Microinsurance coverage, premiums expected to increase from 2016 levels

Posted on August 10, 2017

THE Insurance Commission (IC) is bullish that over 31 million Filipinos will be covered by microinsurance by yearend, with total premium production by the sector to also increase.

Microinsurance coverage is likely to continue increasing this year, along with premiums written. -- BW FILE PHOTO
An official from the IC said the microinsurance industry could protect more than 31 million Filipinos before the year ends, which in turn, would lead to a rise in premiums generated by mutual benefit associations (MBAs), non-life and life insurance companies in the sector.

“Hard to tell because [the sector’s performance is fluctuating,] but I’m quite optimistic that hopefully, by the close of 2017, maybe they (microinsurance firms) can cover up to or more than 31 million lives,” Juan Paolo P. Roxas, acting division manager of Microinsurance Division of the IC told reporters on the sidelines of the 2nd Cebuana Lhuillier Micro-insurance Disaster Resilience Forum on Wednesday.

To recall, in 2014, 31 million people were covered under microinsurance while latest data from the insurance regulator bared a total of 26.6 million Filipinos had microinsurance policies in the first three months of the year.

Broken down, 17.1 million of the total came from MBAs, 4.4 million from life insurers while 2.2 million were from the non-life firms.

Asked if they are optimistic the sector could exceed the covered 31 million lives recorded in 2016 by yearend, Mr. Roxas said, “Yes I’m quite optimistic... Based on our data, the Philippines penetration rate in terms of microinsurance is not that high, so there’s still a lot of improvement.”

Insurance Commissioner Dennis B. Funa had said early this year that the country’s microinsurance penetration rate stood at 25.4% as of September 2016, up 3.2% from the previous quarter, translating to 26 million Filipinos covered by microinsurance. The IC is confident microinsurance penetration rate will rise to 48.7% by 2022.

“So we can only hope that through the aid and the cooperation of the various industries involved, we can make them more aware of this type of product and that this type of product actually exists in the market since 2010,” Mr. Roxas said.

According to him, bulk of the policies of 31 million lives protected would still come from MBAs, as seen in the sector’s first quarter performance where MBAs topped the microinsurance sector in terms of premium production and the number of individuals covered during the period.

“If you want to avail microinsurance or any of their (MBAs) products, you have to be a member first, so their style of doing business is quite different and unique other than this commercial companies and cooperative insurance systems,” Mr. Roxas said.

Along with the IC’s projection of a rise in number of Filipinos having microinsurance policies by end-2017, total premium generated by the sector is also expected to grow.

“In terms of premium production, if it’s more than 31 million that we’re looking at, we’re also hoping that the microinsurance sector could contribute more, because if there will be more lives insured that they will cover, there should be more chances of producing premiums,” Mr. Roxas said.

Preliminary data based on quarterly reports submitted to the IC showed non-life insurance firms produced P156.3 million worth of premiums in the April to June period, 47.12% higher from the P106.2 million recorded in the same period a year ago.

Life insurers recorded a slight decrease of 1.87% to P438.5 million in total premiums in the first three months of the year from P44.8 million in the previous year. MBAs, meanwhile, yielded a total of P850.5 million in net premiums at end-June.

Asked if the IC is looking at a certain figure in net premiums for 2017, Mr. Roxas said, “It’s hard to say, it depends on the performance of their industries.” -- Janine Marie D. Soliman