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
Wednesday, March 31, 2010
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.
Saturday, February 27, 2010
Tuesday, February 16, 2010
Rural banks welcome microinsurance
(The Philippine Star) Updated February 16, 2010 12:00 AM
MANILA, Philippines - The Rural Bankers Association of the Philippines (RBAP) and the Microenterprises Access to Banking Services (MABS) program has expressed its support for initiatives to introduce microinsurance in the country.
Both have also started working with other groups in the insurance industry to support the National Strategy on Microinsurance formally launched last month. These include technical assistance and training for insurance providers in developing and enhancing the quality of microinsurance products and services in the country.
As part of this initiative, RBAP-MABS, USAID, MICRA/Philippines and Mercy Corps MAXIS also held a workshop last Feb. 1-3 at the Asian Institute of Management (AIM) in Makati City entitled “Developing Successful Microinsurance Products.”
RBAP president Joseph Omar Andaya said the event dovetails with the government’s efforts towards developing the Philippines as the microinsurance capital of Asia.
“It (the event) proved to be a fitting follow-through to the recent launching of the National Regulatory Framework and National Strategy for Microinsurance,” Andaya added.
RBAP has actively been advocating for member rural banks to eventually partner with private local insurance companies to provide needed insurance services for their microfinance clients.
Formulation of the strategy and its framework involved the Department of Finance, the Insurance Commission, the National Credit Council, other public and private stakeholders, as well as international agencies.
Aimed at enhancing insurers’ skills in product development, service delivery and marketing, the workshop was participated in by AA International, Country Bankers Life, CocoLife, Malayan Insurance, MicroEnsure Philippines, Philippine Prudential Life and Pioneer Life, mutual benefit associations or MBAs including TSPI, ASKI, RBTI and CARD.
Taking part in the event were representatives of GTZ-German Technical Cooperation, USAID, the Philippine Life Insurance Association (PLIA) and Coop Life Insurance and Mutual Benefit Services (CLIMBS).
The training workshop is considered as the first of its kind in the Philippines and was conducted by Michael McCord, senior microinsurance specialist and president of the Microinsurance Centre of USA. McCord has been conducting a series of meetings with the country’s insurance industry stakeholders in support of RBAP-MABS and MICRA’s efforts in expanding microinsurance services in the Philippines.
MANILA, Philippines - The Rural Bankers Association of the Philippines (RBAP) and the Microenterprises Access to Banking Services (MABS) program has expressed its support for initiatives to introduce microinsurance in the country.
Both have also started working with other groups in the insurance industry to support the National Strategy on Microinsurance formally launched last month. These include technical assistance and training for insurance providers in developing and enhancing the quality of microinsurance products and services in the country.
As part of this initiative, RBAP-MABS, USAID, MICRA/Philippines and Mercy Corps MAXIS also held a workshop last Feb. 1-3 at the Asian Institute of Management (AIM) in Makati City entitled “Developing Successful Microinsurance Products.”
RBAP president Joseph Omar Andaya said the event dovetails with the government’s efforts towards developing the Philippines as the microinsurance capital of Asia.
“It (the event) proved to be a fitting follow-through to the recent launching of the National Regulatory Framework and National Strategy for Microinsurance,” Andaya added.
RBAP has actively been advocating for member rural banks to eventually partner with private local insurance companies to provide needed insurance services for their microfinance clients.
Formulation of the strategy and its framework involved the Department of Finance, the Insurance Commission, the National Credit Council, other public and private stakeholders, as well as international agencies.
Aimed at enhancing insurers’ skills in product development, service delivery and marketing, the workshop was participated in by AA International, Country Bankers Life, CocoLife, Malayan Insurance, MicroEnsure Philippines, Philippine Prudential Life and Pioneer Life, mutual benefit associations or MBAs including TSPI, ASKI, RBTI and CARD.
Taking part in the event were representatives of GTZ-German Technical Cooperation, USAID, the Philippine Life Insurance Association (PLIA) and Coop Life Insurance and Mutual Benefit Services (CLIMBS).
