it.’ They could think that typhoons [as strong as Ondoy] only come once every 10 years," Mr. Valdez said.

Awareness could also wane in areas which don’t experience many disasters, he added.

"It’s more economics than awareness. At 0.5% per year, it can be quite expensive," Mr. Valdez said.

Mr. Lacson said customers who approach him have also expressed the reluctance to shell out so much money. However, he said he asks them, "For every peso you save in premiums, how much do you lose in potential claims?"

Disaster-prone

According to the German Agency for International Cooperation’s (GIZ) Study on Demand of Insurance for Natural Catastrophes, the Philippines is one of the countries most prone to natural disasters. An average of 25 typhoons hit every year and Ondoy and Pepeng racked up an estimated P30 billion in overall damage.

Global reinsurance leader Munich Re also singled out Asia as the region most vulnerable to losses caused by natural catastrophes.

"Weather-related catastrophes worldwide and in Asia have tripled since 1980, and the loss potential is rising," Francis Savari, Munich Re Singapore head of client portfolio management, said in an e-mail on Friday.

According to Munich Re data, 32% of the 19,500 loss events from 1980 to 2010 happened in Asia. The region also had 51% of the 2,275,000 disaster-related fatalities during the 30-year period.

Moreover, Asia had an estimated $1.140 trillion in overall losses from natural catastrophes during the 1980-2010 period but insured losses only totalled $66.6 billion.

Major factors for the increasing losses are a rise in population, higher value concentration in extremely exposed regions and climate change, Mr. Savari said.

Reinsurance

To help insurers deal with the destruction caused by natural catastrophes, many industry players have begun seeking partnerships with reinsurance companies abroad.

Reinsurance is insurance for insurance companies, or a practice of spreading the risk to other parties.

Federal Phoenix’s Mr. Dimacali explained: "Most companies don’t usually get reinsurance. But Ondoy sunk entire warehouses, factories, and shopping malls. That is a very big pay-out, more than one insurer can absorb."

Insurance companies are now striking agreements with reinsurers abroad by paying them a portion of the premiums they receive. In return, the reinsurer helps pay for the obligation when a large claim needs to be settled.

"We’ve also began getting reinsurance for car claims, which are usually very small. But when a disaster hits, it’s not just one car that gets damaged. It could be all the cars in the Marikina and Cainta area," Mr. Dimacali said. "The industry probably paid P2 billion in car claims alone after Ondoy."

Broker Mr. Lacson added that the ability of insurers to quickly settle claims -- no matter how large -- would encourage more customers to purchase non-life insurance.

"Ondoy hit Metro Manila in September 2009. By the year-end, we were able to settle all motor claims. Also, 95% of all property claims were settled," he said.

Munich Re’s Mr. Savari did not disclose figures on the portion of their reinsurance business that comes from Philippine insurers. He admitted, though, that there was a "substantial rise in reinsurance demand and interest over the last years."

"With the rise in natural catastrophes, the higher living standards in the Philippines and the increasing capital requirements we expect this to increase further," he said.

Microinsurance

The low-income sector, meanwhile, remains an untapped market.

"They are the most vulnerable because they don’t have enough capital. Sometimes, their cars and their homes are still being paid off," Mr. Dimacali said.

Reinsurance giant Swiss Re emphasized the need for microinsurance.

"The more pressing challenge is how to protect those who are unable to purchase insurance protection for themselves, but whose lives and properties may be directly affected by natural catastrophes. The government may need to step in here," Swiss Re Vice-President Sandra Capay said in an e-mail.

Last month, the Insurance Commission approved a microinsurance product called Buhay, Bahay, Kabuhayan.

The product is designed to give P10,000 worth of coverage against death from accidents or damage to property/business from natural calamities. Consumers can buy up to three units for a total coverage of P30,000.

A Buhay, Bahay, Kabuhayan contract is good for a year.

In an earlier interview, the PIRA’s Mr. Valdez said eight non-life insurance companies had already expressed interest in offering the product this year.

GIZ and Munich Re have also partnered with the Cooperative Life Insurance and Mutual Benefit Services (CLIMBS), an umbrella organization of cooperatives, late last year to offer a natural catastrophe insurance product to 1,600 cooperatives with nearly a million members.

The product, CLIMBS Weather Protect, insures a portion of a cooperative’s loan portfolio so it remains liquid in the event borrowers, affected by natural calamities such as storms, default.

Eighty cooperatives are already set to insure their portfolios this year, CLIMBS Executive Vice-President Isagani B. Daba has said.

"With our product we strengthen the cooperative’s capacity to offer their members financial relief at that time where it is most needed," Munich Re business development manager Thomas Mahl said in an e-mail on Friday.

Manulife to sell micro insurance to rural Pinoys

2011-02-25T21:54:00.000+08:00

Business Mirror
Wednesday, 23 February 2011 19:09
Jun Vallecera / Reporter

THE Manufacturers Life Insurance Co., which earlier partnered with local lender China Banking Corp., plans the sale of micro insurance to rural Filipinos on a scale that is not only sustainable, but commercially viable as well.

It is part of the insurer’s multiyear plan to make the Philippines the center of its microinsurance business in the region.

David Wong, senior vice president and regional executive at Manulife Financial operations within the Association of South East Asian Nations or Asean, said they are about to undertake the pilot testing of the project on the island of Mindanao down the country’s south.

Wong noted that most microinsurance programs tend to focus on urban-based middle classes no matter that in Asia some two billion of the population live below the poverty line and have no cover for the various risks they face on a daily basis.

“A large population in rural Asia has no risk cover and this sector is ignored thus far. We need to go to this segment of the population,” Wong said.

He also noted that while microinsurance programs exist in most countries in the region, only the Philippines and India took the trouble to support them with legislative measures that ensure continued viability and growth.

In the Philippines, Wong said some two to three million benefit directly from microfinance programs extended by such carriers as nongovernment organizations, mutual benefit associations and others looking out for the financial welfare of the less financially endowed.

“We are looking at this market and pilot test a program in one or two provinces in the Philippine south,” Wong said of Mindanao where the poverty incidence is relatively higher than in most parts of the country.

What Manulife learns from the project in the months ahead should be instructive as to the size and scope of the microinsurance program they have in mind, Wong explained.

He ruled out risk protection for farmer crops that some insurers are also pilot testing on Leyte island, saying they are thinking along the lines of health and wellness cover.

This means offering rural Filipinos cover for their hospital bills at premium prices that even the poor can afford to pay.

Wong was not too specific but insurance executives said earlier that an affordable health cover typically involves premium payments of around P300 a year

Cooperatives eye insurance vs extreme weather events

2011-02-24T00:08:00.000+08:00

BusinessWorld
Finance
Posted on February 23, 2011 09:26:43 PM
BY DIANE CLAIRE J. JIAO

EIGHTY cooperatives are eyeing insurance for their loan portfolios to protect themselves against a rash of defaults when their members are hit by natural calamities.
Insurers have come up with various products to provide protection as the number of storms that hit the country each year increases in number or severity. -- AFP
Global reinsurance leader Munich Re and the German Agency for International Cooperation (GIZ) have partnered with the Cooperative Life Insurance and Mutual Benefit Services (CLIMBS), an umbrella organization of cooperatives, late last year to offer a natural catastrophe insurance product to 1,600 cooperatives with nearly a million members.

“We are currently in the process of marketing the product to our member cooperatives,” CLIMBS Executive Vice President Isagani B. Daba said in a phone interview with BusinessWorld yesterday.

“We are still closing the deals, but we expect 80 cooperatives to avail of the product this year.”

The product, CLIMBS Weather Protect, insures a portion of a cooperative’s loan portfolio, so it remains liquid in the event its borrowers, affected by natural calamities such as storms, default on their loans.

CLIMBS will act as primary insurer, and Munich Re, the reinsurer.

“[Natural catastrophes] interrupt the cash flow of cooperatives as member-borrowers can lose their livelihood and assets in a single storm and become unable to repay their loans,” read the GIZ demand study, a copy of which was obtained by BusinessWorld.

CLIMBS Weather Protect was developed after tropical storm Ondoy and typhoon Pepeng successively hit the Philippines in 2009. The two typhoons had an estimated combined damage of P30 billion, according to the Office of Civil Defense.

Cooperatives suffered financially as the homes, properties and crops of their members were destroyed, Antonis Malagardis, program manager of GIZ Microinsurance Innovations Program for Social Security, told BusinessWorld in an interview on Friday.

The GIZ study also noted that the Philippines is hit by an average of 25 typhoons yearly. The country is also vulnerable to floods, landslides, droughts, volcanic eruptions and earthquakes.

“The amount of payout depends on the severity of the natural catastrophe,” said Mr. Malagardis, explaining the product. The severity is measured either through wind speed or rainfall.

“We developed a unique set of weather indices for each of the 1,700 municipalities of the Philippines,” he added, since the geographic profile and vulnerability to disasters differ for every area.

If a storm exceeds the weather index set for that municipality, the cooperative in that area receives a payout. If wind speed or rainfall is the highest recorded in 10 to 15 years, the insurer will pay 5% of the cooperative’s loan portfolio. If the highest in 15 to 20 years, 10%; and in 20 years, 20%.

Mr. Malagardis emphasized the need to cover cooperatives as loan institutions, but he added that individual members also stand to gain from CLIMBS Weather Protect, even though it’s the cooperatives that are directly insured.

“Currently, to offset this risk [of loan defaults], cooperatives lend money at a higher interest rate, posing an additional burden to the member-borrower, especially to low-income households,” the GIZ study explained.

Moreover, cooperatives are required to pass on the benefits of the insurance payout to their members.

“Each cooperative establishes a separate Natural Catastrophe Fund and special lending window that offer interest-free emergency loans from the fund to help afflicted members recover,” the GIZ study said.

“We are also planning to extend benefits to households directly. This can be done through cash advances, loan discounts or a rescheduling of their loan repayments,” Mr. Malagardis added.

Life-savings product planned

2011-02-09T08:52:00.002+08:00

BusinessWorld
Finance
Posted on January 30, 2011 08:24:24 PM

BY DIANE CLAIRE J. JIAO

THE GOVERNMENT is developing a prototype product combining life protection and savings, in a bid to boost the nascent microinsurance market.
The Department of Finance and the National Credit Council, along with the German Agency for International Cooperation (GIZ, formerly German Technical Cooperation or GTZ) and the Asian Development Bank, have been developing prototype products for the microinsurance industry in the Philippines.

A non-life product dubbed “Buhay, Bahay at Kabuhayan” is up for approval by the Insurance Commission (IC).

“Based on our studies, low-income families want a life insurance product they can benefit from even while they are alive,” GIZ Senior Finance Adviser Dante Portula told BusinessWorld last Friday.

Life insurance products typically pay money to beneficiaries of the policyholder only upon the event of his or her critical illness or death.

“The product we are developing will act like a savings account for the poor,” Mr. Portula said. “They will open an account and deposit money.

The monthly premiums for life insurance will be deducted from this savings account.”

He added it will also allow the poor to withdraw their money at any time, especially in cases of emergency.

GIZ, which conducts the technical studies for the government’s microinsurance initiatives, designed the life-savings plan to suit the poor and their erratic wage patterns.

“One season, farmers earn a lot from a good harvest. The next season, a typhoon can hit their province,” Mr. Portula explained. “They may not always be able to pay their monthly premiums.”

The savings account will act as a stable pool of money to collect premiums from, he said.

Collecting premiums will also be made easier as insurers no longer have to nag customers to pay.

However, GIZ has yet to resolve which institutions will be responsible for managing the savings accounts.

“Will it be the Bangko Sentral ng Pilipinas? Will it be insurance companies who provide the life insurance? Or will it be microfinance institutions (MFIs), where the poor are enrolled in?” Mr. Portula asked.

If insurance companies managed these accounts, he said, the savings will have to be booked as liabilities or financial obligations in their accounting books, just like the collected premiums.

On the other hand, MFIs, which presently extend savings and microinsurance services, are worried their members will no longer tap their services since they can get both life insurance and savings accounts from insurers anyway, Mr. Portula said.

“We will fix these issues first, but we expect the life insurance prototype product to be ready by the second quarter of this year,” he said.

Prototype products serve as the guide for insurance firms, cooperatives and mutual benefit associations that want to venture into microinsurance.

The basic features and the terms of the microinsurance product are outlined, but insurers are free to tweak these in case they want to provide additional services. The pricing is not dictated, though, to give insurers room to compete with each other.

However, the prices set by insurers have to comply with the terms set by the IC for all microinsurance products.

According to the IC’s Insurance Memorandum Circular 1-2010, the amount of premiums computed on a daily basis should not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

The “Buhay, Bahay, Kabuhayan” product is designed to give P10,000 coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of P30,000. A contract is good for a year.

Insurers interested in ‘three-in-one’ microinsurance

2011-02-09T08:41:00.000+08:00

BusinessWorld
Finance
Posted on February 08, 2011 09:03:08 PM
BY DIANE CLAIRE J. JIAO

EIGHT non-life insurance companies have expressed interest in the “three-in-one” microinsurance product approved by the government last Monday.
The Philippine Insurers and Reinsurers Association (PIRA), which groups 87 non-life insurers, said this number could still rise, hailing microinsurance as the “next big step” for the insurance industry.

“We are just about to release the circular about the prototype product to our members,” Mario C. Valdez , PIRA general manager, told BusinessWorld in a phone interview yesterday.

“However, five companies have already inquired about it, while three others are looking to expand their existing microinsurance product line.”

Mr. Valdez declined to name the companies, though, as the Insurance Commission (IC) will still have to approve companies’ respective products before these can be offered in the market.

The Department of Finance and the National Credit Council, along with the German Agency for International Cooperation (GIZ) and the Asian Development Bank, have been developing prototype products in a bid to boost microinsurance in the country.

IC approved on Monday the non-life prototype product dubbed Buhay, Bahay, Kabuhayan.

The product is designed to give P10,000 worth of coverage against death from accidents or damage to property/business from natural calamities. Consumers can buy up to three units for a total coverage of P30,000. A Buhay, Bahay, Kabuhayan contract is good for a year.

“Microinsurance is the next big step for our industry. It’s such a large market that we can tap, probably worth P2 billion,” Mr. Valdez said.

The non-life microinsurance market is presently estimated at just P200 million.

He said Filipinos from the low-income sector have realized the value of insurance, especially after tropical storm Ondoy wreaked havoc in Luzon in 2009.

“We are also complementing the prototype product with financial literacy campaigns nationwide, to encourage more people to purchase insurance,” Mr. Valdez added.

While the basic terms and conditions were already set in Buhay, Bahay, Kabuhayan, the government gave room to insurers to price the premiums of the product themselves.

“If they have an efficient business model, they can afford to price the products lower. Usually, companies tie up with microfinance institutions so they can reach more people,” GIZ Senior Finance Adviser Dante Portula told BusinessWorld yesterday. “The pricing is where they will compete.”

He added that insurers could tweak the prototype and add their own features to it, as long as it complied with the terms set by IC for all microinsurance products.

According to IC’s Insurance Memorandum Circular 1-2010, the amount of premiums computed on a daily basis should not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

“Insurers have to get the approval of the Commission for their new product offerings. However, since the terms and conditions of Buhay, Bahay, Kabuhayan were already pre-approved by IC, non-life insurers can expect faster processing for their microinsurance products,” Mr. Portula said.

