Low-income Filipinos can rely on microinsurance when disaster strikes

Manila Times
February 18, 2015 8:42 pm

THE domestic insurance industry posted a stellar growth performance in the past year, registering an estimated 28 million Filipinos protected by microinsurance.

Microinsurance has proven to be a great tool in promoting affordable security in the Philippines with its significant contribution to the increase in insurance penetration, which hit 28 percent, one of the highest rates in the Asian region.

The recent calamities that shook the country highlighted the importance of having insurance protection, especially for the poor who are the most vulnerable. When Super Typhoon Yolanda struck the country in November 2013, over half a billion pesos in microinsurance claims were settled and given as benefits to families to cover calamity assistance for damaged crops, hospitalization and death.

Now that its wide-ranging impact is known, microinsurance is currently seen as an important component of risk management, complementing the government’s disaster prevention and rehabilitation program.

To support the industry’s growth, providers are encouraged to look into designing more products that will provide comprehensive coverage to the lives and livelihood of low-income people. One example of this is crop insurance offered by public insurance agencies in partnership with private providers.

There is a need to develop such products to cushion the effects on the low-income segment whose livelihoods and income sources are threatened when calamities strike. When such losses occur, the ability of an individual to bounce back from a calamity is severely affected, thus also affecting the productivity of their segment in the broader economy.

Delivery channels like the rural banks, cooperatives and other microfinance institutions should respond to these needs by providing access to a product that will provide security over losses at an affordable rate. Support and development institutions like industry associations, donors and other development-oriented agencies, on the other hand, should do their part by providing assistance in building the capabilities of various delivery channels to provide quality microinsurance services to the low-income sector.

For its part, the Rural Bankers Association of the Philippines is continuously providing training and licensing and other forms of technical assistance to its member banks. To date, a total of 223 rural banks and over 500 staff have already undergone microinsurance training provided by the RBAP’s training arm, the Rural Bankers Research and Development Association.

Bank staff who completed the course are qualified to act as their institution’s soliciting agent, which is part of the program to empower institutions as access points for clients to avail of microinsurance.

With continuous partnership between the private and the public sector, microinsurance will soon emerge to be a vital component of disaster risk management, benefiting more Filipino lives in the coming years.

PH Microinsurance: Challenging the Climate, Responding to Change

Watch how Microinsurance in the Philippines helped the victims of Typhoon Haiyan (Yolanda).  https://www.youtube.com/watch?v=MjICODBAudE&feature=youtu.be

32M Filipinos have insurance

Manila Standard Today
By Jennifer Ambanta | Jan. 23, 2015 at 11:40pm

One in every three Filipinos is now covered by insurance, following the growth of the micro-insurance industry, the Insurance Commission said Friday.

"About 32 million Filipinos are now insured, not including those under the Social Security System and the Government Service Insurance System," Insurance Commissioner Emmanuel Dooc said at the sidelines of the 66th anniversary of the agency.

Dooc said a large part of the insured population was serviced by the micro-insurance industry with 28 million individuals.

"As of end-2014 micro insurance have reached 28 million Filipinos," Dooc said.

He said his personal target was to increase the insurance penetration rate in the country to 50 percent, involving 50 million Filipinos, by the end of his term in 2019.

"Before my term ends in 2019, I hope we reach out to that much people," he said.

Dooc said the goal of the Insurance Commission was to bring financial inclusion to more Filipinos, especially those in remote parts of the country.

The insurance industry ended the third quarter of 2014 with total assets of P1.043 trillion and total premiums of P132 billion.

Total investments reached P800 billion, half of which were placed in government securities while total benefits amounted to P52.3 billion.

Dooc said the insurance industry was fast becoming a pillar of the economy as it expanded over the past five years.

"Despite mergers and consolidation as a result of capital buildup and strict implementation of law, the industry continues to thrive," he said.

Data showed that from an all-time high of 130 insurance companies, the total number of industry players dropped to 99 this year.

The Insurance Commission said earlier it expected mergers and consolidation to continue in the coming years, because of the Association of Southeast Asian Economic Integration.

The Insurance Commission celebrated its 66th anniversary on Friday, with theme "Alleviating Poverty Through Inclusive Insurance Protection.”

EIU names Phl number 1 in microfinance in Asia

By Ted P. Torres (The Philippine Star) |
Updated December 8, 2014 - 12:00am

MANILA, Philippines - The Economist Intelligence Unit (EIU) has ranked the Philippines as microfinance leader in Asia, and third best globally in a study that covered 55 countries.

Global microfinance leader is Peru, followed by Colombia. In fourth is Chile and fifth is India (second best in Asia).

The Philippines was second best in 2010, and number one globally in 2009, the first time the report was conducted.

The EIU report also noted the Philippines was ranked among the leaders in the regulation and promotion of micro-insurance. The other nations mentioned were Colombia, India and Mexico.

The strength of the top three, according to the report, lies in the presence of a financial-inclusion strategy.

“The Philippine government’s multi-year development plan includes a financial-inclusion strategy with specific commitments, many of which have been implemented, including financial-education initiatives,” EIU said.

The report noted that one of the key strengths of the Philippines is that the Bangko Sentral ng Pilipinas (BSP) is the first monetary regulator to form a body specifically for financial inclusiveness. The National Strategy for Microfinance, formed in 1997, preceded the Inclusive Finance Advocacy Staff.

In close cooperation with other agencies, the BSP also encourages a strategy that offers micro-insurance regulations to facilitate the provision of life, health and other insurance products to low-income populations.

However, the report expressed concern that most of the providers of micro-credit and microinsurance are situated in populous and urbanized areas. Only 26.6 percent of the adult population had deposit accounts, majority of which are also in urbanized areas.