The training workshop is considered as the first of its kind in the Philippines and was conducted by Michael McCord, senior microinsurance specialist and president of the Microinsurance Centre of USA. McCord has been conducting a series of meetings with the country’s insurance industry stakeholders in support of RBAP-MABS and MICRA’s efforts in expanding microinsurance services in the Philippines.
Monday, February 15, 2010
BSP okays microinsurance sales - Business World Feb. 15, 2010
THE POOR may now buy micro-insurance from rural, cooperative and thrift banks after these institutions were green-lighted by the central bank to serve as distributors.
In a statement issued last Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board the day before had "approved ... the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks."
These banks, the BSP added, "are ideal insurance distribution channels as they are the trusted financial institutions in the countryside and have a deeper knowledge and understanding of the low-income market."
Rural banks had clamored to be allowed to sell microinsurance -- aside from the credit life insurance they normally bundle into loans -- noting the additional revenues that big banks were reaping from bancassurance, or the sale of insurance policies within their premises.
Bancassurance rules, however, stipulate that banks should own at least 5% of insurance firms -- a requirement rural banks said they could not fulfill since they were too small to invest in insurance companies.
Rural banks proposed a "partnership model" where they would partner with commercial insurers. They would act as information disseminators and collection agents of the insurers, earning a fee in the process.
The banks also said they wanted to sell microinsurance products other than credit life insurance -- which primarily protects banks from default by clients who are often poor and without collateral -- such as life, crop, and property insurance but needed the central bank’s go-ahead before they could do so.
Officials of the thrift and rural bank associations welcomed the BSP move.
Pascual M. Garcia III, president of the Chamber of Thrift banks, said in a telephone interview yesterday: "Banks will be able to provide products to more customers. These banks are heavily exposed to the micro-sector... [This] will improve penetration of the sector and improve the existing relationship."
Mr. Garcia also said the order would make microinsurance cheaper as insurance firms would not need to open branches and hire people.
Joseph Omar O. Andaya, president of the Rural Bankers Association of the Philippines (RBAP), said the BSP move would further boost lending to the agricultural sector.
"Banks will be more encouraged to lend because when you are in agribusiness, you are subject to the vagaries of nature. Microinsurance mitigates that because banks can recover what they lend, since farmers affected by natural calamities get back seed money to restart their enterprise with insurance," he said.
While the BSP has not released the rules and regulations covering the sale of micro-insurance by rural, cooperative and thrift banks, its statement said banks needed to comply with Insurance Commission rules on microinsurance and verify that insurers have "adequate consumer protection mechanisms."
Both Messrs. Garcia and Andaya could not immediately say how much the sale of microinsurance would add to their bottom line, but said the BSP’s move was significant more for its social implications.
"[Microinsurance] will serve as parachutes for those who were poor but have made good in their lives so they won’t go back to poverty," Mr. Andaya said.
"It’s not going to be a big revenue source," Mr. Garcia said. "Our organizations can provide input on the type of products... Customers will understand about risk that can damage their business and families and pick up appropriate insurance for that. This will give them better chances for recovery and help them manage risk when things happen..."
Mr. Andaya said the RBAP was already in talks with insurance firms for products that could be introduced, but said the government should consider inviting more players from abroad so the cost of microinsurance could go down. -- Don Gil K. Carreon
In a statement issued last Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board the day before had "approved ... the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks."
These banks, the BSP added, "are ideal insurance distribution channels as they are the trusted financial institutions in the countryside and have a deeper knowledge and understanding of the low-income market."
Rural banks had clamored to be allowed to sell microinsurance -- aside from the credit life insurance they normally bundle into loans -- noting the additional revenues that big banks were reaping from bancassurance, or the sale of insurance policies within their premises.
Bancassurance rules, however, stipulate that banks should own at least 5% of insurance firms -- a requirement rural banks said they could not fulfill since they were too small to invest in insurance companies.
Rural banks proposed a "partnership model" where they would partner with commercial insurers. They would act as information disseminators and collection agents of the insurers, earning a fee in the process.