The next step now for donor institution GIZ is to support the PIRA members who will venture into microinsurance, he shared.

“We will help link insurers to different distributing partners, like microfinancing institutions, schools, religious organizations and pawnshops,” Mr. Portula said.

Amendment to Insurance Code approved

2011-02-08T07:53:00.000+08:00

BusinessWorld
Finance
Posted on February 07, 2011 09:41:17 PM

INSURANCE CONSUMERS have to be careful on who they entrust their premium payments to, as they will be held responsible should their brokers fail to remit these payments to insurance companies.
The House banks and financial intermediaries committee yesterday approved a provision in House Bill No. 1502 seeking to amend the Insurance Code. The approved provision stated: “Payment of premiums to brokers is not considered payment of premiums to insurers.”

Brokers are financial intermediaries who find sellers of insurance products on behalf of their clients. They are different from insurance agents who represent specific insurance companies. Payments made to insurance agents are considered payments made to insurance companies.

The Insurance Code provides that “No policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid.”

The approved amendment, however, was contested by Surigao del Norte Rep. Guillermo A. Romarate, Jr. who pointed out this could expose the public to risk.

“They might expect protection, not knowing their payments to their brokers were not received by the insurer,” he said during the hearing yesterday.

But industry players did not want to be held liable for erring brokers either.

“We cannot extend coverage when we have not received a single centavo,” said Fortunato D. Peralta, Philippine Insurers and Reinsurers Association (PIRA) deputy general manager.

He explained that brokers were representatives of insurance clients, unlike agents who have contractual obligations to insurers.

“They are ‘shopping boys’ for the assured, based on industry parlance,” Mr. Peralta explained. “They are not representatives of the insurers.

That’s why they don’t even get commissions, like agents.”

PIRA board member Victoria B. Roman also revealed there was a scheme in the past wherein some brokers allegedly made money by pocketing their clients’ premium payments.

Industry practice usually allows brokers a credit extension or a grace period of 90 days after a policy is issued, before payments have to be made.

“Clients already have an insurance policy in those 90 days. But there are some brokers who would cancel the policy on the 89th day, and then move to another insurance company, and then start all over again,” Mario C. Valdez, PIRA general manager told BusinessWorld in a phone interview yesterday.

Mr. Valdez added that a client could be moved to different insurance companies and effectively earn coverage for an entire year, without premiums actually being paid to an insurer.

Mr. Romarate, however, insisted insurance companies were in the best position to control brokers.

“But if we had a measure of control over them through a contract, they wouldn’t be brokers anymore. They would be agents,” PIRA’s Mr. Peralta said.

So, to strike a balance between the interests of the insurers and the protection of consumers, the House banks and financial intermediaries committee resolved that the provision would instead read, “Payment of premiums to brokers, who are not agents of insurance companies, is not considered payment of premiums to insurers.”

Industry players suggested several measures to help the insuring public protect their premium payments.

“Deal with brokers you know and trust,” PIRA’s Mr. Valdez said. “Always ask for the original receipt of the insurance company, not just the acknowledgment receipt of the broker.”

Consumers often think paying premiums is a nuisance, he added. Once they make their payments, they no longer bother to get proof it has been remitted to insurance companies.

Philippine Life Insurance Association representative Jose L. Cuisia, Jr. also urged the Insurance Commission to regulate brokers, since they are the ones who give licenses to them.

Mr. Valdez was quick to clarify, though, that the scam of pocketing premiums was limited to a few brokers. -- Diane Claire J. Jiao

Insurance Commission OK’s microinsurance standards

2011-02-01T23:19:00.000+08:00

BusinessWorld
Finance
Posted on January 31, 2011 09:26:37 PM

THE INSURANCE Commission (IC) has approved the performance standards that will govern the microinsurance industry, an official said yesterday.
The performance standards dictate how insurance companies, cooperative insurance societies and mutual benefit associations providing microinsurance products and services will be evaluated and monitored by IC.

“The performance standards are crucial because they will ensure the financial stability of microinsurance providers and, in turn, the protection of the consumers,” Deputy Insurance Commissioner Vida T. Chiong said in a phone interview with BusinessWorld.

She said the IC is readying a draft circular for Insurance Commissioner Emmanuel F. Dooc’s signature.

Insurers will be evaluated and monitored according to standards or indicators grouped under the acronym SEGURO, which stands for: solvency and stability; efficiency; governance; understanding of the product by the client; risk-based capital; and outreach.

According to the draft circular obtained by BusinessWorld, the risk-based capital, solvency and stability indicators will be applied to insurers’ total operations, while the others will be applied only to their microinsurance operations.

Solvency and stability measure the soundness and strength of the microinsurance provider. Insurers must have the capacity to cover all their liabilities or financial obligations, including the claims of clients, in the short- and long-term.

Efficiency, on the other hand, should show how premiums cover not only the benefits promised to the insured, but also operational and transactional expenses like commissions and taxes.

Efficiency also determines how fast clients are paid after the submission of the complete, required set of claims documents.

“A short time to pay-out indicates good service and good value of insurance to the client,” the document read.

The performance standards set a limit of 10 working days for pay-outs.

Moreover, IC monitors the risk-based capital of microinsurance providers. This is the minimum amount of capital needed to support the degree of risks insurers take on in their operations and investments.

In addition to studying the performance of individual insurers, several standards also measure the growth and development of the microinsurance industry as a whole.

One indicator is based on clients’ understanding of the value of microinsurance products.

The renewal ratio compares the number of in-force policies and terminated policies. The number of claims filed by clients that are rejected by insurers can also indicate how well the insured understand the product.

Meanwhile, the outreach indicator determines the extent of the microinsurance business. This is measured by the growth in the number of clients and the growth in collected premiums.

Lastly, the governance indicator determines if the conduct of business complies with the principles of good governance. Insurance providers have to be transparent and educate their clients about the responsibilities of both the insurer and the insured.

“Our higher goal is to increase the penetration of microinsurance in the country and to help our less privileged Filipinos,” Ms. Chiong said.

“It is also the responsibility of microinsurance entities to make sure the industry grows.”

She urged insurers to participate in IC’s nationwide campaign for financial literacy, to encourage more people to purchase microinsurance products.

The performance standards will be used to evaluate the operations of microinsurance providers beginning this year. The standards will be applied to annual statements submitted by insurers in 2012. -- Diane Claire J. Jiao

National gov’t, Quezon City partner on microinsurance

2011-02-01T23:15:00.000+08:00

BusinessWorld
Finance
Posted on January 24, 2011 09:46:54 PM

THE DEPARTMENT of Finance (DoF) and the Insurance Commission (IC) are partnering up with the local government of Quezon City to bring microinsurance to barangays.
The nationaL government’s partnership with the Quezon City government to bring microinsurance to barangays, whose residents are most vulnerable to calamities, serves as a test case for the initiative. -- AFP

The Quezon City government, along with DoF, IC, the Philippine Information Agency and insurance associations, will form a technical working group to develop training modules for barangay leaders to teach microinsurance to their constituents.

“The educational materials will include the basics of insurance, the responsibilities of insurers and the benefits entitled to clients,” National Credit Council (NCC) Deputy Executive Director Joselito S. Almario told BusinessWorld in a phone interview last Friday.

The NCC is headed by the DoF.

Mr. Almario, also a director at the DoF, also stressed the importance of bringing down the concept of risk protection to the masses, saying, “Microinsurance contracts have to be made simple and written in Filipino.”

The partnership with Quezon City is the first stage of a bigger campaign by DoF and IC to bring microinsurance to all barangays in the country.

“We will work with all local government units (LGU). We want to have information bureaus in each locality to link Filipinos to microinsurance providers,” Mr. Almario said.

The nationwide financial literacy campaign will be launched in June of next year. The partnership with Quezon City will serve as a pilot run, for the technical working group to test the effectivity of the educational materials and training modules.

Mr. Almario explained that Quezon City was chosen as a pilot city because of its population of informal settlers. According to the Quezon City government’s website, there are more than 200,000 informal settlers in the city, the highest in Metro Manila.

“Since poor households are most vulnerable to risks... such as death, illness or injury, accidents, and natural or man-made calamities, there is a vital need to provide the low-income sector with access to affordable financial protection,” IC said in a statement.

Mr. Almario also said Quezon City’s existing poverty alleviation program, Sagip Buhay, was the perfect vehicle for the microinsurance campaign.

“Several microfinance institutions (MFI) are already tied up with the Quezon City government for Sagip Buhay. Microinsurance providers, in turn, can link up with MFIs to deliver their products to the poor,” he said.

Mr. Almario said he hoped to build their own version of private-public partnerships with insurers and LGUs working together to make insurance more accessible.

“When we were hit by calamities last year, poor families could only rely on LGUs for assistance,” he explained.

“But LGUs don’t always have enough resources to attend to all their constituents and rebuild infrastructure at the same time. If insurers can provide coverage for the people, LGUs can focus on reconstruction efforts.”

The partnership with the Quezon City government will officially kick-off on January 31.

DoF and IC will also be also announcing the approved performance standards for the microinsurance industry on the same day.

“The performance standards will evaluate the strength and stability of microinsurance providers,” Mr. Almario said.

There are currently 25 microinsurance products approved by IC. The performance standards will be applied in the evaluation of their operations this year.

“Once the microinsurance standards are approved, we will train IC staff so they can evaluate the insurers’ annual reports according to the performance standards,” Mr. Almario said. -- Diane Claire J. Jiao

DoF, IC to launch micro-insurance drive

2011-01-31T09:16:00.000+08:00

Manila Bulletin
By CHINO S. LEYCO
January 29, 2011, 5:20pm

MANILA, Philippines — The Department of Finance (DoF) and the Insurance Commission (IC) announced that they will launch a massive campaign to promote microinsurance awareness in the country, starting with a team-up with the local government of Quezon City.

In a statement, the finance department and the IC said the alliance with the Quezon City government will start on January 31 through the launch of the “Roadmap to Financial Literacy on Microinsurance.”

The collaboration between the national government and local government units (LGUs) is seen to promote and provide risk protection to the country’s low income earners.

Microinsurance was introduced in the country to supplement the poverty alleviation program of the government.

Since poor households are most vulnerable to risks associated with uncertain losses such as death, illness or injury, accidents, and natural and man-made calamities, there is a vital need to provide the low-income sector with access to affordable financial protection in case of such contingencies.

In 2010, the government through the DoF-National Credit Council and in collaboration with other government agencies and the private sector launched the twin pillars of microinsurance development – the “National Strategy for Microinsurance” and the “Regulatory Framework for Microinsurance.”

The “National Strategy for Microinsurance” defines the vision, objectives, roles of the various stakeholders, and key strategies to be pursued in enhancing access of the low-income sector to insurance products and services.

The “Regulatory Framework for Microinsurance,” on the other hand, establishes the policy and regulatory environment to encourage, enhance, and facilitate the safe and sound provision of microinsurance products and services by the private sector.

The event is the culmination of the observance of the Microinsurance Month. Under Presidential Proclamation 1212 signed in January 10, 2007, January is declared as Microinsurance Month and appointed the IC and the DoF as the lead agencies.

Draft microinsurance standards, product OK’d

2011-01-05T00:43:00.000+08:00

BusinessWorld
Finance
Posted on 09:33 PM, January 04, 2011
BY PRINZ P. MAGTULIS, Reporter

STANDARDS for the nascent microinsurance industry as well as the prototype of a non-life product may be released by the Insurance Commission (IC) at the end of the month, after these were approved by an interagency committee.

“Yes, we approved them. They are now with the IC,” Finance Undersecretary Gil S. Beltran, who headed the committee, told BusinessWorld last Thursday.

Joselito S. Almario, deputy executive director of the National Credit Council, said in a separate phone interview last Thursday that “circulars will be issued on Jan. 31” in time for the “start of a financial literacy campaign to educate insurers” about the developments.

“Deputy [Insurance] Commissioner (Vida T. Chiong) decided to wait for the new commissioner to take over. He will be the one to issue the circulars,” he explained.

Mr. Almario oversaw the work of three technical working groups that worked on the standards, the prototype and the roadmap for the financial literacy campaign. The groups made draft circulars that were then forwarded to the steering committee for review.

The groups and the committee were composed of representatives from the IC, the Securities and Exchange Commission, the central bank, the Cooperative Development Authority, and insurance groups Philippine Life Insurance Association, Inc. (PLIA) and Philippine Insurers and Reinsurers Association (PIRA).

The draft circulars have been submitted to IC for final approval.

Emmanuel L. Dooc was appointed Insurance Commissioner last Dec. and will assume office within the month. Ms. Chiong has been acting as IC officer-in-charge in the meantime.

The performance standards will govern microinsurance providers, which include commercial insurers, cooperative insurance societies and mutual benefit associations.

The standards, known collectively as “SEGURO” -- for Solvency and Stability, Efficiency, Governance, Understanding of the product, Risk-based capital, and Outreach -- will evaluate insurers based on their solvency, level of risk-based capital, among others.

Standards will be used essentially “to evaluate a microinsurance firm’s viability and capacity to support future claims,” Mr. Almario explained.

The plan is to have the standards in place starting this year, he said, and for microinsurance providers to report to IC “how they performed against the standards by submitting their financial statements in 2012.”

“The [IC] shall use the performance standards to identify as early as possible entities whose financial conditions and/or performance...are [of] concern and if warranted, recommend appropriate remedial measures,” the draft standards read.

Ms. Chiong, in a separate phone interview last Thursday, said the new standards will provide “regulatory space” to microinsurers as they are now subject to the “higher standards” followed by the big insurance companies.

Insurance Memorandum Circular (IMC) 1-2010 issued in January last year provided the regulatory framework for microinsurance.

The circular defined microinsurance and set a P200,000 maximum coverage with daily premiums “not exceeding 5% of the minimum wage in Metro Manila” or at about P20 at present.

IMC 1-2010 allowed 16 microinsurance products to be registered with the IC, but Mr. Almario said prototype products are being developed for both non-life and life insurers in order to expand the microinsurance market.

Non-life insurers grouped under PIRA will soon be marketing the “three-in-one” product known as “Buhay, Bahay at Kabuhayan” after the prototype was approved by the steering committee.

The product, Mr. Almario said, will allow clients to have a maximum of P30,000 coverage with premiums “depending on the costing to be provided by the company.”

The P30,000 coverage is divided into: P10,000 for beneficiaries in case of death of the insured; P10,000 for a destroyed house; and P10,000 for a damaged business establishment due to natural calamities.

A prototype for life insurers is still being developed.

Mr. Almario added that a financial literacy campaign that will be conducted nationwide will push through by Jan. 31 to “educate insurers and potential clients about the standards and the non-life product from January to June.

More Pinoys access microfinance Number of clients in RP increased -- ADB report

2010-12-29T22:13:00.000+08:00

Business World
Finance
Posted on 08:56 PM, December 28, 2010

THE NUMBER of active microfinance clients in the Philippines increased between 2006 and 2008 following the implementation of a project by the Asian Development Bank (ADB), a report released yesterday by the multilateral lending agency showed.

