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.
Thursday, August 18, 2011
Saturday, July 30, 2011
The movement for microinsurance
(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.”
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.”
Friday, July 29, 2011
Philippines: Life market to spurt ahead this year
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.
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.
Thursday, June 16, 2011
Nonlife insurers urged to lobby for tax breaks
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
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
Saturday, May 28, 2011
Micro-insurance seen picking up
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
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
Saturday, May 21, 2011
Microinsurance Can Help Poor Prepare for a Better Future - Experts Say
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.
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.
Wednesday, April 27, 2011
Wider coverage expected due to microinsurance
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
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
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