Other major challenges highlighted by the report include the weak and fragile delivery and implementation.

Another stumbling block is the country’s archipelagic situation made up of more than 7,000 islands, where huge financial, security and logistical challenges exist in reaching the poor and unbanked.

The EIU said that in the country’s largest province, Mindanao, coverage for microfinance is negligible. Non-regulated financial institutions, namely, co- operatives, are not well supervised and engage in deceptive practices and charge high interest rates. Over-indebtedness is also an issue with multiple financing,

 “Financial literacy continues to be a problem, as many Filipinos do not understand or value the importance of savings,” the report added.

The EIU is an independent business within The Economist Group providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports. The group also publishes the prestigious The Economist, a business journal.

Phl leads East Asia in microinsurance

By Ted P. Torres
The Philippine Star
Updated November 25, 2014

MANILA, Philippines - Roughly 27.96 million Filipinos had microinsurance coverage in 2013, among the highest in the East Asian region, according to the Insurance Commission (IC).

Likewise, the penetration ratio (as a percentage of population) rose from 7.22 percent in 2009 to 28.62 percent last year.

The Philippines had the highest microinsurance penetration ratio and the second highest penetration, based on a 2013 study commissioned by the Munich Re Foundation.

The Philippines recorded a 20.6-percent penetration ratio or the highest among the top 10 nations covered by the study.

It was followed by the 13.9 percent in Thailand, nine percent for India, 6.1 percent for Bangladesh, and 3.7 percent for Malaysia. The rest of the countries based on ranking are Pakistan, Cambodia, East Timor, Jordan and Nepal.

In terms of penetration, India was tops with 111.1 million with microinsurance policies followed by the Philippines with 19.9 million policies.

China came in third with 11.9 million, Bangladesh with 9.4 million, and Thailand with 9.3 million. The rest of the field are: Pakistan, Indonesia, Malaysia, Nepal and Cambodia.

Before 2010, mutual benefit associations (MBAs), with a few exceptions among the larger life insurers, sold the low-cost informal insurance products.

But the government’s microinsurance program, with all its regulatory and actuarial improvements, changed all that.

At the start of 2013, there were 80 microinsurance products – 54 are classified as life products and 26 as non-life products – approved by the IC.

Offering microinsurance products are 19 insurance companies and 17 MBAs with approved microinsurance products.

In fact, 14 of the 17 MBAs are focused solely on IC-approved microinsurance products. About two million MBA members have microinsurance products.

Already, the program benefited more than 95,000 clients/beneficiaries, with payments reaching P1.87 billion in death and disability benefits.

IC commissioner Emmanuel F. Dooc said that the numbers are expected to be greater this year, with the increase in the number of participants coming the private sector.

Dooc said that the rapid entry of financial but non-insurance institutions, such Cebuana Lhuillier, in the microinsurance environment would dramatically increase the number of individual coverage.

‘They have one of the largest distribution networks today,” he added.

Philippines ranks 3rd in global EIU financial inclusion ranking

Business, Manila Bulleting
Lee C. Chipongian
November 13, 2014

The Philippines is one of the top three countries in the world that have the most effective financial inclusion programs, based on the “Global Microscope 2014” index of the Economist Intelligence Unit (EIU) which assessed the “enabling environment” of 55 countries.

It is an improvement from the 2013’s ranking which listed the country as fourth in the world.

“Peru, Colombia and the Philippines demonstrate the most conducive environments for financial inclusion,” the report said. The Philippines improved its score to 79 (out of 100) from last year’s 67.9, trailing behind to Peru’s 87 and Colombia’s 85.

EIU highlighted the Philippines’ leadership in the micro-insurance regulation and the government’s committed and documented financial-inclusion strategy or programs. “The Philippines government’s multi-year development plan includes a financial-inclusion strategy with specific commitments, many of which have been implemented, including financial-education initiatives,” said EIU.

The report also discussed the country’s challenges to ensure long-term success such as in implementation. “While the Philippines is at the forefront of promoting and creating an enabling environment for financial inclusion, some sector experts believe that delivery and implementation are weak.”

The fragmented economic sectors are a significant financial, security and logistical challenges, in a country of 7,000 islands. The EIU said the concentration of microfinance institutions (MFIs) in urban and semi-urban areas with larger populations leads to banks charging higher interest rates on loans. “Non-regulated financial institutions, namely, co-operatives, are not well supervised and engage in deceptive practices and charge high interest rates.”

There are also areas that MFIs are too few and scarce, specifically in Mindanao where EIU said coverage for microfinance is “negligible.” The report also pointed out the multiple financing problems or over-indebtedness, however they also acknowledged efforts to improve on this with the establishment of a credit data bureau or the Credit Information  Corp. which should be in place by the end of this year. The Credit Information System Act was legislated in 2008.

“Lastly, financial literacy continues to be a problem, as many Filipinos do not understand or value the importance of savings,” said EIU. The report cited a World Bank data that only 26.6 percent of the adult population has a deposit account.

The EIU said the Bangko Sentral ng Pilipinas’ (BSP) efforts to improve and promote financial literacy as part of its financial inclusion agenda have gained traction over the years.

It noted that the BSP was the first central bank in the world to have an “Inclusive Finance Advocacy Staff” for financial inclusion.

“The BSP continues to promote an enabling environment for financial inclusion through the issuance of various regulations and circulars, which seek to encourage new entrants of financial-services providers and products that serve the poor, while also ensuring the safe provision of such services,” said EIU.

In May this year, the central bank approved a stronger consumer protection framework which includes a separate system that will be implemented by 2016.

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