THE ASIAN DEVELOPMENT BANK released a report yesterday indicating that the number of microfinance clients in the Philippines increased between 2006 to 2008. Microfinance is considered one of the tools that help combat poverty.

THE ASIAN DEVELOPMENT BANK released a report yesterday indicating that the number of microfinance clients in the Philippines increased between 2006 to 2008. Microfinance is considered one of the tools that help combat poverty.

The ADB reported that microfinance clients increased by 129.17% to 5.5 million in December 2008, from 2.4 million in December 2006.

ADB said its $150-million Microfinance Development Program (MDP), approved on Nov. 22, 2005, helped create a “sound and market-oriented microfinance sector development path” for the Philippines.

The project had the goal of helping the Philippine government in addressing weaknesses in the microfinance sector and help poor Filipinos access quality financial services.“The objective of the MDP was to improve household incomes, reduce poverty and reduce the vulnerability of the poor,” ADB said in the report.

Microfinance is the provision of financial services to low-income clients who traditionally lack access to typical banking and related services.

Microfinance is also the idea that low-income individuals are capable of lifting themselves out of poverty if given access to financial services.

The National Credit Council, under the Finance department, served as the borrower and executing agency for the loan.

Aside from increasing the number of Filipinos who access microfinance services, the bank said MDP also helped in creating a total of 2.6 million jobs during the period of its implementation, along with the increase in the amount of microfinance and in the number of loan releases.

The ADB report added that performance standards of microfinance institutions in terms of portfolio quality, efficiency, sustainability outreach ratings and continued monitoring were also achieved, along with easy financial transactions through electronic banking and appropriate rural saving schemes that increased the clients’ savings mobilization.

“The MDP enhanced the enabling and regulatory environment as the Bangko Sentral ng Pilipinas formulated rules and regulations to promote microfinance operations by banks, allowing microfinance-oriented banks to open branches anywhere in the country, and promoting electronic banking with consumer protection, particularly for savings mobilization,” ADB said.

It added that the Securities and Exchange Commission managed to comply with the program’s required policy action of compelling microfinance-oriented non-government organizations to be transparent and observe full disclosure in their operations.

Assessing the MDP overall, the multilateral financial institution said it was “successful” in achieving its objectives with its high efficiency and likely sustainability.

Finance officials were not immediately available for comment as of yesterday. -- Jo Javan A. Cerda

Asia: Big scope for microinsurance in several countries

2010-11-12T22:47:00.000+08:00

Asia Insurance Review Vol I Issue 184

The Philippines, Indonesia and India offer the biggest market opportunities for microinsurance because of their regulatory frameworks, strong cooperative systems and potential risks from extreme weather and disasters such as earthquakes and volcano eruptions, reports Reuters citing Mr Craig Churchill, head of the global Microinsurance Network and team leader of the International Labour Office's Microinsurance Innovation Facility.

He was speaking in conjunction with the three-day 6th International Microinsurance Conference in Manila that began on Tuesday. Around 500 participants are attending the event to discuss the solutions and challenges in microinsurance. The conference is organised by the Munich Re Foundation, Microinsurance Network, the Philippines' Department of Finance, and Georgia State University's Center for the Economic Analysis of Risk.

At present, over 140 million people, mostly in Africa and Asia, are covered by affordable insurance premiums, and studies showed the potential market is up to 3 billion, says the Munich Re Foundation and International Labour Organisation. More than half of microinsurance products are focused on life and health, while less than 10% cover farms.

"We're still at the experimental stage in offering products that could cover agriculture," said Mr Churchill, adding that there is huge potential growth for such products, citing the impact of typhoons Ketsana and Parma in the northern Philippines in late 2009.

Last month, German reinsurer Munich Re said that it would launch a reinsurance project in the Philippines to cover cooperative companies against extreme weather events. That will be the first microinsurance product in the country to offer farmers some protection against typhoons and flooding problems, to which the Philippines is prone.

Mr Joselito S Almario, a director of the Department of Finance, said that microinsurance has a potential Philippine market of nearly 35 million people willing to pay a premium of PHP20-30 (US$0.46-0.69) a week for coverage of up to PHP120,000 (US$2,771) in life and non-life benefits. At present, 14% of the Philippines' 96 million people have insurance, including 2.9 million people covered by microinsurance, mostly as members of cooperatives.

Micro-insurance regulatory framework set

2010-11-12T22:43:00.000+08:00

BusinessWorld, Finance
Posted on 02:04 PM, November 10, 2010
Breaking News ( Updated as of 01:54 PM )

A REGULATORY framework for micro-insurance companies will be implemented in January, officials said on the second day of the sixth International Micro-insurance Conference in Makati City.

"The performance standards [regulations] will take in effect by January 2011," said Vida T. Chiong, Insurance Commission deputy commissioner and officer-in-charge.

"This will serve as a guide for the commission and other stakeholders to determine the viability of a [micro-insurance] company -- if it has the capacity to settle claims in the future," she added.

Ms. Chiong said the standards will provide "regulatory space" to micro-insurers with "lower" requirements for putting up a micro-insurance compared to those stipulated in the Insurance Code.

Geraldine Desiderio-Garcia, chairman of the micro-insurance committee of the Philippine Life Insurers Association, said in a lecture at the conference the standards will "formalize existing micro-insurance practices" such as cutting by half the P100-million capital requirement -- the fund to put up a micro-insurance firm -- for commercial insurers.

The standards, currently undergoing fine-tuning by a technical working group composed of government officials and private representatives, will be transmitted next month to a micro-insurance steering committee, headed by Finance Undersecretary Gil S. Beltran,, for review.

The Insurance Commission will give final approval of standards. -- Prinz P. Magtulis

Insurance standards readied

2010-11-12T22:42:00.000+08:00

Insurance standards readied
BusinessWorld
Finance
Posted on 08:38 PM, November 10, 2010

REGULATORS are preparing “performance standards” for microinsurance providers to make sure their operations are sustainable and the poor, who are their clients, are protected.
At the same time, they are planning a nationwide financial literacy campaign to increase awareness among the poor about the importance of microinsurance.

Vida T. Chiong, deputy commissioner and officer-in-charge of the Insurance Commission (IC), shared with participants of the 6th International Microinsurance Conference in Makati City yesterday that the performance standards shall serve as a “guide for the commission... to determine... the capacity [of a microinsurer] to settle claims in the future.”

The standards go by the acronym “SEGURO,” for Stability, Efficiency, Governance, Understanding of the product, Risk Management and Outreach.

Microinsurance providers -- which include commercial insurers, cooperative insurance societies and mutual benefit associations -- will be evaluated based on their solvency and level of risk-based capital, among others.

Their performance, in terms of time they take to pay out claims, number of claims they reject, growth in number of clients and growth in premiums, will also be examined.

The standards are currently being fine-tuned by a technical working group composed of the IC, National Credit Council, Securities and Exchange Commission, Philippine Life Insurance Association, Inc. and the Philippine Insurers and Reinsurers Association.

These will be transmitted next month to a steering committee, headed by Finance Undersecretary Gil S. Beltran for review.

The IC will give final approval to the standards.

The plan is to have the standards in place by January 2011 and for microinsurance providers to report to the IC how they performed against the standards by 2012.

“The Insurance Commission shall use the performance standards to identify as early as possible those entities whose financial condition is a concern and recomend appropriate remedial measures, if necessary,” a draft IC circular states.

Meanwhile, Joselito A. Almario, a director at the Finance department, said a microinsurance literacy campaign is planned to start by January.

“It will run from January to June. We will go region to region to educate stakeholders, especially the poor, about microinsurance,” he said.

Modules will be provided during the regional campaign, Mr. Almario said, with stakeholders such as regulators, insurance firms, clients, and even legislators expected to learn “what they can contribute to boost the microinsurance industry in the country.” -- Prinz P. Magtulis

Microinsurance sees growth opportunities in Asia

2010-11-12T22:39:00.000+08:00

Reuters - Wednesday, November 10

MANILA, Nov 9 - India, Indonesia and the Philippines offer the biggest
opportunities for the fledging microinsurance industry, which has a potential market of 3 billion people, industry officials said on Tuesday.

Microinsurance offers coverage for people with low incomes, including products such as life insurance, and is branching into areas such as offering farmers polices against extreme weather.

Over 140 million people, mostly in Africa and Asia, are now covered by affordable insurance premiums, and studies showed the potential market is up to 3 billion, the Munich Re Foundation and International Labour Organisation said ahead of a three-day microinsurance conference in Manila.

Craig Churchill, head of the global Microinsurance Network, said more than half of microinsurance products were focused on life and health while less than 10 percent cover farms.

"We're still at the experimental stage in offering products that could cover agriculture," he said, adding there was huge potential growth for such products, citing impacts of typhoons Ketsana and Parma in the northern Philippines in late 2009.

Those typhoons, and Typhoon Megi in October, caused deaths, flooding, landslides, and damage to crops and infrastructure.

Last month, German reinsurer Munich Re said it would launch a reinsurance project in the Philippines to cover co-operative companies against extreme weather events. [ID:nLDE69A1DM]

That will be the first microinsurance product in the country to offer farmers some protection against perennial typhoon and flooding problems. Another three groups offer non-life products.

Churchill said the Philippines, Indonesia and India offer the biggest market opportunities due to their regulatory frameworks, strong co-operative system and potential risks from extreme weather and disasters such as earthquake and volcanoes.
About 14 percent of the Philippines' 96 million people have insurance, including 2.9 million people covered by microinsurance, mostly as members of co-operatives,
Joselito Almario of the Finance Department said.

He said microinsurance had a potential Philippine market of nearly 35 million people willing to pay a premium of 20-30 pesos a week for coverage of up to 120,000 pesos in life and non-life benefits.

"It costs them just a pack of cigarettes a day," said Almario, who is also deputy executive director of the national credit council.

The government has set a maximum daily premium of 20 pesos, 5 percent of the daily minimum wage in Metro Manila, for life and health insurance products offering payouts of up to 200,000 pesos for more than a dozen insurers, including rural banks and co-operatives

Microinsurance conference today

2010-11-12T22:36:00.000+08:00

Monday, 08 November 2010 00:00
Written by Gold Star Daily

SOME of the world's most prominent and ardent advocates of microinsurance are set to convene today as part of a global effort to extend risk cover for the poor and help popularize the practice of financial inclusion in the Philippines where the less financially endowed are often shut out of financial services available to everyone else.

Germany's Munich Re Foundation announced the three-day Manila conference earlier in Munich, Germany and in Luxemburg to boost awareness of the event in a country where fewer than one in seven Filipinos even know what an insurance policy is and what it can do to one's life.

The 6th International Microinsurance Conference will convene at the Hotel Intercontinental in Makati City where some 500 participants from all corners of the world will discuss issues and offer solutions to the challenges facing microinsurance at present. Finance Secretary Cesar V. Purisima was expected to attend the opening of the conference.

Purisima acknowledged the key role microinsurance will play in the lives of Filipinos in the coming years and that with the full implementation of the government's public-private partnership program or PPP. "Microinsurance will be at the forefront of the Philippine government's efforts to provide our low-income sector and the poor protection from risks, providing them the means to rebuild their lives when unfortunate and unforeseen events occur," he said.

The government previously bared plans to improve the country's low insurance penetration rate where only an estimated 13.92 percent of some 90 million Filipinos have insurance cover. Local insurers under the Philippine Insurers and Reinsurers, for example, vowed to help raise awareness about the benefits of insurance cover among Filipinos. pna

A version of this article appeared in print on Nov 9, 2010 Tuesday

Insurance standards readied

2010-11-11T01:14:00.000+08:00

Business World
Finance
Posted on 08:38 PM, November 10, 2010

REGULATORS are preparing “performance standards” for microinsurance providers to make sure their operations are sustainable and the poor, who are their clients, are protected.

At the same time, they are planning a nationwide financial literacy campaign to increase awareness among the poor about the importance of microinsurance.

Vida T. Chiong, deputy commissioner and officer-in-charge of the Insurance Commission (IC), shared with participants of the 6th International Microinsurance Conference in Makati City yesterday that the performance standards shall serve as a “guide for the commission... to determine... the capacity [of a microinsurer] to settle claims in the future.”

The standards go by the acronym “SEGURO,” for Stability, Efficiency, Governance, Understanding of the product, Risk Management and Outreach.

Microinsurance providers -- which include commercial insurers, cooperative insurance societies and mutual benefit associations -- will be evaluated based on their solvency and level of risk-based capital, among others.

Their performance, in terms of time they take to pay out claims, number of claims they reject, growth in number of clients and growth in premiums, will also be examined.

The standards are currently being fine-tuned by a technical working group composed of the IC, National Credit Council, Securities and Exchange Commission, Philippine Life Insurance Association, Inc. and the Philippine Insurers and Reinsurers Association.

These will be transmitted next month to a steering committee, headed by Finance Undersecretary Gil S. Beltran for review.

The IC will give final approval to the standards.

The plan is to have the standards in place by January 2011 and for microinsurance providers to report to the IC how they performed against the standards by 2012.

“The Insurance Commission shall use the performance standards to identify as early as possible those entities whose financial condition is a concern and recomend appropriate remedial measures, if necessary,” a draft IC circular states.

Meanwhile, Joselito A. Almario, a director at the Finance department, said a microinsurance literacy campaign is planned to start by January.

“It will run from January to June. We will go region to region to educate stakeholders, especially the poor, about microinsurance,” he said.

Modules will be provided during the regional campaign, Mr. Almario said, with stakeholders such as regulators, insurance firms, clients, and even legislators expected to learn “what they can contribute to boost the microinsurance industry in the country.” -- Prinz P. Magtulis

‘Three-in-one’ microinsurance product planned

2010-11-08T18:32:00.000+08:00

Today’s Headlines
BusinessWorld
Posted on 10:22 PM, November 07, 2010
BY JUDY T. GULANE, Sub-Editor

REGULATORS want to introduce a "three-in-one" product to the fledgling microinsurance market, capitalizing on the Filipinos’ penchant for cheap, convenient products and to boost protection for the poor.
Tropical storm Ondoy’s damage is cited as spurring the development of the proposed ‘Buhay, Bahay at Kabuhayan’ microinsurance product. -- AFP
Tropical storm Ondoy’s damage is cited as spurring the development of the proposed ‘Buhay, Bahay at Kabuhayan’ microinsurance product. -- AFP

They are still at the stage of finalizing the product, for now dubbed "Buhay, Bahay at Kabuhayan," but already have inquired if they can start developing and marketing it.

"It’s a simple yet powerful product," said Joselito S. Almario, a director at the Finance department and deputy executive director of the National Credit Council, which the Finance department heads.

The product is designed to give P10,000 coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of P30,000. A contract is good for a year.

"It’s a composite, a three-in-one," said Mr. Almario, adding that no insurer at home or abroad is known for selling this bundle.

"If something happens to you, an accident and you die, then your beneficiaries get P10,000," he explained. "If your home or business or place of business gets damaged by flood or an earthquake, then you get P10,000."

Regulators, he said, are constantly seeking ways to provide social nets for the poor -- the slowest to recover after personal or natural calamities -- without burdening them with high premiums.

The technical group that is working on "Buhay, Bahay at Kabuhayan" still has to compute the final premiums but these shall hew to guidelines set in Insurance Memorandum Circular 1-2010 that state premiums on a daily basis must not exceed 5% of the daily minimum wage of nonagricultural workers in Metro Manila, which is currently at P404 daily.

