Page 1 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
Page 2
The Philippines
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• 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
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• 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%)
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Evolution of Microinsurance
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• 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
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The multi-stakeholder approach
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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
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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
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Microinsurance policy milestones
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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
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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
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The Process
Mapping of gaps and inefficiencies
Formation of Technical
Working Group
Drafting of policy papers
Industry and public
consultations
Launching and adoption
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Market response
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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)
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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.
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Way forward
• Document experiences as lessons-
generating exercise and inputs to
enhancement
• Explore opportunities for thematic
microinsurance development
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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
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Maraming Salamat!
Bayarlala!
Thank you!