Business World
Finance
Posted on January 27, 2012 08:11:34 PM
A TOTAL of 3.5 million microinsurance policies were sold last year after the government and the private sector began promoting the financial protection products for the poor.
"From January up to December 15, 2011, about 3.5 million policies were sold," said National Credit Council Deputy Executive Director Joselito S. Almario during a roundtable discussion with the media on Friday.
"And this number did not even indicate how many people were covered, since some policies were group insurance policies. They could be covering 100 or 200 people," he added.
No comparable data for 2010 is available.
Mr. Almario said the figure could easily rise to 5 million by the end of this year, as the Insurance Commission (IC) and the German Agency for International Cooperation (GIZ) continue their financial literacy campaign until August. The campaign was launched in February 2011.
"That target is attainable," he added, especially since insurers will be required to report progress on their microinsurance efforts to the IC this year.
Microinsurance is one of the key priorities of the IC and the Aquino administration. Insurance Memorandum Circular 1-2010, released in January 2010, set the guidelines for the nascent microinsurance industry. The amount of premiums, computed on a daily basis, should not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila. Also, the coverage of microinsurance policies should not be more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.
There are currently eight microinsurance providers from the nonlife industry, seven from the life industry and 15 from mutual benefit associations, Insurance Commissioner Emmanuel F. Dooc said.
"We have diverse microinsurance products. For life we have, among others, the usual basic life and credit life insurance, disability benefits, medical expenses reimbursement and micro-investment products," he pointed out.
Nonlife insurers offer variants of the prototype "Buhay, Bahay, Kabuhayan" designed by GIZ and approved by IC. The product is designed to give a P10,000 coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of P30,000. A contract is good for a year.
Despite the progress, Mr. Dooc expressed hope other insurance companies will also offer insurance products for the poor.
In response, George C. Mina, the general manager of the industry group Philippine Life Insurance Association, Inc., said during the roundtable that a number of life insurers are keen to offer microinsurance.
"Nine companies have already gotten approval to offer microinsurance this year. Five are waiting for approval and six are interested," Mr. Mina said.
Saturday, January 28, 2012
Tuesday, January 24, 2012
Life insurance to sustain double-digit growth
Malaya Business Insight
Tuesday, January 24, 2012
BY ANGELA LORRAINE CELIS
The life insurance industry is expected to sustain last year’s double-digit growth this year, an industry official said.
"Barring any external catastrophic events such as a euro zone meltdown with its contagion effects on the US and Asia, we are optimistic regarding the continuing growth of the life insurance industry in 2012," Mayo Jose Ongsingco, Philippine Life Insurance Association (PLIA) immediate past president, said.
"We are projecting to sustain the 2011 growth in 2012," Ongsingco, who is also Insular Life president and chief operating officer, said.
Ongsingco said that total premiums could have grown to around 20 percent in 2011 compared with the previous year.
"This will be driven by an estimated growth in new business premiums of around 40 percent year on year," Ongsingco said.
The official 2011 figures are yet to be disclosed.
Ongsingco said that some of the factors that would influence the industry’s growth this year would include the same macroeconomic drivers last year. In 2011, the services sector was the main driver of growth.
He added that the Public-Private Partnership program’s "trickle-down effects," benign inflation, and a possible credit upgrade for the Philippines later this year will also positively affect the industry’s growth.
"Micro insurance, the expansion of the mandatory migrant workers insurance and the implementation of the PERA (Personal Equity and Retirement Account) initiative will add to the growth of the life industry," Ongsingco said.
"Other external events that should be watched would be the resolution of the US debt ceiling issue, the pending bill in the US congress that would curtail BPO outsourcing, and tensions in the Middle East that could disrupt oil supplies and increase prices," he said.
"Clearly, for the Philippine life insurance industry, the growth in new premiums will be mostly attributed to investment-linked product sales and will be exemplified by bank-generated production," Ongsingco said.
Ongsingco also said that one of the drivers of industry growth last year was overall economic growth.
"There is a positive correlation between GDP (gross domestic product) growth and life insurance premium growth. Despite the lingering euro zone and the US debt ceiling crisis, the Philippine GDP is expected to still grow by around 4.7 percent in 2011 although lower than 2010’s 7.6 percent GDP growth," Ongsingco said.
The Philippines’ GDP growth rate for 2011 is yet to be announced by the National Statistical Coordination Board.
The latest data from the NSCB shows, however, that the Philippine economy grew 3.6 percent in the first three quarters of the previous year.
This is less than half the 8.2 percent growth in the first nine months of 2010 and also below the government’s 4.5 to 5.5 percent growth outlook for 2011.
This year, the government expects the Philippine economy to grow 5 to 6 percent.