The Philippine microinsurance industry is still in its infancy, with the National Strategy and the Regulatory Framework for Microinsurance released only in January 2010.

Yet it is fast-developing. After the IC came out with Insurance Memorandum Circular 1-2010 that defined microinsurance, the agency issued, together with the Securities and Exchange Commission and Cooperative Development Authority, another circular closing down informal insurance or insurance-like activities.

The Bangko Sentral ng Pilipinas also came out with a circular allowing rural, cooperative and thrift banks to market and sell microinsurance products within their premises.

Commercial insurers, mutual benefit associations and cooperatives are now selling microinsurance products, but in singles, not "three-in-one" as contemplated in "Buhay, Bahay at Kabuhayan."

Considered a pioneer in the field of microinsurance, the Philippines will share its experiences during the 6th Microinsurance International Conference that takes place starting tomorrow to Thursday.

Manila is this year’s host of the annual gathering.

Mario C. Valdez, general manager of the Philippine Insurers and Reinsurers Association (PIRA) that groups the country’s 80-plus non-life insurers, claimed that "several" PIRA members expressed interest in the product after it was unveiled during an October 11 association conference.

"Buhay, Bahay at Kabuhayan" will be considered a non-life product.

"They were enthusiastic about it. They said they want to develop it, as it suits their clients’ needs," Mr. Valdez said.

There is demand for this product, he claimed, with many victims of tropical storm Ondoy, which ravaged Luzon last year, regretting not having insurance against calamities.

"With this product, we hope to help the poor get back on their feet," Mr. Valdez said.

"It’s also a way for non-life insurers to expand their market," he added.

"Right now, they are competing for a small market, and the IC will require they have a P125-million capitalization by December. Microinsurance opens up a new market and provides a venue for them to make returns on their additional capitalization," Mr. Valdez said.

The technical working group, headed by the Finance department, targets to launch the final "Buhay, Bahay at Kabuhayan" policy contract before yearend.

Other members of the technical working group are the IC, PIRA, National Credit Council, Philippine Life Insurance Association, Inc. and the Actuarial Society of the Philippines.

The group enjoys technical assistance from the GTZ or German Technical Cooperation.

Gov’t pushing wider life insurance coverage

2010-11-02T22:53:00.000+08:00

By Ronnel Domingo
Philippine Daily Inquirer
First Posted 21:50:00 11/01/2010

Filed Under: Insurance, Government

MANILA, Philippines—The government is now pushing efforts to expand life insurance coverage among the people.

At present, only 13.9 percent of the country’s population have insurance coverage—a disparity the government hopes to address by promoting micro-insurance as well as policies that offer low-priced premiums.

To boost this campaign, the Philippines will host the 6th International Micro-insurance Conference to be held in Manila on Nov. 9 to 11.

Over 500 delegates from around the world are expected to take part in the proceedings, said Dirk Reinhard, chairman of the conference steering committee.

According to Reinhard, most delegates recognize the importance of providing insurance services for low-income populations which, in turn, will enable a country to attain the United Nation’s Millennium Development Goals.

In a statement, Reinhard said the conference would focus on key issues, such as new distribution channels, claims-handling mechanisms, strategies for enabling the environment to develop micro-insurance, solutions for natural disasters, and insurance literacy.

“Of the many challenges the sector faces, insurance literacy is currently recognized as one of the most important hurdles to overcome,” he said. “Educating the clients on the benefits of insurance is an indispensable ingredient to the success of any micro-insurance program.”

According to Munich Re Foundation, the Germany-based organizer of the meeting, micro-insurance in the Philippines has been on the rise compared with the rest of world over the last few years.

However, Munich Re said that life insurance penetration rate in the country “is still very low.”

Even then, the group noted efforts to improve the figures, including the government’s adoption of a national strategy and regulatory framework for micro-insurance.

This policy “promotes greater access by the poor to small, affordable micro-insurance products and requires the formalization of all informal schemes of micro-insurance by 2012 to ensure that clients are adequately protected,” Munich Re said.

“The Philippine Insurers and Reinsurers Association recently pledged to inform some 27 million Filipinos on the merits of securing insurance policies in support of the government’s literacy campaign,” it added.

RP places second in global study on microfinance business environment

2010-10-31T11:22:00.000+08:00

By Iris C. Gonzales (The Philippine Star) Updated October 30, 2010 12:00 AM Comments (0)

MANILA, Philippines - The Philippines placed second in a study conducted by the Economic Intelligence Unit dubbed as Global Microscope on microfinance business environment.

The study was conducted among 54 developing countries. Among the different developing countries, Peru retained its position as the global leader on microfinance bureau’s environment.

According to the study, for the second year now, the Philippines and Bolivia top the Economic Intelligence Unit’s Global Microscope index. “The Philippines and Bolivia swapped positions and finished second and third, respectively, this year. Two newcomers, Pakistan and Kenya, joined the top 10, displacing Nicaragua and Uganda,” the study noted.

The three best-performing countries score especially well in two of the main index categories: regulatory framework and institutional development.

“The Philippines enjoys the best overall regulatory environment for microfinance, alongside Cambodia, which does not make the top 10 overall, and Pakistan which does,” it said.

The study noted key changes in the country’s microfinance environment. It noted that microfinance institutions in the Philippines or MFIs are able to offer a variety of services, and many do.

“Regulated MFIs can accept deposits, and those linked to the international payments system can accept remittances,” it said.

In terms of choices, clients in the Philippines have a wide choice of service providers, including local and national institutions.

Furthermore, the study noted that in 2010, the Bangko Sentral ng Pilipinas (BSP) began allowing rural, co-operative, and thrift banks to sell authorized micro-insurance products.

These institutions can be licensed as micro-insurance agents, and can only sell policies up to P190,000 or $4,000 under certain provisions, it noted.

The study also took note of the fact that in April 2010 the BSP issued a circular that set the rules for accrediting microfinance rating agencies, a move seen as encouraging local MFIs to be rated.

“Until recently, it was rare for microfinance banks (MFBs), rural banks, or thrift banks with microfinance operations to become externally rated,” the study said.

In 2010, BSP issued rules on the extension of housing microfinance and eased requirements for micro-lending in agriculture which the study said also contributed to the improvement in the microfinance environment.

At the same time, the study underscored the need to put in place a credit information system.

“The Credit Information System Act signed into law in September 2008 requires all regulated entities to submit positive and negative information to a new credit bureau under the Securities and Exchange Commission (SEC). However, the establishment of the Central Credit Information Corporation (CCIC) has not yet resulted in the operation of a functioning, active credit bureau, despite the fact that implementing rules and regulations (IRR) were approved in May 2009. According to local press, operations are now expected to begin in the third quarter of 2010,” it said

6th International Microinsurance Conference - Manila, the Philippines

2010-10-28T01:17:00.000+08:00

Munich/Luxembourg – With the growing recognition that providing insurance services for the low-income populations plays a significant role in the achieving the United Nation’s Millennium Development Goals (MGDs), the 6th International Microinsurance Conference will take place this year in Manila, the Philippines. The conference, which will run between 9 – 11 November 2010, will host around 500 participants to discuss the solutions and challenges microinsurance faces in helping to achieve these goals.

The conference, which is organised by the Munich Re Foundation and the Microinsurance Network with support from GTZ/BMZ, the Department of Finance in the Philippines and Georgia State University’s Center for the Economic Analysis of Risk, will bring together representatives from across the microinsurance sector including insurance and reinsurance companies, international organisations, NGOs, development-aid agencies, academics, policymakers, regulators and supervisors.

Secretary of Finance Cesar V. Purisima, is expected to attend the opening of the conference confirming that microinsurance is of great importance to the government of the Philippines. The Secretary affirmed that, “through a strong public-private sector collaboration, microinsurance will be in the forefront of the Philippine Government’s efforts to provide our low-income sector and the poor protection from risks, providing them the means to rebuild their lives when unfortunate and unforeseen events occur.”

The agenda for the conference was put together following a call for proposals in March 2010 by a panel of renown experts and representatives from all corners of the microinsurance world. The focus will be on independent case studies and academic research on innovative and sustainable microinsurance programmes and/or products, focusing on key issues and challenges. These include new distribution channels, claims handling mechanisms, strategies for enabling the environment to develop microinsurance, solutions for natural disasters and finally insurance literacy.

Of the many challenges the sector faces, insurance literacy is currently recognised as one of the most important hurdles to overcome. Educating the clients on the benefits of insurance is an indispensible ingredient to the success of any microinsurance programme and with the publication of a number of recent case studies, most notably a landscape study by the Insurance Education Working Group of the Microinsurance Network; good practices are emerging slowly, some of which will be presented during the conference.

The 6th International Microinsurance Conference, the longest running and most attended microinsurance conference there is, offers an indispensible added value to all those that attend and to the sector as a whole. From the first conference in Munich in 2005 through to the fifth one in Dakar (2009), which was the largest microinsurance conference ever with an attendance of over 450 representatives from 63 countries, the International Microinsurance Conference continues to provide a unique opportunity for attendees to move the sector forward though collaboration and communication.

The 6th International Microinsurance Conference in Manila, as Dirk Reinhard, Munich Re Foundation and Chairman of the Conference Steering Committee, points out “has taken on even more importance with the G20’s Financial Inclusion Experts Group (FIEG) identifying insurance as one of the fundamental financial services that requires extending in their nine Principles for Innovative Financial Inclusion”.

Over the last few years, microinsurance in the Philippines has been on the increase compared to the rest of world. But with a population of around 92 million and only 13.92 % have life insurance, penetration is still very low. Efforts are ongoing to change this though. The Department of Finance and the Insurance Commission recenltly formulated the National Strategy and Regulatory Framework for Microinsurance. Among others, it promotes greater access by the poor to small, affordable microinsurance products and requires the formalisation of all informal schemes of microinsurance provision by 2012 to ensure that clients are adequately protected. The Philippine Insurers and Reinsurers Association recently pledged to inform some 27 million Filipinos on the merits of securing insurance policies in support of the Government’s financial literacy campaign.

About the International Microinsurance Conference
Initiated and organised by the Munich Re Foundation in collaboration with the Microinsurance Network, the aim of the conference is to be the international platform where experts share information, knowledge and experience in microinsurance in order to overcome existing challenges.

About Munich Re Foundation
The Munich Re Foundation seeks to provide answers to overarching questions from a variety of perspectives in order to find sustainable solutions in the area of risk prevention. Questions concerning development are linked to risk management and poverty reduction.
For more information:
• Contact Dirk Reinhard/Martina Mayerhofer (info@munichre-foundation.org)
• Visit www.munichre-foundation.org

About the Microinsurance Network
The Microinsurance Network is a network of organisations involved in microinsurance. Its mission is to promote the development and proliferation of good-value insurance products for people on low-income by providing a platform for information sharing and stakeholder coordination.
For more information:
• Contact Matthew Genazzini (matthew.ada@microfinance.lu)
Visit www.microinsurancenetwork.org

Insurers focus on microinsurance

2010-10-27T15:44:00.000+08:00

(The Philippine Star) Updated October 26, 2010 12:00 AM Comments (0) View comments

MANILA, Philippines - Microinsurance will be one of the key topics of the Insurance Consciousness Week (ICW) from Oct. 26 to 30, to be co-promoted by the Philippine Insurers and Reinsurers Association (PIRA) and the Philippine Insurers Club (PIC).

PIRA chairman Michael Rellosa said microinsurance — or insurance for the poor and the marginalized — would be the main highlight of the ICW, which was declared 10 years ago by then President Joseph Estrada.

“Nature has once again reminded all us of the importance of being insured. Last year it was tropical storm Ondoy that flooded cars and houses. Now it’s typhoon Juan that devastated our farmlands. We really need to develop micro insurance to protect our poor countrymen who are exposed to various risks, including natural calamities,” Rellosa said.

He added that all over the world, insurance groups are looking at microinsurance as a tool to alleviate poverty. German reinsurance firm Munich Reinsurance Gmh (MunichRe), for one, is sponsoring the 6th International Microinsurance Conference which to be held in the Philippines next month.

The event is expected to draw at least 500 participants and over 80 speakers and facilitators from around the world. These participants include representatives from insurance and reinsurance companies, international organizations, non-government organizations (NGOs), development-aid agencies, the academe, policymakers, regulators and supervisors.

Rellosa said microinsurance is still facing various challenges in areas of distribution, claims handling and the lack of insurance literacy among the poor.

“Majority of our countrymen view insurance as an added expense when they should consider it as an investment and as a tool to manage the risks that they cannot handle. We need to educate them and the ICW is one way of reaching out to them,” he said.

Aside from the ICW and the Micro Insurance Conference, PIRA is also co-hosting the ASEAN Insurance Council meetings of insurance regulators and industry leaders from Southeast Asia. The association is also backing the Young ASEAN Managers Awards, which recognize the promising future leaders of the region

Munich Re Launches Its First Microinsurance Product for Cooperatives in the Philippines

2010-10-27T15:38:00.001+08:00

October 11, 2010 by Microfinance Africa
Filed under MICROFINANCE AROUND THE WORLD

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By Iris Lai, Insurancenewsnet.com -

Munich Re has rolled out its first microinsurance product in the Philippines to provide protection for the lending capacity of cooperatives to low-income groups against extreme weather events.

The loan protection microinsurance product was developed for Coop Life Insurance & Mutual Services, a cooperative life insurer for local cooperatives and members in the Philippines, in partnership with Deutsche Gesellschaft fur Technische Zusammenarbeit, a German government-owned enterprise for international sustainable development projects.

Munich Re is the sole reinsurer for this microinsurance product, distributed through more than 1,800 cooperatives in the Philippines. Coop Life is the composite insurance provider for cooperatives with products offered for life, property and health protection. It is also the primary insurer for local cooperatives and offers them portfolio protection.

The product will enable low-income households in the Philippines to receive benefits through their cooperative after devastating natural events. For the cooperatives, the microinsurance plan will guarantee liquidity of the loan portfolio and will provide quick payout via Coop Life, said Munich Re in a statement.

Munich Re is also looking into development of other new microinsurance products in the Philippines, said Thomas Mahl, business development manager at Munich Re Singapore. The partnership with GTZ is important to promote social responsibility for catastrophe protection in delivering benefits to the target group, he said.

The Philippines is highly exposed to extreme weather events such as typhoons, torrential rain and subsequent floods, creating financial risks to microfinancial institutions. Typhoon Morakot was among the top 10 largest global natural catastrophe in 2009, causing 614 deaths, US$1.6 billion in economic losses and US$110 million in insured losses, according to Munich Re.

Natural disasters interrupt the cash flow of cooperatives as member borrowers often cannot repay their loans, leading to insolvency of the cooperatives. In the Philippines, the cooperatives currently lend money at a higher interest rate, creating an additional financial burden to the low-income borrower.

The microinsurance product “will help cooperatives to spread the risk, secure their liquidity and enhance their micro-lending capacity even in critical times, at the same time making loans affordable to their members,” said Mahl.

In addition to reinsurance coverage, Munich Re will offer support in satellite data monitoring and analysis. There has been a great demand for catastrophe risk protection in Asia. Mahl said the reinsurer is looking to develop this product in other countries.

