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Microinsurance provides risk protection to 31 million low-income Filipinos

by BusinessMirror - December 9, 2015

The RIA report indicated that microinsurance in the Philippines is increasingly reaching more low-income Filipinos. In 2014 the industry reported 31.1 million microinsurance beneficiaries, up from 19.8 million in 2012 and 2.9 million in 2009.

This proves that microinsurance works in the Philippines.

The insurance providers, for example, have responded effectively after Supertyphoon Yolanda (international code name Haiyan) in November 2013, paying out more than 100,000 microinsurance claims within the first three months, amounting to approximately half-a-billion pesos. The average amount per claim paid was P4,777. (Data source: Report on “The effectiveness of microinsurance service providers’ response to Typhoon Haiyan” commissioned by Microinsurance Network and GIZ RFPI Asia.)

What started only as a corporate social responsibility program by some insurance providers, microinsurance today has proven it could generate some decent profits to the companies, DOF officials said.

More MI-MBAs had been organized, from six in 2006 to 18 in 2012 and now 21. Commercial companies have started participating in microinsurance beginning 2012 with only 12 companies, to 31 in 2013 and 42 companies today. MIMBAs account for 64 percent of total insured lives in microinsurance.

In the commercial insurance space, there have been joint ventures, and some companies have set up subsidiary company for microinsurance business.

“Clear policy direction and proportionate regulatory guidelines provide the driving force to insurance market development. It provides certainty for the industry to invest in microinsurance activities. It gives public confidence to trust microinsurance products. The good numbers in microinsurance, as elaborated in the RIA report, is a product of multistakeholders dialogue and cooperation,” Emmanuel F. Dooc, insurance commissioner, said.

“I am happy to inform that the IC has issued the third regime of Microinsurance regulations. The first regime in 2006 conceived the tier of MI-MBAs. The second regime in 2010 encouraged commercial companies to participate more in the market. Then microinsurance got institutionalized in the Insurance Code, as amended [2013]. The third regime called Enhanced Microinsurance Framework was issued in October 2015. It provides broader options to deliver microinsurance and clearer guidelines on reinsurance based on lessons after Supertyphoon Haiyan,” Dooc added.

“The Philippines is a leader in inclusive insurance measures among countries in Asia. The country has proven that microinsurance works and could be sustainable using full market-based approach. The role of the government in providing clear policy directions has enabled the private sector and other stakeholders to contribute to the advocacy of microinsurance market development,” Gil S. Beltran, finance undersecretary and concurrent executive director of the National Credit Council, said. The RIA report offers many good practices with regard to the proportionality principle in regulations. This has provided the Philippines with the credibility and confidence to lead the agenda discussion on microinsurance and disaster-risk financing during the Asia-Pacific Economic Cooperation meetings of the Finance Minister’s Process which concluded with the launch of the Cebu Action Plan.

“The journey of the Philippines in microinsurance market development has been a source of inspiration and knowledge by many jurisdictions not only in Asia but also in other continents,” Dr. Antonis Malagardis, GIZ RFPI Asia program director, said.

Many representatives from countries such as Indonesia, Nepal, Vietnam, Mongolia, Thailand, Ghana, Egypt and Germany visited the Philippines to learn from its success story. Some countries have invited the Philippines to share experiences, and more countries have listened intently on how the Philippines made impressive progress in microinsurance.

Malagardis added that “the RIA on microinsurance is a first known initiative of a systematic and focused methodology to determine the impact of policy and regulatory reforms to market development. It provides insurance supervisors and other stakeholders, not only in the Philippines, with good lessons and recommendations.”

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