"The system was also very liquid with P1.6 trillion in SDAs (special deposit accounts). Some of this excess liquidity was channeled to investment-linked life insurance products," he said.
Ongsingco said that other notable drivers last year were overseas Filipino workers’ remittances, the growing BPO industry, and low inflation.
Earlier, Bangko Sentral governor Amando Tetangco said that remittances of OFWs for January to October 2011 reached $16.5 billion, a year-on-year growth of 7 percent.
Tetangco expects full-year remittances in 2011 to amount to $20.1 billion.
"For 2012, the forecast is $21.1 (billion), there will be a 5 percent growth," Tetangco said.
Inflation in 2011 was 4.8 percent, which is within the government’s 3 percent to 5 percent target.
In 2010, total life insurance premiums grew 23.56 percent to P70.727 billion. The first-year premiums, meanwhile, grew 59.38 percent to P34.28 billion.
The top five insurance companies in 2010 in terms of premium income performance were Philam Life, P11.255 billion, 16 percent of total; Sun Life, P10.63 billion, 15 percent; Philippine AXA Life, P8.36 billion, 11.8 percent; Pru Life UK, P7.36 billion, 10.4 percent; and Insular Life, P7.13 billion, 10.1 percent.
In terms of first-year premiums, the top five were Philippine AXA, P6.64 billion, 19.4 percent of total; Pru Life UK, P5.23 billion, 15.3 percent; BPI-Philam, P4.56 billion, 13.3 percent; Insular Life, P3.27 billion, 9.5 percent; and Philam Life, P2.7 billion, 7.8 percent.
The industry’s penetration rate in 2010 was only 13 percent, but Ongsingco expects this to increase as more policies are sold.
Of this rate, 10 percentage points is covered by group life insurance, while only 3 percentage points is covered by individual life insurance.
"Micro insurance, compulsory migrant workers insurance and the sale of life insurance policies as a PERA-qualified product will definitely increase the penetration rate," he said.
Ongsingco noted that micro insurance in particular will definitely improve the penetration rate as more persons will be covered by life insurance.
Micro insurance is defined by the Insurance Commission as an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events.
With most of the banks and other financial institutions centered in key areas, the Philippines is a prime spot for micro insurance and microfinance.
"The natural target markets of micro insurance are the lower-income and small individual entrepreneurs who are normally unable to access regular life insurance," Ongsingco said.
Ongsingco said that there are some life insurance companies already selling or considering micro insurance products, although the number of companies was not disclosed.
"There are however some issues to be threshed out such as in underwriting, selling and eventually, claims evaluation/settlement," he said.
"Micro insurance has been launched successfully in South America and we are studying the use of similar models for the Philippines. Moreover, BSP has allowed thrift, cooperative, and rural banks as distribution channels for micro insurance," he said.
The BSP, aiming to increase public access to needed financial services, approved in 2010 the marketing, sale and servicing of micro insurance products by rural, cooperative and thrift banks as well as other financial institutions.
Tuesday, January 24, 2012
BY ANGELA LORRAINE CELIS
The life insurance industry is expected to sustain last year’s double-digit growth this year, an industry official said.
"Barring any external catastrophic events such as a euro zone meltdown with its contagion effects on the US and Asia, we are optimistic regarding the continuing growth of the life insurance industry in 2012," Mayo Jose Ongsingco, Philippine Life Insurance Association (PLIA) immediate past president, said.
"We are projecting to sustain the 2011 growth in 2012," Ongsingco, who is also Insular Life president and chief operating officer, said.
Ongsingco said that total premiums could have grown to around 20 percent in 2011 compared with the previous year.
"This will be driven by an estimated growth in new business premiums of around 40 percent year on year," Ongsingco said.
The official 2011 figures are yet to be disclosed.
Ongsingco said that some of the factors that would influence the industry’s growth this year would include the same macroeconomic drivers last year. In 2011, the services sector was the main driver of growth.
He added that the Public-Private Partnership program’s "trickle-down effects," benign inflation, and a possible credit upgrade for the Philippines later this year will also positively affect the industry’s growth.
"Micro insurance, the expansion of the mandatory migrant workers insurance and the implementation of the PERA (Personal Equity and Retirement Account) initiative will add to the growth of the life industry," Ongsingco said.
"Other external events that should be watched would be the resolution of the US debt ceiling issue, the pending bill in the US congress that would curtail BPO outsourcing, and tensions in the Middle East that could disrupt oil supplies and increase prices," he said.
"Clearly, for the Philippine life insurance industry, the growth in new premiums will be mostly attributed to investment-linked product sales and will be exemplified by bank-generated production," Ongsingco said.