As extreme weather events induced by climate changes are likely to increase, Munich Re said microinsurance instruments are expected to gain relevance for affected communities as well as insurers’ portfolio.

The partnership with cooperatives could scale up the microinsurance coverage on a group level across the county, said Mahl. Also, these cooperatives offer extensive distribution and administration supports for product penetration.

Insurers intensify call for microinsurance after ‘Juan’

2010-10-27T15:33:00.000+08:00

Insurers intensify call for microinsurance after ‘Juan’
GMANews.TV
GMANews.TV - Monday, October 25

In the aftermath of typhoon Juan (international code: Megi) which devastated northern Luzon last week, insurers have intensified the call for farmers to buy microinsurance.

“Nature has once again reminded all us of the importance of being insured. Last year, it was typhoon Ondoy that flooded cars and houses. Now, it’s typhoon Juan that devastated farm lands," Philippine Insurers and Reinsurers Association (PIRA) chairman Michael Rellosa said this weekend.

“We really need to develop microinsurance — or insurance for the poor and marginalized — to protect our poor countrymen who are exposed to various risks, including natural calamities," Rellosa said in an interview.

He pointed out that some local insurance companies are now developing products for farmers.

An example is the crop insurance of one company that insures the capital used by the farmer in planting his field, Rellosa said.

The insurance company will indemnify the farmer for the capital he used should the area be declared under a state of calamity, he added.

Rellosa said microinsurance is still confronting several challenges in areas of distribution, claims handling, and the lack of insurance literacy among the poor. “Right now, majority of our countrymen view insurance as an added expense when they should consider it as an investment and as a tool to manage the risks that they cannot handle. We need to educate them," he said.

Promoting security

Meanwhile, PIRA has partnered again with the Philippine Insurers Club (PIC) for the Insurance Consciousness Week (ICW), starting Oct. 26-30, 2010, that carries the theme “Promoting Security and Stability through Insurance Awareness."

The week will start with a thanksgiving mass at the Insurance Commission and dialogues with marginalized sectors on their perception of insurance and how the industry can appreciate insurance better, said PIC president Leticia Pagharion.

Charity works have also been lined up, she said.

The ICW will end in Davao City, with the Davao Insurers Club expounding on how people from Mindanao could appreciate insurance, Pagharion added.

Aside from the ICW and the Micro Insurance Conference, PIRA is also co-hosting the Association of Southeast Asian Nations’ (Asean) Insurance Council meetings of insurance regulators and industry leaders from Southeast Asia, she said.

Pagharion said the association is also backing the Young Asean Managers Awards which recognize the promising future leaders of the region.

“We can therefore say that in the four weeks that will follow, all eyes of the insurance industry in the region will be focused on the Philippines. It is PIRA’s privilege to be given this opportunity," Rellosa said. — JE/VS, GMANEws.TV

Microinsurance Momentum in the Philippines

2010-10-15T20:38:00.000+08:00

Microinsurance Momentum in the Philippines
by Kate McKee: Friday, October 8, 2010
CGAP

When hundreds of practitioners from around the world descend on Manila next month for the annual microinsurance conference, they’ll have a chance to observe firsthand a sector on the move. Sure, right now only 13.92 % of Filipinos have life insurance and penetration (premiums to GDP) is only 1.05%. But access is growing. And recent field research shows that once it is explained to them, low-income people say they want insurance and are willing to pay 20-30 pesos (US$.45-.$60) a week for it. As insurance providers begin to target the low-income market, they are offering a range of products: whole life; accident, burial and medical benefits plans; asset protection for microentrepreneurs hit by fire, lightning, flood, typhoon or earthquakes; and weather index crop insurance.

Over a hundred practitioners gathered in Manila on Friday, October 1 for a consultation on the new “Roadmap for Financial Literacy on Microinsurance,” an action plan prepared by a Technical Working Group comprised of all the key stakeholders from government, the microfinance and cooperative sectors and the insurance industry. This work has been supported by ambitious sector-building programs of the Asian Development Bank and GTZ that aim to institutionalize industry standards, develop products and carry out a nationwide microinsurance literacy and advocacy campaign.

The Roadmap is accompanied by a new “National Strategy and Regulatory Framework for Microinsurance” that aims to promote orderly growth in the sector while protecting consumers by requiring retail sellers of insurance policies to either register a Mutual Benefit Association (MBA) or team up with a regulated insurer. The focus is strictly on sustainable insurance provided by private providers, distributed by financial institutions who are close to the poor, and paid for by low-income people who see insurance as a good value proposition (referred to as “the paying poor”). The day before, the Financial Monetary Board had authorized mini-branches to widen financial access points, with microinsurance mentioned specifically as a permissible product.

The new rules are being rolled out through these road shows along with a broad financial literacy campaign. Itoy Almario (National Credit Council – Department of Finance), who has spearheaded the Roadmap process, pointed out that it is not just clients but also regulators and those in the industry who need a different mind-set – “Insurance is not just for the rich.”

One aspect of the whole process that stands out is the integration of client protection right from the beginning. Almario was quick to remind the audience that the current problem is not just misunderstanding of insurance by poorer Filipinos, but outright mistrust. Simple, plain-language contracts and claims settlement within 10 days would be a good starting point to building more trust. Consumer protection and client rights and benefits are central messages in the campaign.

This focus mirrors similar work in other countries and at the global level. For example, CGAP is commissioning a chapter for the forthcoming new version of the Micro-insurance Compendium (the first was co-published by the International Labor Organization and the Munich Re Foundation on nascent approaches to consumer protection regulation. While we tend to fear that regulation will increase costs and price poor people out of the market, this may be a case where basic rules of the game actually build trust and hence help build the market, rather than stifling innovation. The Smart Campaign is working on guidelines that apply the core client protection principles to micro-insurance, and the MicroInsurance Network is launching a task force on how to promote transparency and fair treatment as the sector expands.

In the Philippines, it looks like the three essential ingredients of responsible finance – industry standards, access-friendly regulation, and financial capability initiatives – are coming together in the microinsurance sector.

–Kate McKee

IC, Pira to entice poor Pinoys to get insurance

2010-10-03T21:09:00.000+08:00

Business Mirror
Written by Jun Vallecera / Reporter
Sunday, 03 October 2010 10:40

POLICY crafters, regulators and industry players vowed on Friday to enlighten poor, but enterprising Filipinos, whether rural- or urban-based, on the merits of acquiring some form of protection against financial reverses and other forms of misfortune.

The Insurance Commission (IC), the Philippine Insurers and Reinsurers Association, the various small units engaged in microinsurance, and technocrats from the Department of Finance met at the Century Park Hotel in Manila and committed to inform as many of the estimated 27 million poor Filipinos who do not have any kind of risk protection at all.

Less than 3 million of these very poor Filipinos have purchased an insurance policy against sickness, dismemberment, property loss, natural perils or even death, and all because an overwhelming number of them are uninformed, said Joselito Almario, deputy executive director of the National Credit Council.

The event formalized the pursuit of what has always been an informal approach to microinsurance and, at the same time, marked the start of a literacy campaign and road show meant to mainstream the microinsurance program.

Almario said only about half of the less than 3 million Filipinos that bought microinsurance policies obtained them from the formal insurance providers, potentially exposing them to many more risks than just the loss of a house or limb.

He would not blame the formal sources of risk protection for not coming down to where their services are sorely needed on account of the high transaction costs, actuarial difficulties and other factors the microinsurance program faces.

Nevertheless, Almario said, the government recognized the need to bring the large swathe of the unprotected population in from the cold and provide them with a measure of risk-mitigating programs like microinsurance.

This was the reason the IC issued a circular in March that laid down policies on what was up to then informal microinsurance activities.

The IC followed up with another circular that set guidelines on the treatment of funds collected from informal microinsurance activities.

Right now, Almario said, performance standards are being set and some fine-tuning is done on the risk-based regulatory framework the IC implements to suit the microinsurance business.

Industry players are also being urged to come up with innovative products so more Filipinos are encouraged to take risk protection for contingent events.

In essence, microinsurance is all about policies written costing as small as P300 a year yielding benefits as large a P200,000, Almario said.

Gov’t eyes micro-insurance regulation next year

2010-10-03T20:02:00.000+08:00

Business World
Finance
Posted on 06:36 PM, October 01, 2010

Gov’t eyes micro-insurance regulation next year

THE FINANCE Department is aiming to regulate all micro-insurance institutions by next year, with a technical working group finalizing a roadmap toward literacy in an indemnity targeting the low-income sector.

Finance Undersecretary Gil S. Beltran said the roadmap will help the government regulate micro-insurance companies, noting that there are many "fly-by-night" insurers without citing data.

"They are not exactly illegal. They are legitimate. It’s just that we have to move them all to the regulatory net," Mr. Beltran said at the sidelines of a micro-finance forum yesterday at the Century Park Hotel in Manila.

Mario C. Valdes, general manager of the Philippine Insurers and Reinsurers Association (PIRA) and member of the working group, said about 17,000 cooperatives offering insurance to their members should register with the Insurance Commission pursuant to its circular last January.

Memorandum Circular (MC) 1-2010 has laid out regulations covering micro-insurance, among them, that premiums to be paid by policy holders should not exceed 5% of the daily minimum wage in Metro Manila, and that insurance coverage should not be more than 500 times of it.

At current rates, micro-insurers should not charged policy holders more than P20 a day with coverage not exceeding P200,000 a year.

"We are targeting that by next year, all companies [offering micro-insurance] and their agents should be registered with the Insurance Commission," Mr. Valdes said by phone.

To do this, information dissemination about micro-insurance is ongoing nationwide. This is being facilitated by the working group composed of representatives from the Finance department-National Credit Council (NCC), Insurance Commission, Securities and Exchange Commission, and the National Anti-Poverty Commission, PIRA and other insurance associations, among others.

In the forum on Friday, NCC Executive Director Joselito S. Almario also said the working group would also distribute modules by the second quarter of next year to "increase knowledge" of different sectors such as the local government units and "potential clients" about micro-insurance.

"The problem is that companies offering micro-insurance do not know how to go down to the level of the informal sector, while informal sector is not even familiar about micro-insurance," Mr. Almario said in a separate interview.

He noted micro-insurance "had long been offered by insurance companies" only that the term was only coined by the government last January.

Michael F. Rellosa, president of the Fortune General Insurance Corp., cited an example. He said his company has been offering for five years now a one-time travel insurance, wherein policy holders who would travel in the future may pay only P50 for a coverage worth P100,000.

"If for example you would go to Baguio, you can avail yourself of this travel insurance. Para siyang tinge na insurance," Mr. Rellosa said in a separate interview.
Under MC 1-2010, micro-insurance is defined as "an activity providing specific insurance [and] insurance-like... products and services that meet the needs of the low-income sector for risk protection... and other contingent events."

Mr. Almario said they would call on insurance companies to have their agents attend trainings on micro-insurance later next year. "LGUs may also help us in promoting trainings for agents," he added. -- Prinz P. Magtulis

Bigger is better for insurers, says Purisima

2010-08-04T22:52:00.000+08:00

By Ted P. Torres (The Philippine Star) Updated August 03, 2010 12:00 AM Comments (0) View comments

MANILA, Philippines - Newly appointed Finance Secretary Cesar V. Purisima is in favor of a higher capital and risk weighting regime for the country’s insurance industry.

“Bigger is better in this industry,” Purisima said during the 60th anniversary of the Philippine Life Insurance Association (PLIA) last week.

The finance secretary was referring to the country’s insurance industry, which is struggling to raise sufficient capital to cover all risks as well as meet the claims of the insurer public.

There are 120 insurance companies, 34 life and another 86 non-life insurance companies, including one re-insurer. All are required to reflect a minimum P100-million paid up capital covering the period 2009.

Department of Finance Department Order (DO) 27-06 requires that all life and non-life insurance companies must reflect a paid up capital of P250 million (or a P500-million net worth capital) by 2011.

“I am encouraging them (insurers) to prepare for bigger competition,” Purisima said. “They have to be bigger, stronger, and better capitalized.”

Majority of the life insurance firms have actual capital well beyond the required P100-million paid up capital for 2009. But industry sources said that a handful of life insurers might not be able to reflect legitimate paid-up capital of P125 million for period 2010.

“That is fine since we want bigger, stronger, healthier, and liquid firms that can meet our standards as well as the claims of the insuring public,” finance officials said.

After all, increasing capital that is risk-weighted is a global standard. Last year, a significant number of large commercial banks already went to the capital markets to raise funds ahead of global standards.

“Our interest is a healthier insurance industry, I hope we can revitalize them,” the finance secretary said.

The life insurers ranked in the top 10 in fact account for roughly 80 percent of total premiums yearly.

Among the non-life insurers, only a third have reflected paid-up capital of more than P100 million. The next 20 or so players reflected a flat P100 million paid up capital based on data from the Insurance Commission (IC).

In terms of gross premiums, only a quarter of the non-life insurers account for 70 percent of the business.

Purisima also wants the insurers to invest in infrastructure although the methodology has still to be worked out.

“The very nature of their industry is long term, and infrastructure investments are not only long term but a direct benefit to the economy,” he said before the life insurers.

The finance secretary said that a vibrant insurance industry is a crucial component to savings and investment
generation.

NEW INSURANCE RULES DRAFTED

2010-07-01T20:47:00.001+08:00

Business World, Finance
Posted on 09:40 PM, June 28, 2010
BY LOUELLA D. DESIDERIO, Reporter

NONGOVERNMENT organizations (NGOs) and cooperatives running informal microin-surance schemes that have been ordered shut down by the government will have to use members’ contributions to pay for the premiums of new insurance plans.

Joint Memorandum Circular No. 2 of the Insurance Commission (IC), Cooperative Development Authority (CDA) and the Securities and Exchange Commission (SEC), which has yet to be released, provides the rules on how funds collected by NGOs and cooperatives must be used once their in-house microinsu-rance schemes are terminated.

Under the joint memorandum circular, funds collected by entities with informal micro-insurance schemes that will formalize their activities -- either by partnering with licensed insurance companies or setting up their own insurance companies -- shall be used to pay for the premiums or fees of insurance or “insurance-like” products.

The funds can also pay for the fees to mutual benefit associations (MBAs) -- set up especially by NGOs to provide microinsurance to members -- where the contributors become members.

For cooperatives, the funds will be used for members’ share capital contributions to a single-purpose or multi-purpose cooperative that would provide their insurance needs. Any excess funds shall be placed in members’ savings accounts in these cooperatives.

In a telephone interview at the weekend, Joselito S. Almario, deputy executive director of the National Credit Council, which implements the national strategy and regulatory framework for microinsurance, said the government came up with rules on the use of funds collected under informal microinsurance schemes in order to protect contributors.

“The circular defines what they (NGOs and cooperatives) will do with the funds collected. If they will formalize, it has to be used for the payment of premiums for the benefit of the people. It is protection for people who paid premiums before,” he explained.

He said that without the rules, some entities may use the funds for their lending operations and may find it difficult to collect the funds when the borrowers are unable to pay.

