Philippines: Microinsurance makes headway

By Ronnel W. Domingo, Philippine Daily Inquirer

Microinsurance in the Philippines could become as successful as microcredit as it is expected to gain ground amid increasing number of providers and rising demand, Finance Undersecretary Gil S. Beltran said Tuesday.

According to a report that Beltran prepared, there has been an increase in the number of microinsurance products, with some coming from established insurance companies.

Other providers of low-premium insurance include cooperative insurance societies, mutual benefit associations, pre-need companies and health maintenance organizations.

Beltran said that in the Philippines—considered to be one of the more developed microinsurance markets in the world—products are being delivered through nontraditional means by partnerships with microfinancing institutions, as well as through microinsurance agents and brokers.

“Compared to commercial (mainstream insurance) products, microinsurance products are affordable, involve simple contracts, have relaxed terms and conditions,” he said. “Some providers even offer policies that are tailor-fit to the buyers’ needs.”

Also, lower capitalization requirements for microinsurance providers as well as relaxed licensing requirements for agents are expected to foster an enabling environment for the business, Beltran said.

“To ensure greater client protection, the government is working with stakeholders toward the formalization of informal insurance providers, institution of mechanisms for redress and grievance, and encouragement of the use of alternative means to resolve disputes,” he added.

Philippines: Rural banks get microinsurance licenses

From The Philippine Star

Seven rural banks have received their licenses to offer microinsurance while another 40 rural banks are currently processing their applications with the Bangko Sentral ng Pilipinas (BSP) and the Insurance Commission (IC).

This development is a direct result of an initiative to train and assist rural banks in becoming licensed and accredited microinsurance agents authorized to distribute microinsurance products and services from licensed partner insurance companies.

The Rural Bankers Research and Development Foundation Inc. (RBRDF) took the initiative under its Microinsurance Initiative. The initiative was designed to convene partners and stakeholders from the commercial insurance industry, donor institutions, project partners and government regulators that are active in the promotion of microinsurance in the country.

The RBRDF is the research and development arm of the Rural Bankers Association of the Philippines (RBAP) which in turn received the technical assistance from the United States Agency for International Development-supported RBAP-Microenterprise Access to Banking Services (MABS) program.

Since the start of 2011, 270 bank staff from 130 rural banks have been successfully been trained under the RBRDFI Basic Microinsurance course.

From the initiative, seven rural banks received their licenses to offer microinsurance with 40 more in various stages of receiving their accreditation from regulators.

Updates on the partnership between microinsurance key players, cost-efficient microinsurance service delivery, and financial literacy initiatives by the Department of Finance (DOF) National Credit Council (NCC) were also extended from the initiative through a recent summit earlier this month.

The RBAP also plans to launch their microinsurance website at microinsurance. rbap.org for all interested rural bankers to obtain up-to-date information about different products and services that they can offer in partnership with the leading insurance companies now offering microinsurance services.

Microinsurance offers the underprivileged segment of society access to cheaper insurance protection in lieu of the more extensive albeit more expensive life insurance products marketed by life insurance firms.

It is an offshoot of the microfinance movement that has swept the country and other developing countries worldwide.

Philippines: Nationwide micro-insurance roadshow jumpstarts in East Visayas

From Philippines Information Agency

TACLOBAN CITY, Leyte, Sept. 13 (PIA) –- Come September 19 – 23, the Financial Literacy Roadshow on Micro-insurance Advocacy training and seminar will be held at the Leyte Park Hotel in Tacloban City with the resounding battlecry “Magpaseguro para protektado!”

The battlecry underscores the fact that as an important social protection measure, micro-insurance is integral to the overall poverty alleviation strategy of the Filipino government.

To put this strategy into action, the Insurance Commission, in partnership with the Department of Finance – National Credit Council (DOF-NCC), and jointly supported by the German International Cooperation – Micro-insurance Innovations Program for Social Security (GIZ-MIPSS) and the Asian Development Bank-Japan Fund for Poverty Reduction (ADB-JFPR), is jumpstarting the first of its 16-region micro-insurance roadshow, anticipated to further push for the increased awareness of and appreciation for micro-insurance and risk protection.

With support from all insurance associations and other private sector institutions, the micro-insurance roadshow aims to form a corps of micro-insurance advocates from government, insurance companies and intermediaries, civil society, support organizations and donors/development partners.