The banks also said they wanted to sell microinsurance products other than credit life insurance -- which primarily protects banks from default by clients who are often poor and without collateral -- such as life, crop, and property insurance but needed the central bank’s go-ahead before they could do so.
Officials of the thrift and rural bank associations welcomed the BSP move.
Pascual M. Garcia III, president of the Chamber of Thrift banks, said in a telephone interview yesterday: "Banks will be able to provide products to more customers. These banks are heavily exposed to the micro-sector... [This] will improve penetration of the sector and improve the existing relationship."
Mr. Garcia also said the order would make microinsurance cheaper as insurance firms would not need to open branches and hire people.
Joseph Omar O. Andaya, president of the Rural Bankers Association of the Philippines (RBAP), said the BSP move would further boost lending to the agricultural sector.
"Banks will be more encouraged to lend because when you are in agribusiness, you are subject to the vagaries of nature. Microinsurance mitigates that because banks can recover what they lend, since farmers affected by natural calamities get back seed money to restart their enterprise with insurance," he said.
While the BSP has not released the rules and regulations covering the sale of micro-insurance by rural, cooperative and thrift banks, its statement said banks needed to comply with Insurance Commission rules on microinsurance and verify that insurers have "adequate consumer protection mechanisms."
Both Messrs. Garcia and Andaya could not immediately say how much the sale of microinsurance would add to their bottom line, but said the BSP’s move was significant more for its social implications.
"[Microinsurance] will serve as parachutes for those who were poor but have made good in their lives so they won’t go back to poverty," Mr. Andaya said.
"It’s not going to be a big revenue source," Mr. Garcia said. "Our organizations can provide input on the type of products... Customers will understand about risk that can damage their business and families and pick up appropriate insurance for that. This will give them better chances for recovery and help them manage risk when things happen..."
Mr. Andaya said the RBAP was already in talks with insurance firms for products that could be introduced, but said the government should consider inviting more players from abroad so the cost of microinsurance could go down. -- Don Gil K. Carreon
Monday, February 1, 2010
New microinsurance rules issued
Business World
Front Page
February 1, 2010
Regulators want informal schemes closed within a year
NEW RULES governing microinsurance were issued on Friday, re-laying the groundwork for the potentially multibillion-peso industry.
The Insurance Commission (IC), which came out with a new circular, also issued a separate set of rules together with two other regulators that close down informal insurance schemes. Both directives were signed on Friday during the launch of a national microinsurance strategy and regulatory framework.
The government is pushing microinsurance for the poor, noting that they risk getting poorer as a result of calamities. Given its insufficient funds, the state is pushing for the development of a private sector-driven microinsurance market.
Studies have shown that while there are formal and informal microinsurance schemes, their penetration rate among the poor is very low.
Microinsurance is distinguished for being low-cost and easy to dispense. The government conservatively estimates sales to hit P2.5 billion annually based on premiums of as low as P1 a day and a client base of seven million.
The first circular which is still unnumbered, said Joselito S. Almario, deputy executive director of the National Credit Council, "implements" the national strategy and regulatory framework and as such serves as the IC’s primary document for regulating the industry.
It amends Insurance Memorandum Circular (IMC) 9-2006 that promoted and defined microinsurance, and spelled out the responsibilities of providers.
IMC 9-2006, Mr. Almario said, was overly focused on mutual benefit associations (MBAs) -- non-profit organizations set up by teachers or government workers, for instance -- to the exclusion of other microinsurance providers.
"The government pushed for MBAs [in providing microinsurance]. But there are cooperatives that do that also," he said.
The new circular states that all insurance firms, cooperatives, and MBAs licensed by the IC may sell microinsurance products, which may consist of one type, or several products -- life, non-life and health -- bundled together.
It also requires microinsurance agents to be licensed by the IC. These agents, however, need not take the regular licensure exam but must undergo a special training program and pass a qualifying exam.
The circular also redefines microinsurance as that where the 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.
