Economy


Microinsurance coverage rises




Posted on January 31, 2014


OVER 19 million Filipinos are covered by microinsurance, more than six times the number recorded five years ago, the Department of Finance yesterday reported.

“Microinsurance coverage in the Philippines is the highest among Asian emerging economies at 20.4% of the total population,” Finance Undersecretary Gil S. Beltran said in an economic bulletin released by the department yesterday.

The country is followed by Thailand (14.1%), India (8.9%), Bangladesh (6.1%), Malaysia (3.6%), Pakistan (3%), China (0.9%), Indonesia (0.5%) and Vietnam (0.2%).

Since 2008, with the help of technical assistance from the Asian Development Bank, Japan and the German Agency for International Cooperation, the government has been able to draft a national microinsurance strategy, a comprehensive regulatory framework and a roadmap to financial literacy.

Microinsurance is said to be one of the key priorities of the Insurance Commission (IC) and the Aquino administration.

Based on the commission’s Insurance Memorandum Circular 1-2010, microinsurance products are those whose daily premiums do not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

Also, the maximum sum of guaranteed benefits should not be 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

The report showed that only 3.1 million Filipinos were covered by microfinance in 2008, but this has grown sharply to 19.95 million as of end last year.

Various reforms adopted in 2010 led to the strong adoption of microinsurance in the country.

“First, it (the country) adopted a National Strategy for Microinsurance in 2010. This defined microinsurance, identified microinsurance providers and started the process of formalizing informal products,” Mr. Beltran said.

A regulatory framework for microinsurance also contributed to the growth, he said, noting that the guidelines served as the basis for the issuance of regulations by the IC and Bangko Sentral ng Pilipinas.

“Third, it adopted performance standards to be used by the IC in regulation and the providers to gauge their performance versus the whole industry. It also served the mutual benefit association chart of accounts to make it more relevant and useful to the needs of the industry,” Mr. Beltran said.

Financial literacy programs and training on microinsurance also boosted the industry’s penetration rate, he added.

“Lastly, an alternative dispute resolution mechanism to protect both consumers and providers and resolve disputes in a non-adversarial way” also contributed to the sector’s growth.

Moving forward, the DoF and IC will further increase the coverage of microinsurance through conducting financial literacy campaigns in partnership with local government units, Mr. Beltran said.

For his part, IC Commissioner Emmanuel F. Dooc, in an interview yesterday, said: “The IC will conduct more trainings to enhance its employees’ competency on microinsurance with the technical assistance and grants from Japan through the Asian Development Bank.”

“We also plan to expand the coverage of microinsurance to health, crop insurance and disaster insurance,” he said.

As of end-2013, there were 17 life insurers, 18 non-life companies and 19 mutual benefit associations licensed by the IC to sell microinsurance products. -- Ann Rozainne R. Gregorio