These future micro-insurance advocates are envisioned to help address two causes of low insurance coverage among the low-income sector – the lack of awareness of insurance and low financial literacy level.

The roadshow begins with three-day Training on Micro-insurance Advocacy (TOMA) where future advocates will learn about the importance of risk protection and how micro-insurance can help in mitigating the effects of these risks in a low-income person’s life. Basic presentation skills were likewise taught during the training.

These skills equipped the participants with the ability to effectively deliver key messages for the promotion of micro-insurance to the general public. The last two days of the roadshow are devoted to advocacy seminars, where representatives from the public and the private sectors were invited to learn about micro-insurance.

The Enhancement of Food Security (EFOS), a project jointly funded and implemented by the GIZ, the European Commission and the Department of Agriculture also provided valuable support in the conduct of the roadshow.

EFOS is responsible in the development and pilot testing of an index-based crop insurance product called Area-Based Yield (ARBY) insurance.

Access to appropriate and affordable risk protection instruments for the low-income sector faces obstacles: unaffordable and inadequate insurance products, persistence of informal insurance schemes and low appreciation of the importance of micro-insurance.

The government, through the initiatives of the IC and its partners, continues the momentum of opportunities opened by the National Strategy for Micro-insurance and the Regulatory Framework for Micro-insurance launched in 2010.

Through enabling micro-insurance policies and regulations, there is now greater availability of life and non-life insurance products provided by commercial insurance companies, mutual benefit associations and cooperative insurance societies. It will be widely distributed through such delivery channels as microfinance institutions, pawnshops, cooperatives, and community-based organizations, among others.

In line with the Roadmap for Financial Literacy endorsed by the Philippine government in February 2011, this roadshow to be conducted by the public and private sectors is unique in that it seeks to get widespread support from all sectors of society – legislators, government regulatory agencies, national agencies, local government units, insurance providers, intermediaries, support institutions, donors/other development partners and existing and potential clients.

Ultimately, the roadshow strives for behavior change through its banner message of cooperation towards building an insurance market for the low-income sector.

The nationwide micro-insurance roadshow is scheduled to visit seven cities in Luzon, three in Visayas and six in Mindanao from 2011-2012.

By the end of this caravan, expect the slogan, “Peligrong laging nakaamba, sa Micro-insurance walang pangamba” to echo across the country. (PIA 8 with report from IC)

Philippines: Manulife eyes microinsurance in South Philippines

By Ted P. Torres, The Philippine Star

MACTAN, Cebu, Philippines — Manulife Philippines will be launching microinsurance products in Southern Philippines in the fourth quarter of the year.

“We are just waiting for the approval of the Insurance Commission (IC) to start selling microinsurance,” Indren Naidoo, Manulife Philippines president and chief executive officer, said.

The initial target will be Cebu and Davao, and subsequently move into areas outside of the cities of Davao and Cebu.

Naidoo said that they have already tied up with one microfinance institution (MFI) in Cebu and another two MFI in Davao.

The chief executive pointed out that coming out with microinsurance products was the easy part. The challenge is to get the right distribution system in place.

“MFIs are natural partners in the business of microfinance and microinsurance,” he added.

Offhand, the micro product could get a protection coverage of between P10,000 to P20,000, with double the amount if due to accidental death. The P10,000 coverage is for a one-month micro product, while the P20,000 is for a three-month product.

Most likely, it will be the first time they will get hold of such protection, the insurer added.

It also has a broad market insurance product that may cost just P15 per day with a protection coverage of P65,000, and again double in case of accidental death.

“Also, 50 percent of the premium will be returned after 10 years,” Naido said.

Microinsurance is not new to Manulife.

Manulife Financial senior vice president and regional executive for Malaysia, Philippines, Thailand and Vietnam David T. W. Wong said that they have been successful in selling microinsurance in Vietnam.

“We have already sold 100,000 microinsurance policies in Vietnam,” Wong said.

Overall, they manage over 10,000 agents in Vietnam selling all types of insurance products including microinsurance. Manulife Financial is ranked third overall in a playing field of 14, and controlling 12 percent market share.