He said the circular being issued following Joint Memorandum Circular No.1 of the IC, CDA and SEC released earlier this year, which terminated infor-mal microinsurance or insurance-like schemes and ordered organizations that extended these to either partner with commercial insurers or incorporate themselves into an insurance firm, a coope-rative, or MBA.

“If you want to get into the insurance activity, you have to get authorization,” he said.

Failure of entities to formalize their activities will result in the revocation of primary franchise or the filing of criminal charges against concerned individuals.

He said the circular will be released this week after it has been signed by the the heads of the concerned agencies.

He said the joint memorandum circular has been signed by Insurance Commissioner Santiago Javier Ranada and SEC Chairman Fe B. Barin, but still needs to be signed by CDA Chairman Lecira V. Juarez and notated by Finance Secretary Margarito B. Teves.

Mr. Almario said many NGOs and cooperatives will be affected by the new joint order. But Microfinance Council of the Philippines Executive Director Lalaine M. Joyas said in a telephone interview on Sunday the council has yet to determine the number of NGOs that will be affected by the circular.

International investment fund seeks microinsurance partners

2010-04-01T00:02:00.000+08:00

By Ted P. Torres
The Philippine Star
Updated March 30, 2010 12:00 AM

MANILA, Philippines - An international investment fund is planning to invest up to P1.1 billion (approximately $25 million) for microinsurance initiatives in the Philippines.

The P1.1 billion is part of a microinsurance fund amounting to $110 million (P5 billion) allocated for investments in businesses that are designed to deliver affordable insurance in Asia and Africa.

LeapFrog Investments is an investment fund that targets strong returns for its investors, tapping the estimated microinsurance market of 1.5 billion people in emerging markets.

Through its portfolio companies, LeapFrog aims to reach 25 million low-income and vulnerable people with essential financial services, 15 million of them women and children, providing protection against life’s tragedies the devastating impact of climate change, and thus ending cycles of poverty.

The fund will be converted into investments of P250 million to P700 million ($5 million to $15 million) and partner with local insurance companies, microinsurers, or businesses with significant distribution platforms that reach the mass market.

In addition to the Philippines, LeapFrog’s priority countries for investment include India, South Africa, Kenya and Ghana.

LeapFrog principal for East Asia Stéphane Chatonsky said that they are looking for partners with innovative insurance and financial services companies or Filipino businesses that own strong distribution platforms.

Chatonsky said that they are guided by the profit-with-purpose investment approach, meaning they manage funds that must earn strong returns for its investors, and at the same time, invest the funds in efforts towards poverty alleviation.

“We will partner with local players and bring to bear resources and our knowledge of global best practices, to ensure Commercial success and impact – supporting the provision of affordable and relevant microinsurance products and other financial products,” she added.

In an earlier interview, LeapFrog founder and president Andrew Kuper said that they would like to take microinsurance to the next level.

“The industry needs to be taken to the next level, both in terms of establishing a new asset class and in terms of demonstrating that microinsurance is a strong business and investment proposition. That success is the swiftest way to open the gates of the capital markets, and make a real dent on mass poverty,” Kuper said.

The three kinds of investment strategy are: investments made on an existing microinsurance company that needs substantial capital and operation guidance; joint venture and co-capitalizing companies with microfinance institutions (MFIs) and other large distributors; and, co-investment with an insurer that seeks to develop an insurance product and distribution network specifically to reach low-income markets.

“We can acquire a large stake in an insurer and help them drive products down the income pyramid,” the LeapFrog president added.

Roughly 70 percent of the Filipino population, or more than 65 million people, are classified as low-income. Yet they have sufficient funds to afford some form of insurance for their families and enterprises. Insurance can have a transformative impact on their lives and livelihoods.

The country’s penetration rate for insurance is still one of the lowest in the region.

That may change as taxes on insurance products have been reduced with the passage of Republic Act 10001, which lowers the premium tax on life insurance policies and fixes the rate of documentary stamp tax (DST).

Likewise, the Bangko Sentral ng Pilipinas (BSP) now allows thrift and rural banks to sell microinsurance products. That however must be differentiated from the traditional and complex life insurance and other financial products being sold by the commercial banking system.

The public and private sector recently signed the Microinsurance Innovations Program for Social Security (MIPSS), a comprehensive program “to improve the risk protection and security of poor people in the Philippines.” In general, that could be translated to microinsurance designed for the poorer sector of society, taking into account cheap insurance products and easy premium payment schemes.

The target for microinsurance is an estimate 1.5 billion vulnerable people in emerging markets. LeapFrog aims to reach 25 million low-income people with essential financial services, 15 million of them are women and children.

Recently, four global institutions have made commitments to LeapFrog. They are: the International Finance Corp. (IFC), the private investment arm of the World Bank Group, which committed $20 million; the board of the Soros Economic Development Fund, a $7-million investment. Flagstone Reinsurance, a global reinsurer, committed $12 million.

The KfW Entwicklungsbank and BMZ, the German Federal Ministry for Economic Cooperation and Development, made the largest single commitment worth $25 million

Insurance fund eyes RP

2010-03-31T23:44:00.000+08:00

Business World
March 30, 2010

AN international investment fund specializing in microinsurance is looking for local partners, noting the country’s large untapped market and the government’s promotion of the low-cost insurance product.

In a briefing last week, Stephane Chatonsky, principal of microinsurance fund LeapFrog Investments, said the firm has identified the Philippines as one of its key markets, and is willing to invest up to $25 million of the $110 million raised from various investors in the country.

Mr. Chatonsky said LeapFrog, founded in Luxemberg and maintaining offices in Australia and the US, chose the Philippines because of its attractiveness as investment destination.

“We chose the Philippines because of the stable macroeconomic environment and good potential for growth,” he said.

“The government has also realized [mi-croinsurance] is a good tool for poverty alleviation and it is pushing hard to get commercial insurers and non-profits to develop it.”

Mr. Chatonsky said LeapFrog is looking at investing in large insurance companies and developing their microinsurance products.

It may also invest in smaller firms that sell microinsurance, or tie up with microfi-nance institutions, church groups or telecommunication firms that serve as distribution channels for the products.

Mr. Chatonsky noted that 70% of Filipinos could be classified as “low-income” but can afford to buy insurance so the potential market for microinsurance is “huge.”

LeapFrog, in its website, claimed it is the “world’s first microinsurance fund.” It said it aims to bring financial services to poor people in India, Kenya, Ghana and South Africa, aside from the Philippines.

Its investors include the International Finance Corp. of the World Bank Group, the Soros Economic Development Fund of billionaire investor George Soros and Accion, one of the world’s largest micro-finance institutions.

Insurance Commissioner Santiago Javier Ranada welcomed the development.

“This will help low income groups. We appreciate them helping because as of now there is low coverage for the D and E income groups, especially in rural areas,” he said in a telephone interview yesterday. “Now, they can get insurance for business, life and health.”

Mr. Ranada hopes LeapFrog’s interest in the Philippines signals the start of investments into the local microinsurance industry.

“[Getting investors in the industry is really] the idea behind the release of rules on microinsurance, since people will be more willing to invest if they know the rules of the game,” he added.

Microinsurance, he pointed out, is a potential multibillion-peso industry, given the number of Filipinos belonging to the D and E classes who are without the protection insurance provides.

In January, the Insurance Commission (IC) issued a circular that amended Insurance Memorandum Circular (IMC) 9-2006, the previous order that governed the microinsurance industry.

The new circular states that all insurance firms, cooperatives, and mutual benefit associations licensed by the IC may sell microinsurance products, which may consist of one type, or several -- life, non-life and health -- bundled together.

It also requires microinsu-rance agents to be licensed by the IC, but they do not have to take regular licensure exam. Instead, they must undergo a special training program and pass a qualifying exam.

The circular also redefines microinsurance as those whose amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed 5% of the current daily minimum wage rate for non-agricultural workers in Metro Manila.

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

Mr. Chatonsky said that aside from providing funding, LeapFrog can provide expertise to help develop the country’s microinsurance industry.

“The big challenge is the distribution channel. It has to be really efficient. You have to reach the poor in a very cost effective way and... some insurers don’t know how to do it,” he said.

“We have done it in India and Africa. It was difficult but we have done it so we are bringing that expertise to the Philippines.”

Mr. Chatonsky said that while microinsurance is good business, it also benefits the poor.

“By providing microinsurance, we give people the opportunity to get out of poverty. This will allow them to manage risks through affordable and quality insurance policies so if something bad happens to them, they can continue to live their lives and accumulate assets,” he said. -- Don Gil K. Carreon

P1.1B For Microinsurance

2010-03-31T02:59:00.000+08:00

The world’s first microinsurance fund, which is partly owned by billionaire investor George Soros, is looking to invest up to P1.1 billion in the Philippines’ fledgling microinsurance industry through partnerships with local insurance companies, banks, retail stores or telecommunications operators. LeapFrog Investments, which is also partly owned by the World Bank’s International Finance Corp. (IFC), on Monday announced it has raised $110 million from global institutions, which it will invest in the microinsurance sectors in Asia and Africa.

Business Mirror
P1.1B for microinsurance
Written by Erik de la Cruz / Reporter
Tuesday, 30 March 2010 21:34

The world’s first microinsurance fund, which is partly owned by billionaire investor George Soros, is looking to invest up to P1.1 billion in the Philippines’ fledgling microinsurance industry through partnerships with local insurance companies, banks, retail stores or telecommunications operators.

LeapFrog Investments, which is also partly owned by the World Bank’s International Finance Corp. (IFC), on Monday announced it has raised $110 million from global institutions, which it will invest in the microinsurance sectors in Asia and Africa.

The Philippines, along with India, South Africa, Ghana and Kenya, is on its list of priority countries to invest in in trying to get a bigger slice of the underserved global microinsurance market, especially in so-called emerging economies.

“We are tremendously excited by the potential of microinsurance in the Philippines,” said Staphane Chatonsky, the LeapFrog principal who leads the fund’s investments in East Asia.

Chatonsky, in a press briefing in Manila, said the fund was planning to make investments of P250 million to P700 million in each partnership deal with a local entity that must be businesses with “significant” distribution platforms that reach the mass market.

Talks were under way with potential partners and they hope to seal agreements soon, he said. But he declined to identify their possible partners.

The Bangko Sentral ng Pilipinas recently announced that rural, cooperative and thrift banks may now sell microinsurance products. The Insurance Commission has released a set of regulations for selling insurance products that meet the poors’ need for risk protection.

“We are here for the long-term and bring unique expertise,” said Chatonsky. “We will partner with local players and bring to bear resources and our knowledge of global practices to ensure commercial success and impact in supporting the provision of affordable and relevant microinsurance products.”

He said they are attracted to the Philippines because while over 70 percent of the population or more than 65 million people are classified as low-income. They have, however, sufficient resources to buy insurance for their families and enterprises.

He also said the Philippines has a relatively stable macroeconomic environment and “good” potential for growth. The government, he added, has been actively promoting microinsurance as a tool for poverty alleviation through appropriate tax, regulatory frameworks, measures, and incentives.

He also mentioned the existence of multiple distribution channels to reach low-income Filipinos such as banks, retail stores, mobile-phone networks, microfinance institutions, and even churches.

The fund has already made its first investment of over $6 million in AllLife, a South African insurer serving people living with HIV and diabetes.

According to Chatonsky, the global market for microinsurance has potential to absorb 1.5 billion policies as of 2009.

Four global institutions were scheduled to announce in Frankfurt on Monday investments in LeapFrog’s profit-with-purpose program. The World Bank’s IFC committed $20 million while the Soros Economic Development Fund has approved a $7-million investment, according to a press statement released in Manila.

Flagstone Reinsurance, a global reinsurer, will invest $12 million while the biggest investment of $25 million is to be made by KfW Entwicklungsbank and BMZ, the German Federal Ministry for Economic Cooperation and Development.

With these investments, LeapFrog said it is now by far the largest dedicated investor in the microinsurance sector worldwide.

Access to Microinsurance to be Expanded in the Philippines

2010-02-27T03:14:00.000+08:00

Please click here for more details.

Rural banks welcome microinsurance

2010-02-16T11:03:00.000+08:00

(The Philippine Star) Updated February 16, 2010 12:00 AM

MANILA, Philippines - The Rural Bankers Association of the Philippines (RBAP) and the Microenterprises Access to Banking Services (MABS) program has expressed its support for initiatives to introduce microinsurance in the country.

Both have also started working with other groups in the insurance industry to support the National Strategy on Microinsurance formally launched last month. These include technical assistance and training for insurance providers in developing and enhancing the quality of microinsurance products and services in the country.

As part of this initiative, RBAP-MABS, USAID, MICRA/Philippines and Mercy Corps MAXIS also held a workshop last Feb. 1-3 at the Asian Institute of Management (AIM) in Makati City entitled “Developing Successful Microinsurance Products.”

RBAP president Joseph Omar Andaya said the event dovetails with the government’s efforts towards developing the Philippines as the microinsurance capital of Asia.

“It (the event) proved to be a fitting follow-through to the recent launching of the National Regulatory Framework and National Strategy for Microinsurance,” Andaya added.

RBAP has actively been advocating for member rural banks to eventually partner with private local insurance companies to provide needed insurance services for their microfinance clients.

Formulation of the strategy and its framework involved the Department of Finance, the Insurance Commission, the National Credit Council, other public and private stakeholders, as well as international agencies.

Aimed at enhancing insurers’ skills in product development, service delivery and marketing, the workshop was participated in by AA International, Country Bankers Life, CocoLife, Malayan Insurance, MicroEnsure Philippines, Philippine Prudential Life and Pioneer Life, mutual benefit associations or MBAs including TSPI, ASKI, RBTI and CARD.

Taking part in the event were representatives of GTZ-German Technical Cooperation, USAID, the Philippine Life Insurance Association (PLIA) and Coop Life Insurance and Mutual Benefit Services (CLIMBS).

The training workshop is considered as the first of its kind in the Philippines and was conducted by Michael McCord, senior microinsurance specialist and president of the Microinsurance Centre of USA. McCord has been conducting a series of meetings with the country’s insurance industry stakeholders in support of RBAP-MABS and MICRA’s efforts in expanding microinsurance services in the Philippines.

BSP okays microinsurance sales - Business World Feb. 15, 2010

2010-02-15T10:23:00.000+08:00

THE POOR may now buy micro-insurance from rural, cooperative and thrift banks after these institutions were green-lighted by the central bank to serve as distributors.

In a statement issued last Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board the day before had "approved ... the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks."

These banks, the BSP added, "are ideal insurance distribution channels as they are the trusted financial institutions in the countryside and have a deeper knowledge and understanding of the low-income market."

Rural banks had clamored to be allowed to sell microinsurance -- aside from the credit life insurance they normally bundle into loans -- noting the additional revenues that big banks were reaping from bancassurance, or the sale of insurance policies within their premises.

Bancassurance rules, however, stipulate that banks should own at least 5% of insurance firms -- a requirement rural banks said they could not fulfill since they were too small to invest in insurance companies.

Rural banks proposed a "partnership model" where they would partner with commercial insurers. They would act as information disseminators and collection agents of the insurers, earning a fee in the process.

The banks also said they wanted to sell microinsurance products other than credit life insurance -- which primarily protects banks from default by clients who are often poor and without collateral -- such as life, crop, and property insurance but needed the central bank’s go-ahead before they could do so.

