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.
Sunday, October 3, 2010
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
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
Wednesday, August 4, 2010
Bigger is better for insurers, says Purisima
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.
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.
Thursday, July 1, 2010
NEW INSURANCE RULES DRAFTED
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.
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.
Thursday, April 1, 2010
International investment fund seeks microinsurance partners
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
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
Wednesday, March 31, 2010
Insurance fund eyes RP
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
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
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.
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.
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