Ongsingco also said that one of the drivers of industry growth last year was overall economic growth.
"There is a positive correlation between GDP (gross domestic product) growth and life insurance premium growth. Despite the lingering euro zone and the US debt ceiling crisis, the Philippine GDP is expected to still grow by around 4.7 percent in 2011 although lower than 2010’s 7.6 percent GDP growth," Ongsingco said.
The Philippines’ GDP growth rate for 2011 is yet to be announced by the National Statistical Coordination Board.
The latest data from the NSCB shows, however, that the Philippine economy grew 3.6 percent in the first three quarters of the previous year.
This is less than half the 8.2 percent growth in the first nine months of 2010 and also below the government’s 4.5 to 5.5 percent growth outlook for 2011.
This year, the government expects the Philippine economy to grow 5 to 6 percent.
"The system was also very liquid with P1.6 trillion in SDAs (special deposit accounts). Some of this excess liquidity was channeled to investment-linked life insurance products," he said.
Ongsingco said that other notable drivers last year were overseas Filipino workers’ remittances, the growing BPO industry, and low inflation.
Earlier, Bangko Sentral governor Amando Tetangco said that remittances of OFWs for January to October 2011 reached $16.5 billion, a year-on-year growth of 7 percent.
Tetangco expects full-year remittances in 2011 to amount to $20.1 billion.
"For 2012, the forecast is $21.1 (billion), there will be a 5 percent growth," Tetangco said.
Inflation in 2011 was 4.8 percent, which is within the government’s 3 percent to 5 percent target.
In 2010, total life insurance premiums grew 23.56 percent to P70.727 billion. The first-year premiums, meanwhile, grew 59.38 percent to P34.28 billion.
The top five insurance companies in 2010 in terms of premium income performance were Philam Life, P11.255 billion, 16 percent of total; Sun Life, P10.63 billion, 15 percent; Philippine AXA Life, P8.36 billion, 11.8 percent; Pru Life UK, P7.36 billion, 10.4 percent; and Insular Life, P7.13 billion, 10.1 percent.
In terms of first-year premiums, the top five were Philippine AXA, P6.64 billion, 19.4 percent of total; Pru Life UK, P5.23 billion, 15.3 percent; BPI-Philam, P4.56 billion, 13.3 percent; Insular Life, P3.27 billion, 9.5 percent; and Philam Life, P2.7 billion, 7.8 percent.
The industry’s penetration rate in 2010 was only 13 percent, but Ongsingco expects this to increase as more policies are sold.
Of this rate, 10 percentage points is covered by group life insurance, while only 3 percentage points is covered by individual life insurance.
"Micro insurance, compulsory migrant workers insurance and the sale of life insurance policies as a PERA-qualified product will definitely increase the penetration rate," he said.
Ongsingco noted that micro insurance in particular will definitely improve the penetration rate as more persons will be covered by life insurance.
Micro insurance is defined by the Insurance Commission as an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events.
With most of the banks and other financial institutions centered in key areas, the Philippines is a prime spot for micro insurance and microfinance.
"The natural target markets of micro insurance are the lower-income and small individual entrepreneurs who are normally unable to access regular life insurance," Ongsingco said.
Ongsingco said that there are some life insurance companies already selling or considering micro insurance products, although the number of companies was not disclosed.
"There are however some issues to be threshed out such as in underwriting, selling and eventually, claims evaluation/settlement," he said.
"Micro insurance has been launched successfully in South America and we are studying the use of similar models for the Philippines. Moreover, BSP has allowed thrift, cooperative, and rural banks as distribution channels for micro insurance," he said.
The BSP, aiming to increase public access to needed financial services, approved in 2010 the marketing, sale and servicing of micro insurance products by rural, cooperative and thrift banks as well as other financial institutions.
Sunday, November 27, 2011
Life insurers told to form ‘critical number’ for mergers
Business World
Finance
Posted on November 24, 2011 10:41:40 PM
LIFE INSURANCE companies mulling a merger need to form a “critical number” to secure the approval of the Insurance Commission (IC).
“Five insurers have already signified interest to merge,” Insurance Commissioner Emmanuel F. Dooc said in an interview yesterday, although he declined to identify the parties involved.
“We told them to come up with a critical number so they can better pool their resources. The ideal number for the merger is eight to 10 firms,” he added.
Talks of a merger among life insurers began last month, as smaller firms face higher capitalization requirements.
The IC has mandated all insurers to have a minimum paid-up capital of P175 million by the end of this year, increasing to P250 million by the end of next year.
The regulator is also eyeing a further hike in their capitalization to P750 million to P1 billion by the end of the Aquino administration in 2016.
“I don’t think many of the small companies can comply,” Mr. Dooc said.
