The Development of the Microinsurance Market in the ... · 16/04/2014 company presentation 2012...

company presentation 2012 16/04/2014

The Development of the

Microinsurance Market in the

Philippines

Diana Almoro

Senior Advisor, GIZ RFPI Asia 16 April 2014

Inclusive Insurance 2014 International Forum

Ulaanbaatar, Mongolia

The Philippines

Type presentation tit le here 16/04/2014

• 7,107 islands

• 96.71 million

population

• USD 1,790 per

capita income

• 25.2% of families in

poverty

• economic drivers:

private sector

investment,

overseas

remittances,

high government

spending

MONGOLIA


• 1.42% insurance penetration of GDP as of

2012

• Small industry with assets of USD 19.2

billion

• Comprises only 7.5% of total resources of

PH financial system

• Regulated by the Insurance Commission,

policy direction from the Ministry of Finance

The Insurance Industry

Insurance Sector:

• 115 private commercial

companies

• 33 Life (79%)

• 82 Non-life (16.2%)

• 28 MBAs (4.8%)

Evolution of Microinsurance


• Offshoot of microfinance development policies of the government

• 1997 National Strategy for Microfinance as policy foundation in

providing formal financial services to the low-income sector

• Financial Inclusion as an overarching goal articulated through the

Medium-Term Philippine Development Plan

• Of 23.7 million Filipinos living below poverty line, only 2.9 million have

some kind of risk protection

• 2006 start of microinsurance development through public-private

partnership with technical support from development organizations

The multi-stakeholder approach


POLICY AND

REGULATORY

AGENCIES

OTHER

NATIONAL

AGENCIES

LOCAL

GOVERNMENT

UNITS

• Enabling policy and regulatory environment

• Measures supportive of financial inclusion

• Guidelines for mainstreaming informal insurance

• Networking and linkage-building with microinsurance

providers

• Inclusion of microinsurance in programs

• Provision of basic support services

• Collaboration with private sector providers

• Institutionalization of Redress Mechanisms

• Public awareness and education


The multi-stakeholder approach

PRIVATE

SECTOR

SUPPORT

INSTITUTIONS

• Leading product innovations that cater to the low-income

sector

• Deepening the market (channels for distribution and easy

claims settlement)

• Guidelines for mainstreaming informal insurance

• Promote financial literacy

• Media, academe, research entities, civil society

organizations, donor community

• Technical assistance for capacity-building, knowledge

generation and financial literacy

Microinsurance policy milestones



Definition of microinsurance in the Philippines

• A financial product or service that meets the

risk protection needs of the poor

• Daily contribution/premium is not more than

7.5% of the current daily minimum wage rate

• Guaranteed benefits are note more than

1,000 times the daily minimum wage rate


Key distinctions: Traditional vs Microinsurance

Provisions Traditional Microinsurance

Maximum premium Company – dictated

7.5% of current daily

minimum wage rate in Metro

Manila

Maximum benefits Company – dictated

1,000 times of daily minimum

wage rate in Metro Manila

Policy contract Complex, long with difficult

terminologies

Short, simple, easy to

understand

Frequency of premium

collection

Monthly, Quarterly, Semi-

Annually, Annual

Could also be daily or weekly

(recognizes payment abilities

of low-income)

Claims settlement Within 60 days after submission

of completed documents

Within 10 days after

submission of complete

documents


The Process

Mapping of gaps and inefficiencies

Formation of Technical

Working Group

Drafting of policy papers

Industry and public

consultations

Launching and adoption

Market response


Before 2009

MI products mostly credit life except for MBA MI products

6 licensed MI-MBA

Very few commercial insurance companies with MI

No MI agent category

End-2012

80 MI products approved (54 life and 26 non-life)

17 licensed MI-MBAs

35 insurance companies (17 life and 18 non-life)

124 licensed as MI agents (34 Rural Banks and 90

individuals)


Key lessons and challenges

2. The private sector should be engaged in

formulating policy and regulatory reforms.

1. The government should own and champion

the reform measures.

3. Small gains lead to bigger milestones.


Way forward

• Document experiences as lessons-

generating exercise and inputs to

enhancement

• Explore opportunities for thematic

microinsurance development


GIZ – Regulatory Framework Promotion of Pro-poor

Insurance Markets in Asia

• Regional program supporting insurance regulators to

develop regulatory frameworks, improve capacities, share

peer-to-peer knowledge

• Works with regulators in Indonesia, Mongolia, Nepal,

Philippines, Thailand and Vietnam

• In Mongolia: partnership with FRC on promoting inclusive

insurance, capacity-building, exploration of insurance

opportunities for MSMEs


Maraming Salamat!

Bayarlala!

Thank you!

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