Philippines: Manulife takes first step into microinsurance in the Philippines

From Life Insurance International

Responding to a call by the Philippines insurance regulator to make life insurance more affordable, Manulife Philippines has entered the microinsurance market with a new product, FirstProtect.

According to Manulife Philippines, monthly premiums on FirstProtect start at PHP15 ($0.35).

The product guarantees life and accident protection for 10 years with a maturity benefit equivalent to 25% of the premiums back after10 years, if the insured survives.

The policy also offers an accidental death rider under which 200% of the coverage amount is paid if the insured’s death is a result of accidental causes.

Manulife Philippines president and CEO Indren Naidoo said: “The number of Filipinos without life or accident protection is staggering, and the country’s insurance penetration rate is among the lowest in the Asia region at around 13% [of the population].”

A unit of Canadian insurer Manulife Financial, Manulife Philippines was established in 1907.

Philippines: Micro-insurance seen picking up

By Flor G. Tarriela, Manilla Bulletin

MANILA, Philippines — “We can cheat death once or twice but we cant get out of this world alive.” Tatay Andro and his wife are engaged in dress-making business.

On September 26, 2009, Andro drowned while crossing a wooden bridge somewhere in Pasig at the height of typhoon Ondoy. Last July 2010, Luningning Cruz, a mother of 4, engaged in the rag making business, was hit by a motorcycle, suffered head injury and died upon reaching the nearest hospital.

Anthony Samson, eldest in a brood of 11 children of Elenor Samson, was devastated when his parents died in an accident while doing business last January.

Under ordinary circumstances, the Batuampos, Cruzes, and Samsons would have very little savings to draw upon in order to settle funeral expenses, much less, cope with the loss of livelihood because of the untimely death of the family breadwinner.

But because they had earlier decided to participate in a micro-insurance program, their families received substantial benefits that allowed them to cope with the loss more graciously.

What is micro insurance? From the Insurance Memorandum Circular 1-2010 issued by the Insurance Commission, micro-insurance is an activity providing specific insurance, insurance like products and services that meet the needs of the low income sector for risk and relief against distress, misfortune or other contingent events.

The minimum capital requirement is P5 million. To date the Insurance Commission has approved the establishment of 16 micro insurance Mutual Benefit Association (MBAs). It has also approved 4 regular insurance companies to offer micro-insurance. The Bangko Sentral ng Pilipinas (BSP) has granted approval for rural banks, thrift banks and cooperatives to sell micro-insurance.

In the above particular cases, they had enrolled in the micro-insurance program of TSPI MBA TSPI (Tulay sa Pag-Unlad Inc.) is a Christian micro-enterprise NGO involved in micro-lending and micro-insurance. In the case of Tatay Andro, TSPI MBA awarded his family P180,000 in benefits.

Currently, Tatay Andro’s wife, Nanay Liza and their 3 children continued what the head of the family previously started. With the help of her co-members in TSPI, Nanay Luningning’s claim was filed, documentary requirements were completed and within a week, benefits amounting to P165,000 were given to her beneficiaries.

As for Anthony, he was somehow comforted when he received benefit claims amounting to more than P100,000. The sadness that he and his siblings experienced from the loss of both their parents was lessened because of the help that TSPI extended to them through micro-insurance.

As can be seen from the above incidents, the poor are very vulnerable to risks such as death caused by illness or accident, disability and property losses; especially when it is the death of the family’s breadwinner. In the past, life insurance would be available only to the middle and upper levels of society. The poor have little to save.

However, the creation of micro-insurance products has provided a tremendous blessing to the poor.

With micro-insurance, the poor can set aside as little as P5 per week to pay for their insurance premiums, which, depending on the offering of the micro-insurance provider, can pay out natural death benefits of P40,000 or more.

There are many institutions that are now offering micro-insurance, many of the pioneers being associated with those who already offer micro-lending services to the poor.

Such is the case with the TSPIMBA. While serving the poor by offering them a variety of enterprise and livelihood loans, TSPI desired to extend more services and assistance to their clients. They saw micro-insurance as a feasible and viable service that the clients desired.

TSPI MBA was set up in order to extend financial assistance in the form of death benefits, loan redemption assistance, disability benefits and other services to the borrowers of TSPI and their immediate family members.