But even the larger players hesitate when it comes to a merger, as some are family-owned or closely-held, and the owners do not want to let go their businesses, he added.
Some insurers also enjoy niche businesses that they will have to give up in a merger as products and services will have to be pooled in the surviving company, Mr. Dooc said.
Nevertheless, the IC is holding talks with the boards of insurers to ask them to consider a merger. It has also reiterated to the companies that the capitalization requirements will be implemented as scheduled.
“Whatever happens, the proposed merger must be finalized by next June, in time for the issuance of the CA (certificate of authority) to licensed insurance companies,” Mr. Dooc said.
There are currently 30 life insurance companies licensed to operate for 2011 to 2012, down from last year’s 34. -- Diane Claire J. Jiao
Finance
Posted on November 24, 2011 10:41:40 PM
LIFE INSURANCE companies mulling a merger need to form a “critical number” to secure the approval of the Insurance Commission (IC).
“Five insurers have already signified interest to merge,” Insurance Commissioner Emmanuel F. Dooc said in an interview yesterday, although he declined to identify the parties involved.
“We told them to come up with a critical number so they can better pool their resources. The ideal number for the merger is eight to 10 firms,” he added.
Talks of a merger among life insurers began last month, as smaller firms face higher capitalization requirements.
The IC has mandated all insurers to have a minimum paid-up capital of P175 million by the end of this year, increasing to P250 million by the end of next year.
The regulator is also eyeing a further hike in their capitalization to P750 million to P1 billion by the end of the Aquino administration in 2016.
“I don’t think many of the small companies can comply,” Mr. Dooc said.
But even the larger players hesitate when it comes to a merger, as some are family-owned or closely-held, and the owners do not want to let go their businesses, he added.
Some insurers also enjoy niche businesses that they will have to give up in a merger as products and services will have to be pooled in the surviving company, Mr. Dooc said.
Nevertheless, the IC is holding talks with the boards of insurers to ask them to consider a merger. It has also reiterated to the companies that the capitalization requirements will be implemented as scheduled.
“Whatever happens, the proposed merger must be finalized by next June, in time for the issuance of the CA (certificate of authority) to licensed insurance companies,” Mr. Dooc said.
There are currently 30 life insurance companies licensed to operate for 2011 to 2012, down from last year’s 34. -- Diane Claire J. Jiao
Tuesday, November 15, 2011
Manulife eyes micro insurance
Malaya Business Insight
BY Angela Lorraine Celis
November 10, 2011
AFTER the Insurance Commission approves its proposal, Manulife Philippines, an American firm, will start selling what it calls micro insurance specifically for the low income group.
The proposed product will have life cover value ranging from P10,000 to P20,000, according to Indren Naidoo, president and chief executive of Manulife. He declined to specify the premium rate but declared that the cover is valid for as short as a month to three months.
As is the practice, the insured is paid double the value of the cover if he dies in an accident.
"We’re hoping to get approval from the regulator this month," Indren Naidoo said.
"After we get the approval, we will sign up our first contract in Davao. We want to keep our promise that we will sign up our first client before the year is out," Naidoo said.
Naidoo added Manulife expects to penetrate the market that rarely has access to insurance products.
Based on government data, the penetration rate for life insurance in the Philippines was only 13 percent as of 2010.
"Part of our overall obligation is to expand life insurance for the less fortunate," Naidoo said.
The initial targets of the company’s micro insurance product are Cebu and Davao. Eventually, Manulife will move to other areas.
Naidoo also announced yesterday that as of end-September, Manulife Philippines’ total premiums had grown around 20 percent.
"The reason for our success is really the expansion of our agency network, particularly in … Davao, Cebu, Baguio, and more recently in Iligan and in Quezon City," Naidoo said.
"We’re really happy that we’re a large sales force of 3,000 agents, growing around 31 percent over the same period last year. That shows that our expansion strategy is working," he explained.
Manulife Philippines’ total new business for the first nine months of 2011 was 54 percent higher than for the same period last year.
"We’re very happy with that, particularly when you look at the half year, when the market was growing only 29 percent. So we’re extremely happy with the way we’re growing," Naidoo said.
BY Angela Lorraine Celis
November 10, 2011
AFTER the Insurance Commission approves its proposal, Manulife Philippines, an American firm, will start selling what it calls micro insurance specifically for the low income group.
The proposed product will have life cover value ranging from P10,000 to P20,000, according to Indren Naidoo, president and chief executive of Manulife. He declined to specify the premium rate but declared that the cover is valid for as short as a month to three months.
As is the practice, the insured is paid double the value of the cover if he dies in an accident.