Premiums, under IMC 9-2006, were computed at 10% of the daily minimum wage rate.
The new circular retains the old one’s provision that "the maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila."
Meanwhile, Joint IC-CDA-SEC Memorandum Circular 01-2010 terminates "informal insurance" or "insurance-like schemes" and orders organizations that extend these to either partner with commercial insurers or incorporate themselves into an insurance firm, a cooperative, or MBA.
The joint circular was signed by Insurance Commissioner Eduardo T. Malinis, Securities and Exchange Commission (SEC) Chairman Fe B. Barin, and Cooperative Development Authority (CDA) Chairman Lecira V. Juarez.
"Many organizations are operating without a license," Mr. Almario said, "when the law clearly states they get a certificate of authority, essentially a license, from the Insurance Commission."
The circular cites the Insurance Code, which insists that organizations undertaking insurance activities first secure a certificate of authority from the IC, and the Cooperative Code which requires cooperatives undertaking such activities to also get an IC certificate.
There are also entities, including non-profit organizations, registered with the SEC that don’t have the authorization but are extending insurance.
Informal insurance schemes are to close in a year, and their providers may either partner with commercial insurers or encourage members to become members of MBAs or cooperatives.
They may also, within two years, organize themselves into a life or non-life insurer, cooperative, or MBA licensed by the IC.
Deputy Insurance Commissioner Vida T. Chiong said other circulars covering reportorial requirements and the required capitalization would be issued.
For BusinessWorld On-line, click here
Front Page
February 1, 2010
Regulators want informal schemes closed within a year
NEW RULES governing microinsurance were issued on Friday, re-laying the groundwork for the potentially multibillion-peso industry.
The Insurance Commission (IC), which came out with a new circular, also issued a separate set of rules together with two other regulators that close down informal insurance schemes. Both directives were signed on Friday during the launch of a national microinsurance strategy and regulatory framework.
The government is pushing microinsurance for the poor, noting that they risk getting poorer as a result of calamities. Given its insufficient funds, the state is pushing for the development of a private sector-driven microinsurance market.
Studies have shown that while there are formal and informal microinsurance schemes, their penetration rate among the poor is very low.
Microinsurance is distinguished for being low-cost and easy to dispense. The government conservatively estimates sales to hit P2.5 billion annually based on premiums of as low as P1 a day and a client base of seven million.
The first circular which is still unnumbered, said Joselito S. Almario, deputy executive director of the National Credit Council, "implements" the national strategy and regulatory framework and as such serves as the IC’s primary document for regulating the industry.
It amends Insurance Memorandum Circular (IMC) 9-2006 that promoted and defined microinsurance, and spelled out the responsibilities of providers.
IMC 9-2006, Mr. Almario said, was overly focused on mutual benefit associations (MBAs) -- non-profit organizations set up by teachers or government workers, for instance -- to the exclusion of other microinsurance providers.
"The government pushed for MBAs [in providing microinsurance]. But there are cooperatives that do that also," he said.
The new circular states that all insurance firms, cooperatives, and MBAs licensed by the IC may sell microinsurance products, which may consist of one type, or several products -- life, non-life and health -- bundled together.
It also requires microinsurance agents to be licensed by the IC. These agents, however, need not take the regular licensure exam but must undergo a special training program and pass a qualifying exam.
The circular also redefines microinsurance as that where the 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.
Premiums, under IMC 9-2006, were computed at 10% of the daily minimum wage rate.
The new circular retains the old one’s provision that "the maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila."
Meanwhile, Joint IC-CDA-SEC Memorandum Circular 01-2010 terminates "informal insurance" or "insurance-like schemes" and orders organizations that extend these to either partner with commercial insurers or incorporate themselves into an insurance firm, a cooperative, or MBA.
The joint circular was signed by Insurance Commissioner Eduardo T. Malinis, Securities and Exchange Commission (SEC) Chairman Fe B. Barin, and Cooperative Development Authority (CDA) Chairman Lecira V. Juarez.