Becoming a member of the TSPI MBA will cost the member a fee of only P240.00 per year. This entitles a member to death benefits for the member, spouse and 4 qualified children, accidental death and dismemberment benefits for the member and his/her spouse, total and permanent disability for the member and equity value also for the member.

Moreover, if the member is also a borrower of TSPI, subject to an additional premium of P1.00 per thousand of loan availed, the member is also entitled to loan availment benefit package composed of death benefit, accidental death benefit, accidental dismemberment, credit life and funeral assistance.

It has only been 4 years since TSPI MBA started its micro-insurance operations. it now has more than half a million members as of December 2010. Micro-insurance is relatively new. Already it is showing to be a viable and promising business proposition. And clearly a big help to the poor.

* * *

Ms. Tarriela is Chairman of Philippine National Bank. She is a director of TSPI NGO and TSPI MBA. She was formerly Undersecretary of Finance and Vice President Citibank N. A.

Philippines: Foreign Venture Capital Plans To Invest $20m In PHL Microinsurance Sector

by Christine Gaylican, Official Wire

A foreign investment fund is prepared to pour an estimated $20 million on a Philippine company willing to venture into microinsurance, a company officer said.

Leapfrog Investment, a global venture capital fund, which wants to differentiate itself with investments with a strong social dimension wants to tap the income potential presented by uninsured middle income households in Asia and Africa.

In a press briefing, Leapfrog Investment officer Stephane Chatonsky said that the firm wants to tap the growing middle income families in the Philippines now estimated at 2.5 to 3 million individuals.

Mr Chatonsky said the company is now in discussions with local insurance providers with life and non-life expertise to see how they could seal the deal before the end of 2011, the Philippine Star said in a related report today.

He noted that the venture capital fund wants to buy a substantial equity in an existing Filipino firm that can sell microinsurance to middle and lower income individuals.

Leapfrog has finance giants the International Finance Corp. (IFC), Soros Economic Development Fund, German Development Bank (KfW), J.P. Morgan, Accion, the Omidyar Network (created by eBay founder Pierre Omidyar), European Investment Bank (EIB), and major reinsurers Flagstone Re and SCOR, in their board members.

Studies presented by Leapfrog indicate that the earnings potential for microinsurance in developing countries is at $40 billion.

Regulator approves Pioneer microinsurance programs

From Manilla Bulletin

MANILA, Philippines – The Insurance Commission recently approved Pioneer Life’s micro-insurance programs – Group Credit Life Microinsurance and Group Personal Accident Microinsurance (long and short scale). Pioneer was one of the first to receive approval based on Insurance Memorandum Circular 01-2010, which emphasizes “the need for microinsurance, promoting its importance, defining its features and implementing regulations to ensure the safe and sound provision of microinsurance products to the poor.”

Pioneer has been spearheading industry efforts to make insurance available to the mass market, creating programs that are within reach of low income workers. It began conducting financial wellness sessions in 2006, to groups of both adults and the youth, sharing basic concepts of saving and investment. By 2008 Pioneer introduced savings and insurance products that are affordable and easy to acquire. Microinsurance was the logical next step. “Our vision is to become a model Filipino enterprise,” shares President and CEO of Pioneer Life Lorenzo Chan Jr. “In order to do that we have to go beyond serving the standard A-B and corporate markets. For us, microinsurance is a natural progression to bring a useful product to people who need it most.”

In partnership with NGOs and institutions offering microfinance, Pioneer has been offering microinsurance programs that meet the peculiar needs of this market such as the need to be covered for accidents, fire and flood. This early, the claims made by beneficiaries have helped keep kids in school and widows get back on their feet. “Microinsurance is an opportunity for us to make the customer our universe,” says Pioneer Life VP for Microinsurance Geric Laude. “We develop our programs only after we truly understand what their needs are.”

With the Insurance Commission’s approval of its programs, Pioneer is set to move fast forward towards a sustainable microinsurance business.

Insurers interested in ‘three-in-one’ microinsurance

BY Diane Claire J. Jiao, Business WOrld Online -

EIGHT non-life insurance companies have expressed interest in the “three-in-one” microinsurance product approved by the government last Monday.

The Philippine Insurers and Reinsurers Association (PIRA), which groups 87 non-life insurers, said this number could still rise, hailing microinsurance as the “next big step” for the insurance industry.