"We’re hoping to get approval from the regulator this month," Indren Naidoo said.
"After we get the approval, we will sign up our first contract in Davao. We want to keep our promise that we will sign up our first client before the year is out," Naidoo said.
Naidoo added Manulife expects to penetrate the market that rarely has access to insurance products.
Based on government data, the penetration rate for life insurance in the Philippines was only 13 percent as of 2010.
"Part of our overall obligation is to expand life insurance for the less fortunate," Naidoo said.
The initial targets of the company’s micro insurance product are Cebu and Davao. Eventually, Manulife will move to other areas.
Naidoo also announced yesterday that as of end-September, Manulife Philippines’ total premiums had grown around 20 percent.
"The reason for our success is really the expansion of our agency network, particularly in … Davao, Cebu, Baguio, and more recently in Iligan and in Quezon City," Naidoo said.
"We’re really happy that we’re a large sales force of 3,000 agents, growing around 31 percent over the same period last year. That shows that our expansion strategy is working," he explained.
Manulife Philippines’ total new business for the first nine months of 2011 was 54 percent higher than for the same period last year.
"We’re very happy with that, particularly when you look at the half year, when the market was growing only 29 percent. So we’re extremely happy with the way we’re growing," Naidoo said.
Wednesday, November 9, 2011
Philippines to offer microfinance record
Business World
Top Story
Posted on November 09, 2011 12:24:47 AM
OFFICIALS will present the Philippines’ microfinance experience during this week’s Asia-Pacific Economic Cooperation (APEC) meetings in preparation for the creation of a financial inclusion strategy to be adopted by the body’s member economies.
“The Philippines is taking an active role in the APEC Economic Leaders’ Meeting. We have been asked to present the developments in our microfinance initiatives because we are very much advanced compared to other countries,” Finance Undersecretary Rosalia V. de Leon yesterday said in a telephone interview.
The presentation will illustrate the country’s microfinance policies and regulatory regime. These will also be used as a reference as the APEC drafts its National Strategy for Financial Inclusion for its 21 member economies.
“Financial inclusion is actually an initiative of the United States in APEC, but it saw that the Philippines is advanced in that perspective,” Ms. de Leon said.
The APEC Financial Inclusion Initiative aims to encourage countries to increase the poor’s access to affordable financial services, such as savings, payment, credit and insurance.
The Philippines devised a National Strategy for Microfinance as early as 1998 to institutionalize the provision of small loans to the poor to jumpstart entrepreneurial projects.
This paved the way for the establishment of wholesale microfinance initiatives, providing funding for institutions such as rural banks, nongovernment organizations and cooperatives.
The private sector, for its part, is responsible for retail microfinance or extending credit directly to borrowers from the lower-income sector to help alleviate poverty.
The government released a total of P168.693 billion in microfinance loans from 2001 to 2009 to nearly 7.14 million borrowers. A separate P82.53 billion was also extended from 2004 to 2009 to create 2.83 million jobs.
The Philippine Development Plan 2011-2016, the economic blueprint of the country under the Aquino administration, identifies microfinance as one of the strategies to build a resilient and inclusive financial sector.
Among the priorities are microinsurance, which provides affordable risk protection against financial distress caused by accidents, death and natural catastrophes. The plan also champions the Credit Surety Fund, a facility from which cooperatives can source funding for micro, small and medium enterprises.
The APEC’s annual meeting is being held this year in Honolulu, Hawaii. Preliminary discussions are already being staged and the event will culminate in a leaders’ summit on Sunday.
APEC has 21 member economies which account for about 40% of the worldís population, approximately 54% of world gross domestic product and about 44% of world trade.
Top Story
Posted on November 09, 2011 12:24:47 AM
OFFICIALS will present the Philippines’ microfinance experience during this week’s Asia-Pacific Economic Cooperation (APEC) meetings in preparation for the creation of a financial inclusion strategy to be adopted by the body’s member economies.
“The Philippines is taking an active role in the APEC Economic Leaders’ Meeting. We have been asked to present the developments in our microfinance initiatives because we are very much advanced compared to other countries,” Finance Undersecretary Rosalia V. de Leon yesterday said in a telephone interview.
The presentation will illustrate the country’s microfinance policies and regulatory regime. These will also be used as a reference as the APEC drafts its National Strategy for Financial Inclusion for its 21 member economies.
“Financial inclusion is actually an initiative of the United States in APEC, but it saw that the Philippines is advanced in that perspective,” Ms. de Leon said.
The APEC Financial Inclusion Initiative aims to encourage countries to increase the poor’s access to affordable financial services, such as savings, payment, credit and insurance.
The Philippines devised a National Strategy for Microfinance as early as 1998 to institutionalize the provision of small loans to the poor to jumpstart entrepreneurial projects.