Officials of the thrift and rural bank associations welcomed the BSP move.

Pascual M. Garcia III, president of the Chamber of Thrift banks, said in a telephone interview yesterday: "Banks will be able to provide products to more customers. These banks are heavily exposed to the micro-sector... [This] will improve penetration of the sector and improve the existing relationship."

Mr. Garcia also said the order would make microinsurance cheaper as insurance firms would not need to open branches and hire people.

Joseph Omar O. Andaya, president of the Rural Bankers Association of the Philippines (RBAP), said the BSP move would further boost lending to the agricultural sector.

"Banks will be more encouraged to lend because when you are in agribusiness, you are subject to the vagaries of nature. Microinsurance mitigates that because banks can recover what they lend, since farmers affected by natural calamities get back seed money to restart their enterprise with insurance," he said.

While the BSP has not released the rules and regulations covering the sale of micro-insurance by rural, cooperative and thrift banks, its statement said banks needed to comply with Insurance Commission rules on microinsurance and verify that insurers have "adequate consumer protection mechanisms."

Both Messrs. Garcia and Andaya could not immediately say how much the sale of microinsurance would add to their bottom line, but said the BSP’s move was significant more for its social implications.

"[Microinsurance] will serve as parachutes for those who were poor but have made good in their lives so they won’t go back to poverty," Mr. Andaya said.

"It’s not going to be a big revenue source," Mr. Garcia said. "Our organizations can provide input on the type of products... Customers will understand about risk that can damage their business and families and pick up appropriate insurance for that. This will give them better chances for recovery and help them manage risk when things happen..."

Mr. Andaya said the RBAP was already in talks with insurance firms for products that could be introduced, but said the government should consider inviting more players from abroad so the cost of microinsurance could go down. -- Don Gil K. Carreon

New microinsurance rules issued

2010-02-01T07:43:00.002+08:00

Business World
Front Page
February 1, 2010

Regulators want informal schemes closed within a year

NEW RULES governing microinsurance were issued on Friday, re-laying the groundwork for the potentially multibillion-peso industry.

The Insurance Commission (IC), which came out with a new circular, also issued a separate set of rules together with two other regulators that close down informal insurance schemes. Both directives were signed on Friday during the launch of a national microinsurance strategy and regulatory framework.

The government is pushing microinsurance for the poor, noting that they risk getting poorer as a result of calamities. Given its insufficient funds, the state is pushing for the development of a private sector-driven microinsurance market.

Studies have shown that while there are formal and informal microinsurance schemes, their penetration rate among the poor is very low.

Microinsurance is distinguished for being low-cost and easy to dispense. The government conservatively estimates sales to hit P2.5 billion annually based on premiums of as low as P1 a day and a client base of seven million.

The first circular which is still unnumbered, said Joselito S. Almario, deputy executive director of the National Credit Council, "implements" the national strategy and regulatory framework and as such serves as the IC’s primary document for regulating the industry.

It amends Insurance Memorandum Circular (IMC) 9-2006 that promoted and defined microinsurance, and spelled out the responsibilities of providers.

IMC 9-2006, Mr. Almario said, was overly focused on mutual benefit associations (MBAs) -- non-profit organizations set up by teachers or government workers, for instance -- to the exclusion of other microinsurance providers.

"The government pushed for MBAs [in providing microinsurance]. But there are cooperatives that do that also," he said.

The new circular states that all insurance firms, cooperatives, and MBAs licensed by the IC may sell microinsurance products, which may consist of one type, or several products -- life, non-life and health -- bundled together.

It also requires microinsurance agents to be licensed by the IC. These agents, however, need not take the regular licensure exam but must undergo a special training program and pass a qualifying exam.

The circular also redefines microinsurance as that where the amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed 5% of the current daily minimum wage rate for non-agricultural workers in Metro Manila.

Premiums, under IMC 9-2006, were computed at 10% of the daily minimum wage rate.

The new circular retains the old one’s provision that "the maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila."

Meanwhile, Joint IC-CDA-SEC Memorandum Circular 01-2010 terminates "informal insurance" or "insurance-like schemes" and orders organizations that extend these to either partner with commercial insurers or incorporate themselves into an insurance firm, a cooperative, or MBA.

The joint circular was signed by Insurance Commissioner Eduardo T. Malinis, Securities and Exchange Commission (SEC) Chairman Fe B. Barin, and Cooperative Development Authority (CDA) Chairman Lecira V. Juarez.

"Many organizations are operating without a license," Mr. Almario said, "when the law clearly states they get a certificate of authority, essentially a license, from the Insurance Commission."

The circular cites the Insurance Code, which insists that organizations undertaking insurance activities first secure a certificate of authority from the IC, and the Cooperative Code which requires cooperatives undertaking such activities to also get an IC certificate.

There are also entities, including non-profit organizations, registered with the SEC that don’t have the authorization but are extending insurance.

Informal insurance schemes are to close in a year, and their providers may either partner with commercial insurers or encourage members to become members of MBAs or cooperatives.

They may also, within two years, organize themselves into a life or non-life insurer, cooperative, or MBA licensed by the IC.

Deputy Insurance Commissioner Vida T. Chiong said other circulars covering reportorial requirements and the required capitalization would be issued.

For BusinessWorld On-line, click here

Microinsurance business formally kicks off

2010-01-30T11:52:00.000+08:00

Business World, Finance
January 30, 2010

The government on Friday formally jumpstarted the microinsurance business, which targets the poor as clients, by launching the national strategy and regulatory framework for the industry.

Representatives from the government -- the Department of Finance, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, Cooperative Development Authority and state health insurer Philippine Health Insurance Corp. -- signed the two documents in a ceremony at the Philippine International Convention Center in Pasay City.

The national strategy and regulatory framework for microinsurance were completed by a technical working group composed of representatives of state agencies and nongovernment organizations last Nov. 13.

The government defines microinsurance as a low-cost insurance that provides the poor protection and relief against distress, misfortune or contingent event.

"We believe that promoting, supporting and advocating microinsurance is one invaluable step towards freeing our people from those chains of poverty," Finance Secretary Margarito B. Teves said in his keynote speech during the event.

The national strategy for microinsurance states the objective, the roles of the various stakeholders and the strategies to be implemented in improving access to insurance of the poor, the self-employed and their families. It also provides ways to encourage those who are providing informal insurance and insurance-like activities to register and to comply with existing regulations set by the government.

The regulatory framework specifies that commercial life and non-life insurance firms, mutual benefit associations, cooperative insurance societies, pre-need firms and health maintenance organizations, among others, which sell microinsurance, should be registered and licensed by the state.

Finance Undersecretary Gil S. Beltran said that this will eliminate "fly by night" microinsurance firms and eradicate "scams."

"We will try to avoid these by coming up with a uniform set of rules to be followed by regulators and microinsurance firms. And nobody will escape the net," he said in an interview. -- BUA

Microinsurance to Yield P2.5B, DoF says

2010-01-29T09:03:00.000+08:00

Business World, Economy
BY ALEXIS DOUGLAS B. ROMERO, Reporter
January 29, 2010

PREMIUMS TO BE RAISED from the sale of just one microinsurance product can hit at least P2.5 billion per year if all the beneficiaries of the government’s microfinance programs were covered, the Finance department said.

Joselito S. Almario, deputy executive director of the Finance department’s National Credit Council, said the computation is based on a "conservative" assumption of a P1 per day premium for seven million clients.

"At P1 per day of premium covering just the risk protection needs of seven million microfinance clients, annual business potential will amount to P2.5 billion," he told BusinessWorld in a telephone interview. "It is just a conservative figure. It is based on just one microinsurance product. It does not include other potential clients such as those in the informal sector and those who are self-employed. It is also based on a daily premium of P1."

Mr. Almario said the assumption can apply to the sale of any microinsurance product such as health, life, or nonlife.

The Finance official noted that the amount of premium contribution per microinsurance policy cannot exceed P19 per day to make them affordable to the poorest sectors.

"It can be higher if the premium collected by the insurance provider is more than P1 per day. The potential of the microinsurance business is big," he said.

Mr. Almario said these premium contributions are on top of the earnings that a firm can generate from their investments.

"When they invest the money they collected, they [companies who will offer microinsurance] can earn further," he said.

Finance Undersecretary Gil S. Beltran, who is also executive director of the National Credit Council, believes that the microinsurance policies would draw support even from those in the low-income brackets.

"We all need the security. This will prod them [poor] to avail of the products. This will reduce the risk on their livelihood," he said in an interview.

"With risk protection, we can make the poor participate more actively in the economy."

The government defines microinsurance as a product that "meets the needs of the disadvantaged for risk protection and relief against distress or misfortune."

Finance officials have said that the potential beneficiaries of the low-priced insurance schemes can be as high as 42 million. This was based on the assumption that each of the seven million microfinance clients belong to a family of six.

The government is set to launch today the national strategy and the regulatory framework for microinsurance, which will formally mark the beginning of the industry.

The national strategy for microinsurance states the objective, the roles of the various stakeholders and the strategies to be implemented in improving access to insurance of the poor, the self-employed and their families. It also provides ways to encourage those who are providing informal insurance and insurance-like activities to register and to comply with existing regulations set by the government.

Under the strategy framework, the government and other stakeholders will provide an appropriate policy and regulatory framework, monitor informal insurance schemes and encourage them to register their operations, and institutionalize financial literacy.

The regulatory framework, meanwhile, enumerates the requirements and standards that facilitate the sound delivery of microinsurance products and services by the private sector.

It states that microinsurance products can only be provided by entities registered and licensed by appropriate government regulatory bodies such as commercial life insurance companies, commercial nonlife insurance companies, mutual benefit associations, cooperative insurance societies, insurance or service cooperatives, pre-need companies and health maintenance organizations.

Mr. Beltran said other microinsurance regulations will be finalized within the year.

The regulatory and strategic frameworks were created by technical working groups composed of representatives from the Finance Department, the Insurance Commission, Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Cooperative Development Authority, National Anti-Poverty Commission ,and Philippine Health Insurance Corp. It was approved by a steering committee last November after a series of consultations held nationwide.

The Asian Development Bank and the German Technical Cooperation have agreed to help the government develop the microinsurance market in the Philippines.

January 29 Program for the Launching

2010-01-26T22:28:00.000+08:00

Microinsurance Launch Program

2:00 – 3:00 pm Registration
Viewing of Displays/Exhibits
3:00 – 4:00 pm Prayer
National Anthem
Short Messages
Asian Development Bank (ADB)
German Technical Cooperation (GTZ)
Keynote Address
Secretary Margarito B. Teves
Audio-Visual Presentation
Signing
National Strategy for Microinsurance
Regulatory Framework for Microinsurance
Presentation of Plaques of Appreciation to the
Members of the Technical Working Groups
Announcement of the Sixth (6th) International Microinsurance Conference
Munich Re Foundation
Closing Remarks
Commissioner Eduardo T. Malinis
4:00 – 6:00 pm Cocktails

DOF prepares blueprint for microinsurance sector

2010-01-26T07:23:00.000+08:00

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Crafting of Microinsurance Performance Standards Initiated

2010-01-20T01:14:00.001+08:00

In preparation for the full implementation of the National Strategy and the Regulatory Framework for Microinsurance which will be launched on January 29, 2010, the Department of Finance (DOF) and the Insurance Commission (IC) held the 1st meeting of a technical working group (TWG) that will formulate a microinsurance industry performance standards. The organizational meeting was held at the IC on January 19, 2010.

The set of performance standards will help the general public, the Management of microinsurance providers and the regulator in assessing various aspects of operations of microinsurance activities. Particular focus will be on efficiency and effectivenes in the delivery of microinsurance by insurance providers. With the performance standards in place, low income and informal clients of microinsurance providers will be provided transparent information and be protected from unsafe and unsound microinsurance practices.

As agreed during the meeting, the performance standards will bear the acronym "SEGURO" which in Pilipino literally translates to "Insurance". SEGURO stands for S-Solvency and Stability; E-Efficiency; G-Governance; U-Understanding the Product; R-Risk Managment; and O-Outreach.

Aside from the DOF and the IC, the TWG is comprised of private sector representatives from the Actuarial Society of the Philippines (ASP), Chamber of Mutual Benfit Associations Inc.(CHAMBAI), Cooperative Insurance Systems of the Philippines (CISP), Coop Life and Mutual Benefit Services (CLIMBS),Insurance Accountants of the Philippines (IAP), Microfinance Council of the Philippines (MCPI), Philippine Insurers and Reinsurers Association (PIRA), Philippine Life Insurance Association (PLIA) and the Risk Management Solutions, Inc. (RIMANSI).

The development of the microinsurance performance standards is being supported by the Asian Development Bank-Japan Fund for Poverty Reduction under a technical assistance grant "Developing Microinsurance Project"

The next meeting of the TWG will be held on February 3-5, 2010 at Tagaytay City, Philippines.

Philippine govt to launch national microinsurance strategy - Asian Insurance Review

2010-01-19T23:57:00.003+08:00

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Next Microinsurance Conference will take place in Manila

2010-01-14T22:38:00.000+08:00

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Gov't readies strategy for micro-insurance

2010-01-12T23:45:00.000+08:00

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Insurance for the poor a step closer to reality

2010-01-11T06:58:00.001+08:00

BusinessWorld - Economy
January 11, 2010

Insurance for the poor a step closer to reality

THE FINANCE department (DoF) will launch on Jan. 29 the national strategy and regulatory framework for microinsurance, in hopes of jumpstarting an industry that will provide insurance policies to the country’s poorest sectors.

"The launching of the national strategy and regulatory framework [for microinsurance] will be held on Jan. 29," Joselito S. Almario, deputy executive director of the Finance department’s National Credit Council, said via e-mail over the weekend.

"We do not have a formal microinsurance industry yet. The event will serve as the beginning of the industry. It will involve all firms that provide [micro]insurance," he explained in a phone interview yesterday.

The Insurance Commission (IC) defines microinsurance as a product that "meets the needs of the disadvantaged for risk protection and relief against distress or misfortune." Specifically, it is an insurance policy whose monthly premium does not exceed P1,050 and maximum amount of life insurance coverage is not more than P175,000.

Finance officials had previously said that the 42 million beneficiaries of the government’s microfinance program are the potential clients of microinsurance schemes. They pointed out that since these people already have access to funds, they are capable of buying insurance products.

In a statement, DoF said the event, whose theme is "Magpaseguro Para Protektado (roughly: ’insure to be protected’)," will outline the government’s policies and directions in providing the poor access to insurance services and products.

"It will create public awareness on the importance of providing appropriate risk protection for the poor through microinsurance and will enjoin the private sector’s participation in the delivery of simple and affordable insurance products for the low-income and informal sectors of society."

The national strategy for microinsurance specifies the objective, the roles of the various stakeholders and strategies to be implemented to improve access to insurance by sectors such as the poor, the self-employed and their families. It also seeks to encourage those who provide informal insurance and insurance-like products to register and to comply with government regulations.

The regulatory framework, meanwhile, will set the minimum requirements and standards that those who plan to deliver these products must meet.

"The regulatory framework is important because this will provide protection to those who avail of insurance policies. We want to make sure that the firms offering these are capable," Mr. Almario said in Filipino.