“We are just about to release the circular about the prototype product to our members,” Mario C. Valdez , PIRA general manager, told BusinessWorld in a phone interview yesterday.

“However, five companies have already inquired about it, while three others are looking to expand their existing microinsurance product line.”

Mr. Valdez declined to name the companies, though, as the Insurance Commission (IC) will still have to approve companies’ respective products before these can be offered in the market.

The Department of Finance and the National Credit Council, along with the German Agency for International Cooperation (GIZ) and the Asian Development Bank, have been developing prototype products in a bid to boost microinsurance in the country.

IC approved on Monday the non-life prototype product dubbed Buhay, Bahay, Kabuhayan.

The product is designed to give P10,000 worth of coverage against death from accidents or damage to property/business from natural calamities. Consumers can buy up to three units for a total coverage of P30,000. A Buhay, Bahay, Kabuhayan contract is good for a year.

“Microinsurance is the next big step for our industry. It’s such a large market that we can tap, probably worth P2 billion,” Mr. Valdez said.

The non-life microinsurance market is presently estimated at just P200 million.

He said Filipinos from the low-income sector have realized the value of insurance, especially after tropical storm Ondoy wreaked havoc in Luzon in 2009.

“We are also complementing the prototype product with financial literacy campaigns nationwide, to encourage more people to purchase insurance,” Mr. Valdez added.

While the basic terms and conditions were already set in Buhay, Bahay, Kabuhayan, the government gave room to insurers to price the premiums of the product themselves.

“If they have an efficient business model, they can afford to price the products lower. Usually, companies tie up with microfinance institutions so they can reach more people,” GIZ Senior Finance Adviser Dante Portula told BusinessWorld yesterday. “The pricing is where they will compete.”

He added that insurers could tweak the prototype and add their own features to it, as long as it complied with the terms set by IC for all microinsurance products.

According to IC’s Insurance Memorandum Circular 1-2010, 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.

“Insurers have to get the approval of the Commission for their new product offerings. However, since the terms and conditions of Buhay, Bahay, Kabuhayan were already pre-approved by IC, non-life insurers can expect faster processing for their microinsurance products,” Mr. Portula said.

The next step now for donor institution GIZ is to support the PIRA members who will venture into microinsurance, he shared.

“We will help link insurers to different distributing partners, like microfinancing institutions, schools, religious organizations and pawnshops,” Mr. Portula said.

Financial literacy on microinsurance kicks off in Quezon City

From Philippine Information Agency -

The Department of Finance (DOF) and the Insurance Commission (IC) will team-up with the local government of Quezon City in enhancing awareness on microinsurance through the launch of the “Roadmap to Financial Literacy on Microinsurance”.

The formal alliance will start off on January 31, 2011 at the flag raising ceremony of the Quezon City government where insurance commissioner Emmanuel F. Dooc and Quezon City mayor Herbert Bautista will deliver keynote speeches. The event will last the entire day with a press conference right after the flag ceremony and a symposium in the afternoon.

The launch of the roadmap will be the pilot event in a massive campaign to promote microinsurance awareness all over the country. The collaboration between the national government through DOF and IC and local government through the local government units (LGUs) is seen to promote and provide risk protection to the country’s low income earners.

Microinsurance was introduced in the country to supplement the poverty alleviation program of the government. Since poor households are most vulnerable to risks associated with uncertain losses such as death, illness or injury, accidents, and natural and/or man-made calamities, there is a vital need to provide the low-income sector with access to affordable financial protection in case of such contingencies.

In 2010, the government through the Department of Finance-National Credit Council (DOF-NCC) and in collaboration with other government agencies and the private sector launched the twin pillars of microinsurance development – the “National Strategy for Microinsurance” and the “Regulatory Framework for Microinsurance”. The “National Strategy for Microinsurance” defines the vision, objectives, roles of the various stakeholders, and key strategies to be pursued in enhancing access of the low-income sector to insurance products and services. The “Regulatory Framework for Microinsurance”, on the other hand, establishes the policy and regulatory environment to encourage, enhance, and facilitate the safe and sound provision of microinsurance products and services by the private sector.

The event is the culmination of the observance of the Microinsurance Month. Under Presidential Proclamation 1212 signed in January 10, 2007, January is declared as Microinsurance Month and appointed the IC and the DOF as the lead agencies.

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