This paved the way for the establishment of wholesale microfinance initiatives, providing funding for institutions such as rural banks, nongovernment organizations and cooperatives.
The private sector, for its part, is responsible for retail microfinance or extending credit directly to borrowers from the lower-income sector to help alleviate poverty.
The government released a total of P168.693 billion in microfinance loans from 2001 to 2009 to nearly 7.14 million borrowers. A separate P82.53 billion was also extended from 2004 to 2009 to create 2.83 million jobs.
The Philippine Development Plan 2011-2016, the economic blueprint of the country under the Aquino administration, identifies microfinance as one of the strategies to build a resilient and inclusive financial sector.
Among the priorities are microinsurance, which provides affordable risk protection against financial distress caused by accidents, death and natural catastrophes. The plan also champions the Credit Surety Fund, a facility from which cooperatives can source funding for micro, small and medium enterprises.
The APEC’s annual meeting is being held this year in Honolulu, Hawaii. Preliminary discussions are already being staged and the event will culminate in a leaders’ summit on Sunday.
APEC has 21 member economies which account for about 40% of the worldís population, approximately 54% of world gross domestic product and about 44% of world trade.
Saturday, November 5, 2011
BRAZIL HOSTS 7TH INTERNATIONAL MICROINSURANCE CONFERENCE
Event will gather over 400 experts and worldwide delegates to push issues forward
Approximately 135 million people in developing countries already use microinsurance as a means of managing risk for the poorer social classes, according to a Lloyd’s of London report, and this number is only going to grow. In Brazil, the situation is no different and this line of insurance will play a key role in reducing the vulnerability of the low-income households. This issue will be one of many debated topics during the 7th International Microinsurance Conference, which will place from November 8th to 10th in the Sheraton Leblon Hotel, in Rio de Janeiro, Brazil.
The already confirmed participants are as follows: the Mayor of the State of Rio de Janeiro, Sérgio Cabral; the Chairman of Munich Re Foundation, Thomas Loster; the Chair of Microinsurance Network and ILO’s Microinsurance Innovation Facility, Craig Churchill; the Superintendent of Susep (Superintendence of Private Insurance), Luciano Portal Santanna; and the President of CNseg (National Confederation of General Insurance Companies, Social Security and Life, Complementary Health and Capitalization), Jorge Hilário Gouvêa Vieira.
The event will bring together more than 400 delegates and experts from over 50 countries to discuss challenges and opportunities in microinsurance, while also focusing on lessons learnt and emerging issues. Organised by Munich Re Foundation and Microinsurance Network, the 7th International Microinsurance Conference will be supported by the Brazilian Confederation of Insurers (CNseg), the Superintendence of Private Insurance (Susep), GIZ/BMZ and Georgia State University.
With 22 sessions and over 70 speakers addressing key questions in the field, the conference represents the largest gathering of microinsurance experts in the world. The issues to be discussed during the conference include an economic analysis of market opportunities and barriers, national and regional strategies for microinsurance development in relation to various parts of the globe, and innovative approaches that improve microinsurance distribution.
“As a host country Brazil is a perfect fit for the 7th International Microinsurance Conference,” said Dirk Reinhard, Vice Chairman of Munich Re Foundation and Chairman of the Conference Steering Committee. “The country is striving to improve access to insurance for the poor through a variety of avenues. With around one fifth of the population in Brazil living around or below the poverty line, Brazil’s impressive economic growth over the past decade, as well as a dedicated insurance industry, have put the country in a strong position to provide the poor with more effective risk management tools to break the cycle of poverty.”
The conference also marks the occasion when the Brazilian National Congress will vote on a law that will incorporate specific regulation on microinsurance activities to enhance the access to insurance for the low-income population of Brazil.
“The rising income over the last years in Brazil and the availability of credit has made the ascension of lower income groups (classes C and D) possible. Nevertheless, it is fundamental to create conditions that protect the equity of such families. Microinsurance is a lawful instrument to ascertain such accomplishments as well as to create the saving habit designed to finance education, thus indispensable to create saving habits among Brazilians” said Jorge Hilário Gouvêa Vieira, President of CNseg.
Microinsurance in Brazil and worldwide
The Microinsurance Committee of CNseg projects that the current premium percentage of the Gross Domestic Product (GDP) will increase from 3.5% to 7.5% in 2017 with the implementation of microinsurance regulation. The current estimation of microinsurance clients in Brazil is between 23 to 33 million clients according to a study by the Centre for Financial Regulation and Inclusion (Cenfri). The expectation is that over the next 20 years microinsurance in Brazil will touch close to a 100 million clients.