"Many organizations are operating without a license," Mr. Almario said, "when the law clearly states they get a certificate of authority, essentially a license, from the Insurance Commission."
The circular cites the Insurance Code, which insists that organizations undertaking insurance activities first secure a certificate of authority from the IC, and the Cooperative Code which requires cooperatives undertaking such activities to also get an IC certificate.
There are also entities, including non-profit organizations, registered with the SEC that don’t have the authorization but are extending insurance.
Informal insurance schemes are to close in a year, and their providers may either partner with commercial insurers or encourage members to become members of MBAs or cooperatives.
They may also, within two years, organize themselves into a life or non-life insurer, cooperative, or MBA licensed by the IC.
Deputy Insurance Commissioner Vida T. Chiong said other circulars covering reportorial requirements and the required capitalization would be issued.
For BusinessWorld On-line, click here
Saturday, January 30, 2010
Microinsurance business formally kicks off
Business World, Finance
January 30, 2010
The government on Friday formally jumpstarted the microinsurance business, which targets the poor as clients, by launching the national strategy and regulatory framework for the industry.
Representatives from the government -- the Department of Finance, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, Cooperative Development Authority and state health insurer Philippine Health Insurance Corp. -- signed the two documents in a ceremony at the Philippine International Convention Center in Pasay City.
The national strategy and regulatory framework for microinsurance were completed by a technical working group composed of representatives of state agencies and nongovernment organizations last Nov. 13.
The government defines microinsurance as a low-cost insurance that provides the poor protection and relief against distress, misfortune or contingent event.
"We believe that promoting, supporting and advocating microinsurance is one invaluable step towards freeing our people from those chains of poverty," Finance Secretary Margarito B. Teves said in his keynote speech during the event.
The national strategy for microinsurance states the objective, the roles of the various stakeholders and the strategies to be implemented in improving access to insurance of the poor, the self-employed and their families. It also provides ways to encourage those who are providing informal insurance and insurance-like activities to register and to comply with existing regulations set by the government.
The regulatory framework specifies that commercial life and non-life insurance firms, mutual benefit associations, cooperative insurance societies, pre-need firms and health maintenance organizations, among others, which sell microinsurance, should be registered and licensed by the state.
Finance Undersecretary Gil S. Beltran said that this will eliminate "fly by night" microinsurance firms and eradicate "scams."
"We will try to avoid these by coming up with a uniform set of rules to be followed by regulators and microinsurance firms. And nobody will escape the net," he said in an interview. -- BUA
January 30, 2010
The government on Friday formally jumpstarted the microinsurance business, which targets the poor as clients, by launching the national strategy and regulatory framework for the industry.
Representatives from the government -- the Department of Finance, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, Insurance Commission, Cooperative Development Authority and state health insurer Philippine Health Insurance Corp. -- signed the two documents in a ceremony at the Philippine International Convention Center in Pasay City.
The national strategy and regulatory framework for microinsurance were completed by a technical working group composed of representatives of state agencies and nongovernment organizations last Nov. 13.
The government defines microinsurance as a low-cost insurance that provides the poor protection and relief against distress, misfortune or contingent event.
"We believe that promoting, supporting and advocating microinsurance is one invaluable step towards freeing our people from those chains of poverty," Finance Secretary Margarito B. Teves said in his keynote speech during the event.
The national strategy for microinsurance states the objective, the roles of the various stakeholders and the strategies to be implemented in improving access to insurance of the poor, the self-employed and their families. It also provides ways to encourage those who are providing informal insurance and insurance-like activities to register and to comply with existing regulations set by the government.
The regulatory framework specifies that commercial life and non-life insurance firms, mutual benefit associations, cooperative insurance societies, pre-need firms and health maintenance organizations, among others, which sell microinsurance, should be registered and licensed by the state.
Finance Undersecretary Gil S. Beltran said that this will eliminate "fly by night" microinsurance firms and eradicate "scams."
"We will try to avoid these by coming up with a uniform set of rules to be followed by regulators and microinsurance firms. And nobody will escape the net," he said in an interview. -- BUA
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