MONDAY, 23 JANUARY 2012 19:18 JUN VALLECERA / REPORTER
CHARTER Ping An Insurance Corp., the non-life insurance arm of the
Metropolitan Bank and Trust Co, sees microinsurance as a potentially
rewarding revenue source and is on the lookout for micro-lending
cooperatives as possible partners.
Charter Ping An Insurance President Melecio C. Mallilin bared the
expansion plan at a briefing where he anticipated growing the company's
profits by 33 percent to P200 million this year.
Mallilin said they have explored various models of engaging the
microinsurance business and understand they cannot market the product
directly because the costs involved are high.
"We decided that partnering with cooperatives is the best possible
model," he said.
There are at present 21 microfinance-engaged cooperative banks listed by
the Bangko Sentral ng Pilipinas (BSP), essentially cooperative lenders
with less than half of their portfolio dedicated to the business of
micro lending.
According to Mallilin, the insurance business observes the law of big
numbers, one in which the potential profit is a function of the extent
of its risk cover.
The more Charter Ping An and its microinsurance cooperative partners
extend risk cover on the greater the returns, he said.
Regulators acknowledge the Philippines is a top performer in the global
endeavor to cast a financially inclusive net for its citizens as a
weapon against poverty.
The BSP under then Gov. Rafael Carlos Buenaventura started the financial
inclusion program by making it attractive for financial institutions to
engage in micro lending which is now a P7-billion industry benefiting
close to a million poor Filipinos with collective savings of some P3.7
billion thus far.
The business of extending contingent risk cover on poor but
entrepreneurial Filipinos had been the next logical step in the
financial inclusion program which aims to address the financial services
needs of those who would only be ignored by the large banks and
financial institutions.
In micro insurance, premium payments can be as small as one peso up to
P19 a day and the benefit payout as large as P190,000 per policy.
These are arbitrary numbers believed suited to the contingent risk
requirements of low-income Filipinos who may pay premium of P30 up to
P570 a month, considered affordable rates by regulators.
By law, microinsurance products should be simple, with provisions
clearly stated as to the face amount of risk cover, the benefits therein
and the terms of the cover.
Commercial non-life insurers like Charter Ping An, mutual benefit
associations, cooperatives, pre-need companies and health maintenance
organizations or HMOs may engage in it with the permission of relevant
authorities such as the Insurance Commission, the Securities and
Exchange Commission, the Cooperatives Development Authority and the BSP.
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