Gov’t eyes micro-insurance regulation next year

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