RECENT WAGE INCREASE IN METRO MANILA, PHILIPPINES HAS RAISED CEILING FOR MICROINSURANCE PACKAGES

RECENT WAGE INCREASE IN METRO MANILA, PHILIPPINES HAS RAISED CEILING FOR MICROINSURANCE PACKAGES

A small thing goes a long way. And in the case of the recent increase in the minimum wage of non-agricultural workers in Metro Manila, Philippines, this means a corresponding increase in microinsurance protection coverage.

Approved last May 9, 2001 and which took effect last May 26, 2011, the new minimum wages are now raised to a range of P389 to P426 per day. It so happened that the ceiling of microinsurance benefit packages in the Philippines is based on the minimum wage of non-agricultural workers in the country's Metro Manila Region.

For this, we will have to go back to Insurance Commission Memorandum Circular No. 9-2006, which was recently amended by Insurance Memorandum Circular 1-2010, dated January 29, 2010. They further redefined microinsurance, as follows:

"Microinsurance" product is a financial product or service that meets the risk protection of the poor, where:

a. The amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed five (5) percent of the current daily daily minimum wage for non-agricultural workers in Metro Manila, and;

b. The maximum sum of guaranteed benefits is not more than 500 times the daily minimum wage rate of non-agricultural workers in Metro Manila.

The maximum amount of premium and guaranteed benefits shall apply on a per product or per policy basis. In the case of of bundled product, this shall apply to each component of the bundled product..."

Going by the above rules, the daily premiums should not exceed Php 21.30 per day. That is derived by multiplying Php 426 by the factor of 0.05. On the other hand, also going by this rule, the microinsurance product may not exceed Php 213,000 per product. (That is 500 X Php 426 = Php 213,000).

Presently, the common amount of package package amounts to a guaranteed benefit of P150,000. This is based on the daily minimum wage of Php 300. Based on this amount, the resulting daily premium is Php 15.

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