The strategic framework and the regulatory framework were approved by a steering committee in November last year after a series of consultations held nationwide. The committee consisted of representatives from the from the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Cooperative Development Authority, National Anti-Poverty Commission, Philippine Health Insurance Corp., as well as the DoF and IC.

After the launch of the frameworks, Mr. Almario said the next step would involve drawing up detailed performance standards to monitor the quality of service delivered by microinsurance providers.

The Asian Development Bank and the German Technical Cooperation are helping DoF develop the microinsurance market in the Philippines. -- Alexis Douglas B. Romero

Microinsurance Strategy and Framework Launching - January 29, 2010

2010-01-06T01:42:00.004+08:00

The Department of Finance and the Insurance Commission will formally launch the National Strategy and the Regulatory Framework for Microinsurance on January 29, 2010 at the Philippine International Convention Center with the following theme: “ Magpaseguro Para Protektado”.

The milestone documents outline the government’s policy thrusts and directions in providing the poor access to insurance products and services. It will create public awareness on the importance of providing appropriate risk protection for the poor through microinsurance and will enjoin the private sector ‘s participation in the delivery of simple and affordable insurance products for the low income and informal sectors of society.

The National Strategy for Microinsurance defines the objective, the roles of the various stakeholders and the key strategies to be pursued in enhancing access to insurance of the poor. It also discusses health insurance for the poor in the context of social protection. Strategies to encourage complementation of the products of PhilHealth by the private sector are also discussed. It also provides directions towards mainstreaming informal insurance and insurance-like activities and the promotion of public awareness and financial literacy.

The Regulatory Framework for Microinsurance, on the other hand, establishes the policy and regulatory environment that will encourage, enhance and facilitate the safe and sound provision of microinsurance products and services by the private sector. It also identifies and promotes a system that will protect the rights and privileges of those who are insured and ultimately enhance trust and confidence on the insurance industry and other providers of insurance-like and other similar products and services.

The National Strategy and Regulatory Framework were crafted by technical working groups formed by the DOF and have undergone a series of regional consultations nationwide in 2009. It was approved by members of a Steering Committee comprised of representatives from the DOF, Insurance Commission, Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Cooperative Development Authority, National Anti-Poverty Commission and PhilHealth in a meeting held on December 11, 2009.

The event is the culmination of the observance of the Microinsurance Month. Under Presidential Proclamation 1212, January is declared as Microinsurance Month and appointed the Insurance Commission IC and the DOF as the lead agencies. It enjoins all in the government to "initiate and participate" in various activities.

Delivering the keynote address will be Finance Secretary Margarito Teves. Expected to attend the launching will be, among others, members of the international community, bilateral and multilateral institutions, insurance providers, microfinance institutions (rural banks, cooperatives and non-government organizations), basic sector representatives, government agencies, financial institutions and other major stakeholders.

In support of the government initiative, the Asian Development Bank (ADB) and the German Technical Cooperation (GTZ) are providing technical assistance to the DOF for the development of the microinsurance market in the Philippines. The assistance focus on the establishment of the appropriate policy and regulatory environment; building capacities of both regulators and providers in regulating and providing microinsurance services; product development and financial literacy for both providers and clients of microinsurance.

6th International Microinsurance Conference to be held in Manila, November 2010

2009-12-30T20:00:00.000+08:00

For more information, click on this link

National Strategy

2009-12-30T18:31:00.000+08:00

Republic of the Philippines
National Strategy for MICROINSURANCE
_______________________________________

A. Background

The Philippine Medium Term Development Plan (MTDP) recognizes the role of government to put appropriate safety nets and risk protection for the poor. “The poor and marginalized groups in the Philippines face various risks – temporary and permanent loss of employment, inability to cope with abrupt changes in the prices of basic commodities, illness and physical injury, violence and the lack of peace and order, old age, etc. Occasionally, they are confronted with shocks arising from natural disasters and abrupt swings in the macro economy. . . Protecting the poor and vulnerable groups is imperative in winning the battle against poverty within the decade.” (MTDP 2001-2010, chapter 13). One way to do this is to ensure that the poor are given access to financial services in general, and insurance in particular.

In line with its policy thrust of rationalizing public spending for social services and less government intervention in activities that could best be implemented by the private sector, the government issued the National Strategy for Microfinance in 1997, which further supports the following key policy direction espoused in the MTDP: “Inefficient or regressive spending and subsidies are being phased out and instead, markets are made to work better for poor people.” (MTDP 2001-2010, chapter 13). To do this, the MTDP also clearly highlights the need to “Develop mechanisms to involve the private sector actively in the provision of services and other assistance to the poverty areas identified by government using innovative and sustainable models available both locally and internationally.”

Recognizing the importance of appropriate risk protection for the poor, the government through the Department of Finance-National Credit Council (NCC), and in coordination with the Insurance Commission (IC) and other regulatory authorities [Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC) and the Cooperative Development Authority (CDA)] as well as the private sector engaged in the provision of insurance products and services, initiated the formulation of a National Strategy to develop an insurance market for the poor.

Consistent with the vision and key strategies espoused in the National Strategy for Microfinance that was issued in 1997 , the National Strategy for Microinsurance defines the objective, the roles of the various stakeholders and the key strategies to be pursued in enhancing access to insurance of the poor. It also discusses health insurance for the poor in the context of social protection. Strategies to encourage complementation of the products of PhilHealth by the private sector are also discussed. It also provides directions towards mainstreaming informal insurance and insurance-like activities and the promotion of public awareness and financial literacy.

B. Vision and Objective: Appropriate Risk Protection for the Poor

The National Strategy for Microfinance articulated the vision “to have a viable and sustainable private micro (financial) market with the government providing a supportive and appropriate policy environment to the market.” Along this line, the market for financial products and services that provides appropriate risk protection for the poor (i.e. microinsurance ) will be developed.
The objective is to provide the poor increased access to microinsurance products and services. This will be achieved through the adoption and implementation of the following key policy strategies:

a. Increased participation of the private sector in the provision of microinsurance services;

b. Establishment of an appropriate policy and regulatory environment for the safe and sound provision of microinsurance by the private sector;

c. Mainstreaming of informal insurance, insurance-like, and other similar activities/schemes; and

d. Institutionalization of financial literacy (learning/education) that will highlight the importance of microinsurance, the applicable rules and regulations, the duties and responsibilities of the providers, and the rights of the insured.

C. Key Stakeholders

The development of an insurance market for the poor requires the participation of all key stakeholders from both the government and the private sector. To ensure that the objective of increased access of the poor for risk protection is attained, it is imperative for key stakeholders to focus on roles where they have distinct and comparative advantage. Their respective roles are as follows:

a. Government

Government shall support and encourage the participation of private insurance providers in offering appropriate risk protection to the poor. Government instrumentalities shall focus on the following:

i. Policy and Regulatory Agencies

1. Provide the enabling policy and regulatory environment to encourage private sector participation in the delivery of Microinsurance products and services;

2. Establish appropriate policy and regulatory measures supportive of financial inclusion; and

3. Identify options and develop guidelines for mainstreaming informal insurance and insurance-like schemes.

ii. Other National Agencies and Instrumentalities

1. Establish networks and linkages with microinsurance providers for the effective and efficient delivery of microinsurance to their constituents; and

2. Provide basic support services such as infrastructure, health services, education and maintenance of peace and order to mitigate the poor’s exposure to risks.

iii. Local Government Units (LGUs)

1. Encourage and collaborate with the private sector on the provision of microinsurance to their local constituents; and

2. Establish support mechanisms (linkages, information and public assistance desks, financial literacy campaigns, etc.) that will increase public awareness and access to microinsurance products and services by the poor.

iv. Social Insurance Providers

1. Make available to the poor social protection from risks that are not normally covered by the private sector;

2. Collaborate with LGUs and other concerned government agencies in providing subsidies in the provision of social microinsurance to identified indigents deserving of the subsidies; and

3. Develop mechanisms to partner with private insurance providers in lowering out-of-pocket expenses for health insurance of the poor.

b. Insurance and insurance-like providers

Private insurance and insurance-like providers shall take the lead role in directly providing microinsurance products and services to the poor. These are the life and non-life insurance companies, Cooperative Insurance Societies (CIS), Insurance/Service Cooperatives, Mutual Benefit Associations (MBAs), pre-need companies and Health Maintenance Organizations (HMOs). They shall:

i. Provide sound and viable microinsurance products and services;

ii. Engage in sustainable operations following principles of good governance, prudential standards and appropriate regulations;

iii. Develop simple, affordable and innovative microinsurance products and services tailor fitted to the needs of the poor;

iv. Complement social insurance products and services provided by government-run social insurance providers; and

v. Increase outreach at the least cost through partnership and networking with community based organizations, Microfinance Institutions (MFIs), social insurance providers, LGUs and other concerned government agencies.

c. Intermediaries

Intermediaries refer to entities or individuals such as brokers and agents that shall facilitate the provision of insurance services by licensed insurance providers. Brokers act on behalf of the clients in the purchase of insurance products while agents, on the other hand, act on behalf of the insurance companies in the solicitation of insurance business. Intermediaries shall:

i. Provide appropriate and reliable delivery and support mechanisms to facilitate microinsurance transactions including claims;

ii. Increase outreach at the least cost and most efficient manner; and

iii. Actively engage in information dissemination and educational activities that will increase the awareness of the poor on the benefits and risk-protection features of specific microinsurance products and services.

d. Support institutions

Support institutions shall provide the necessary support services and assistance to build the capacity of key stakeholders in microinsurance. These institutions shall include the following: academic and research entities, Business Process Outsourcing (BPO) companies, training and technical assistance service providers, networks and associations, media, foundations and other service providers. Support institutions shall:

i. Promote public awareness and education;

ii. Provide technical assistance, capacity building and training programs for providers, government institutions and other stakeholders;

iii. Conduct policy and market research, business development studies and advocacies; and

iv. Develop appropriate business solutions for efficient delivery of Microinsurance products and services.

e. Development partners

Development partners are international organizations, be it publicly or privately owned, and individuals of good reputation that support the development thrusts of the government. Development partners shall:

i. Support financial inclusion policy and regulatory initiatives of the Government, including local government units, that will encourage and strengthen private sector participation, and at the same time protect the poor from unsafe and fraudulent insurance schemes. Such support and assistance shall include building capacities of government entities in formulating and implementing appropriate prudential requirements and standards, and in promoting public-private sector collaboration in social insurance schemes;

ii. Assist in setting up and institutionalizing an information database at the local and national levels that will be used for the development of microinsurance products; and

iii. Provide technical assistance to the private sector on products development, distribution channel innovations, training and capacity building, financial literacy, information campaign, knowledge management, impact assessment, and operating systems and procedures enhancement.

D. The Strategies to be pursued

To realize the objective of providing poor households and microenterprises greater access to microinsurance products and services, the following specific strategies shall be pursued:

a. Provision of an appropriate policy and regulatory environment that is conducive to the effective and efficient functioning of the private microinsurance market. Such environment shall be established to encourage increased private sector participation in the provision of microinsurance products and services. This shall be done by:

i. Formulating prudential requirements and guidelines appropriate for delivery of microinsurance products and services;

ii. Establishing performance standards that will guide the operations of microinsurance providers;

iii. Developing policies and guidelines for the private sector to complement products and services of social insurance programs of Government such as the Philippine Health Insurance Corporation (PhilHealth) and the Philippine Crop Insurance Corporation (PCIC),; and

iv. Providing regulatory space for innovative electronic payment systems and infrastructures to improve efficiency and to lower the cost of transactions in the delivery of microinsurance products and services.

b. Mainstreaming informal insurance. Informal schemes refer to in-house insurance schemes developed and implemented by entities that do not have any license from the Insurance Commission nor any other appropriate regulatory body. To ensure the safe and sound provision of microinsurance products and services, entities engaged in the provision of informal insurance activities (i.e. doing self-insurance) shall be required to formalize such activities within a specified period of time. Government shall:

i. Provide the following options for formalization.

1. Partnership with formal insurance providers and intermediaries through the purchase of individual/group insurance policies either directly from an insurance provider or through an intermediary;

2. Becoming a duly licensed agent or broker;

3. Joining a Mutual Benefit Association (MBA) or a Cooperative Insurance Provider. Cooperatives may apply as members in an existing Cooperative Insurance Society, while individuals may apply as members in an MBA or in an Insurance/Service Cooperative engaged in insurance business.

4. Setting up of any of the following licensed Insurance Entities:

a. Life or Non-life insurance company;
b. Mutual Benefit Association; or
c. Cooperative Insurance Society or as an Insurance/Service Cooperative that is engaged in insurance business.

ii. Provide clear rules and guidelines on collaboration and exchange of information among government regulatory bodies to ensure that informal insurance schemes are under the coverage of the regulatory environment within a specified period of time.

iii. Provide appropriate support systems to formalization through:

1. Information dissemination and advocacy campaign on policies and guidelines to formalization by the concerned regulatory bodies in collaboration with appropriate stakeholders;

2. Capacity building and training for microinsurance providers by support institutions with the assistance of development partners with specific focus on the following:

a. Development of products that will meet the needs of the clients; and

b. Provision of enhanced benefits, business opportunities and/or assured protection to entities mainstreaming their informal insurance activities.

c. Institutionalization of Financial Literacy. Public awareness and education campaign on the importance of microinsurance shall be carried out among key stakeholders. This shall focus on the following: appropriate risk protection; microinsurance policies and regulations; duties and responsibilities of providers; and rights and benefits of clients. The target audience for financial literacy on microinsurance shall include the following:

1. Legislators
2. National and local government officials
3. Insurance and insurance-like providers
4. Intermediaries
5. Wholesale and retail Micro Finance Institutions
6. Existing and potential clients/consumers
7. International development/donor agencies
8. Support institutions

Financial Literacy on microinsurance shall be pursued by:

1. Using tri-media that include print, radio and television;

2. Building capacities of key stakeholders in ensuring the safe and sound provision of microinsurance products and services through the conduct of seminars, conferences, trainings and workshops including exposure visits;

3. Institutionalizing activities on financial literacy within major stakeholders;

4. Establishing networks and linkages between and among support institutions engaged in the financial literacy campaign; and/or

5. Establishing a critical mass of advocates on financial literacy in both the government and the private sector;

A national framework on Financial Literacy for Microinsurance shall be formulated. The framework shall provide the key policies and strategies to be pursued, measures to be adopted as well as the activities to be implemented to ensure that both the microinsurance providers and clients understand their respective roles, rights and responsibilities and that the latter are given appropriate protection.

2009-12-30T01:50:00.000+08:00

In a study entitled Making Insurance Markets Work for the Poor: Microinsurance Policy Regulation and Supervision – Philippines Case Study, it was reported that as of 2006, the microinsurance market in the country covers an estimated 2.9 million adults (about 5.4 percent of the adult population), almost half of which (41 percent), are provided by the informal market. Informal micro insurance market is comprised of registered and unregistered institutions that provide insurance, insurance-like, and other similar products and services to the poor without any license from the concerned regulatory authority.

2009-12-30T01:40:00.000+08:00

Social insurance programs such as those administered and implemented by PhilHealth, Government Service Insurance System (GSIS), and Social Security System (SSS), even when provided to the same clients (i.e. the poor) are not covered in this framework.