Microinsurance clients surge
AN ESTIMATED 7.8 million Filipinos are now covered by microinsurance,
more than double the number five years ago, the Insurance Commission
(IC) yesterday said.
The IC bared a list of industry milestones as it concluded yesterday the
Developing Microinsurance Project, a technical assistance program of the
Asian Development Bank (ADB)-Japan Fund for Poverty Reduction that ran
from 2008 to 2012.
Only 3.1 million Filipinos were protected by microinsurance before 2008,
IC Chief Insurance Specialist Reynaldo M. Vergara said during the
National Conference on Microinsurance yesterday.
The number has grown sharply to 7.8 million this year, he said, due to
the concerted effort of the government, development partners and the
private sector to develop microinsurance, low-premium insurance targeted
at low-income individuals.
Moreover, prior to 2008, microinsurance products were only offered as an
optional benefit for the credit and savings programs of microfinance
institutions, he noted.
Now, there are 80 microinsurance products approved by the IC -- 54 life
and 26 non-life.
The uptake of the private sector has also been immediate, he said. There
are now 17 mutual benefit associations and 28 insurance companies -- 16
life and 12 non-life -- licensed to offer microinsurance products from
the "very few" seen before.
There are also 116 licensed microinsurance agents to date, 26 of which
are rural banks and 90 are individuals.
Since 2008, with the help of technical assistance from the ADB, Japan
and the German Agency for International Cooperation (GIZ), the
government has been able to draft a national microinsurance strategy, a
comprehensive regulatory framework and a roadmap to financial literacy.
"As a result, the Philippines is now the pioneer and the source of
concrete best practices in the world when it comes to microinsurance,"
Mr. Vergara said.
"Many countries have microinsurance products and providers but no
foundation, which makes it difficult to develop the industry," he explained.
Despite these early gains, stakeholders pointed out in the conference
that there are 23 million Filipinos below the poverty line, and they
need to be targeted for microinsurance.
"They remain susceptible to unpredictable incidents such as
unemployment, accidents, illnesses and natural disasters. This is where
microinsurance could enter as aid in ensuring that inclusive growth
penetrates even the bottom layer of the society," Takahiro Etchu,
financial attache of the embassy of Japan, said.
Inclusive growth is growth that reaches the poorest sectors of society.
Kunio Senga, director-general of the ADB Southeast Asia department,
added: "Under uncertainty of another global crisis, financial inclusion
will enable even poor people to access a wide range of financial
services, including credit, savings, insurance... integral to sustain
and realize inclusive growth."
In order to expand microinsurance coverage, GIZ program manager Antonis
Malagardis called for the improvement of distribution channels so more
people can be reached at less cost.
"Well-developed distribution channels are crucial in bringing
microinsurance... to the doorsteps of the low-income people. It will not
only make enrollment more efficient for insurance providers but more
importantly, it makes the servicing of claims faster," Mr. Malagardis said.
Some of the conduits that have been eyed are schools, pharmacies and
utilities, he explained. Relationships with local communities must also
be strengthened so they can be convinced to participate in microinsurance.
Finance Undersecretary Gil S. Beltran also revealed the government is
considering imposing a mandatory allocation for microinsurance for
insurance companies, similar to the case of India where 10% of premiums
must be from microinsurance policies.
This will be similar to the Agri-Agra Reform Credit Act of 2009 which
requires banks to set aside at least 25% of their total credit resources
for lending to the agriculture and agrarian reform sectors.
Other than this possible quota, the government is not keen to offer
subsidies or tax incentives to encourage microinsurance providers, Mr.
Beltran said.
"These perks are not efficient. Microinsurance must be mainly private
sector-led," he said.
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