Data from the MicroInsurance Centre, a product development, research and advocacy institution, estimates that over the next ten years, the global microinsurance market will reach around one billion new consumers, equivalent to a third of the market potential. Climate change, population growth, urbanisation and a leveraging technological of innovations are determining factors for the expansion of this market.
According to Craig Churchill, the Chair of the Microinsurance Network, the expansion of microinsurance to protect the poor is coming from a diverse range of institutional arrangements. In the Philippines, for example, where the conference was held in 2010, the commercial insurance company, Malayan, expanded its outreach from 4.1 million to over 5 million low-income people from 2007 to 2009 by distributing cover through pawn shops, while Country Bankers Life covered 800,000 persons through rural banks. During that same period, other models also achieved significant outreach. For example, MicroEnsure, a specialised broker, facilitates the cover for 1.2 million lives, and PhilHealth’s scheme to extend social protection to workers in the informal economy covers at least 28,000 persons. However, the mutual benefit association of the NGO CARD eclipses them all, covering seven million low-income persons. “Now that we are seeing models that are successful in reaching huge numbers,” said Churchill, “we need to focus more on ensuring that the poor are actually benefiting from the cover.”
Approximately 135 million people in developing countries already use microinsurance as a means of managing risk for the poorer social classes, according to a Lloyd’s of London report, and this number is only going to grow. In Brazil, the situation is no different and this line of insurance will play a key role in reducing the vulnerability of the low-income households. This issue will be one of many debated topics during the 7th International Microinsurance Conference, which will place from November 8th to 10th in the Sheraton Leblon Hotel, in Rio de Janeiro, Brazil.
The already confirmed participants are as follows: the Mayor of the State of Rio de Janeiro, Sérgio Cabral; the Chairman of Munich Re Foundation, Thomas Loster; the Chair of Microinsurance Network and ILO’s Microinsurance Innovation Facility, Craig Churchill; the Superintendent of Susep (Superintendence of Private Insurance), Luciano Portal Santanna; and the President of CNseg (National Confederation of General Insurance Companies, Social Security and Life, Complementary Health and Capitalization), Jorge Hilário Gouvêa Vieira.
The event will bring together more than 400 delegates and experts from over 50 countries to discuss challenges and opportunities in microinsurance, while also focusing on lessons learnt and emerging issues. Organised by Munich Re Foundation and Microinsurance Network, the 7th International Microinsurance Conference will be supported by the Brazilian Confederation of Insurers (CNseg), the Superintendence of Private Insurance (Susep), GIZ/BMZ and Georgia State University.
With 22 sessions and over 70 speakers addressing key questions in the field, the conference represents the largest gathering of microinsurance experts in the world. The issues to be discussed during the conference include an economic analysis of market opportunities and barriers, national and regional strategies for microinsurance development in relation to various parts of the globe, and innovative approaches that improve microinsurance distribution.
“As a host country Brazil is a perfect fit for the 7th International Microinsurance Conference,” said Dirk Reinhard, Vice Chairman of Munich Re Foundation and Chairman of the Conference Steering Committee. “The country is striving to improve access to insurance for the poor through a variety of avenues. With around one fifth of the population in Brazil living around or below the poverty line, Brazil’s impressive economic growth over the past decade, as well as a dedicated insurance industry, have put the country in a strong position to provide the poor with more effective risk management tools to break the cycle of poverty.”
The conference also marks the occasion when the Brazilian National Congress will vote on a law that will incorporate specific regulation on microinsurance activities to enhance the access to insurance for the low-income population of Brazil.
“The rising income over the last years in Brazil and the availability of credit has made the ascension of lower income groups (classes C and D) possible. Nevertheless, it is fundamental to create conditions that protect the equity of such families. Microinsurance is a lawful instrument to ascertain such accomplishments as well as to create the saving habit designed to finance education, thus indispensable to create saving habits among Brazilians” said Jorge Hilário Gouvêa Vieira, President of CNseg.
Microinsurance in Brazil and worldwide
The Microinsurance Committee of CNseg projects that the current premium percentage of the Gross Domestic Product (GDP) will increase from 3.5% to 7.5% in 2017 with the implementation of microinsurance regulation. The current estimation of microinsurance clients in Brazil is between 23 to 33 million clients according to a study by the Centre for Financial Regulation and Inclusion (Cenfri). The expectation is that over the next 20 years microinsurance in Brazil will touch close to a 100 million clients.
Data from the MicroInsurance Centre, a product development, research and advocacy institution, estimates that over the next ten years, the global microinsurance market will reach around one billion new consumers, equivalent to a third of the market potential. Climate change, population growth, urbanisation and a leveraging technological of innovations are determining factors for the expansion of this market.
