Insurance standards readied

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