According to Craig Churchill, the Chair of the Microinsurance Network, the expansion of microinsurance to protect the poor is coming from a diverse range of institutional arrangements. In the Philippines, for example, where the conference was held in 2010, the commercial insurance company, Malayan, expanded its outreach from 4.1 million to over 5 million low-income people from 2007 to 2009 by distributing cover through pawn shops, while Country Bankers Life covered 800,000 persons through rural banks. During that same period, other models also achieved significant outreach. For example, MicroEnsure, a specialised broker, facilitates the cover for 1.2 million lives, and PhilHealth’s scheme to extend social protection to workers in the informal economy covers at least 28,000 persons. However, the mutual benefit association of the NGO CARD eclipses them all, covering seven million low-income persons. “Now that we are seeing models that are successful in reaching huge numbers,” said Churchill, “we need to focus more on ensuring that the poor are actually benefiting from the cover.”
MICROINSURANCE – A SLOW-ONSET REVOLUTION
Innovation Flash
Issue 11, November 2011
The Newsletter of the ILO’s Microinsurance Innovation Facility
The Microinsurance Network will soon become a teenager. After nearly a decade of work, we can be proud of what this group has achieved. It has facilitated the creation of organizations such as the ILO’s Microinsurance Innovation Facility and the Access to Insurance Initiative. Both these organizations have advanced research into and the development of microinsurance pilot projects and the bases for a sound regulatory environment. The 7th International Microinsurance
Conference to be held in Rio de Janeiro from 8 to 10 November 2011, hosted jointly by the
Microinsurance Network and the Munich Re Foundation, will attract five times more participants than the initial conference in 2005.
Microinsurance has brought about change in the industry. Companies such as Zurich, Swiss Re and
Allianz have created teams to find ways to enter the low-income market. MicroEnsure now serves
millions of clients. Leapfrog’s success in attracting substantial capital to be invested in microinsurance shows that access to capital is not the key issue.
Yet have we seen the big breakthrough in developing profitable microinsurance solutions that provide good client value for large numbers of clients? Perhaps not. Should we be disappointed? Clearly not!
The development of microinsurance cannot take place independently of economic development, improved healthcare and education, and political stability. Since the lack of local experts seems to be a major obstacle to development, the insurance industry needs to invest in the education and training of such experts. What the developed world took several hundred years to accomplish cannot be replicated within a decade even given all the new technology and knowledge
that is now available.
What is needed, moreover, are strategic, country-wide approaches such as the one adopted by the Philippines, in which the insurance industry, government, donors and organizations representing the clients join forces. The challenges are often too great to be met by individual players alone, and the now mature Microinsurance Network will continue its work to catalyse cooperation throughout the industry.
Dirk Reinhard
Vice Chairman, Munich Re Foundation and Member of
the Executive Committee of the Microinsurance Network
I
Issue 11, November 2011
The Newsletter of the ILO’s Microinsurance Innovation Facility
The Microinsurance Network will soon become a teenager. After nearly a decade of work, we can be proud of what this group has achieved. It has facilitated the creation of organizations such as the ILO’s Microinsurance Innovation Facility and the Access to Insurance Initiative. Both these organizations have advanced research into and the development of microinsurance pilot projects and the bases for a sound regulatory environment. The 7th International Microinsurance
Conference to be held in Rio de Janeiro from 8 to 10 November 2011, hosted jointly by the
Microinsurance Network and the Munich Re Foundation, will attract five times more participants than the initial conference in 2005.
Microinsurance has brought about change in the industry. Companies such as Zurich, Swiss Re and
Allianz have created teams to find ways to enter the low-income market. MicroEnsure now serves
millions of clients. Leapfrog’s success in attracting substantial capital to be invested in microinsurance shows that access to capital is not the key issue.
Yet have we seen the big breakthrough in developing profitable microinsurance solutions that provide good client value for large numbers of clients? Perhaps not. Should we be disappointed? Clearly not!
The development of microinsurance cannot take place independently of economic development, improved healthcare and education, and political stability. Since the lack of local experts seems to be a major obstacle to development, the insurance industry needs to invest in the education and training of such experts. What the developed world took several hundred years to accomplish cannot be replicated within a decade even given all the new technology and knowledge
that is now available.
What is needed, moreover, are strategic, country-wide approaches such as the one adopted by the Philippines, in which the insurance industry, government, donors and organizations representing the clients join forces. The challenges are often too great to be met by individual players alone, and the now mature Microinsurance Network will continue its work to catalyse cooperation throughout the industry.
Dirk Reinhard
Vice Chairman, Munich Re Foundation and Member of
the Executive Committee of the Microinsurance Network
I
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