26 May 2015– The Philippines has the highest microinsurance coverage among Asia-Pacific Economic Cooperation (APEC) member economies, experiencing exponential growth over the last 10 years. According to Michael McCord of the Microinsurance Network, coverage in the Philippines rose from 20% to 28.1% from 2012 to 2014, reaching an annual growth of 18.4% in terms of the number of persons covered. As of 2015, microinsurance in the Philippines has covered 28 Million individuals. This comes as the country continues to develop financial inclusion by making financial services available and accessible to all regardless of income class.
Insurance Commissioner Emmanuel F. Dooc said, “There is an increased awareness and concern from the government and the private sector in working together for financial inclusion. Hence we see various initiatives on microinsurance that reflect a whole-of-government approach with extensive collaboration with the private sector.”
Private financial institutions are actively engaged in providing various types of microinsurance products and services, developed to cater to the different needs of the clients at an affordable premium. The amount of premiums, contributions, and fees computed on a daily basis, does not exceed 7.5% of the current daily minimum wage rate for non-agricultural workers in Metro Manila and having the maximum sum of guaranteed benefits of not more than 1,000 times the daily minimum wage rate for non-agricultural workers in Metro Manila, based on simplified contracts and relaxed terms and conditions, allowing the informal sector to have a greater understanding of the benefits of insurance, and their rights as insured.
“Microinsurance does not only enhance our resiliency to disasters, shocks, and crises. I actually think it is a key element to strengthening the economy and making growth sustainable. It is always a win for the economy when the most vulnerable are protected and empowered. In a way, boosting microinsurance coverage rates is an effective anti-poverty measure: we minimize vulnerabilities of the poor and enable them to rebuild the pieces of their dreams that crack when disaster hits,” Beltran explained.
The importance of microinsurance was highlighted in the aftermath of Typhoon Haiyan. Microinsurance providers were able to infuse P0.5 billion (around US$11 million) in typhoon-affected areas after paying out damage claims within the required 10-day period. In addition, 129,786 families reportedly took out new microinsurance policies after the typhoon.
Finance Secretary Cesar V. Purisima emphasized the importance of the Philippines-proposed Cebu Action Plan (CAP) in the country’s hosting of the APEC meetings this year. He said, “We are seeing how microinsurance works in the Philippines: not only to protect the most vulnerable, but also our sustained and inclusive growth trajectory. Throughout this year, we are sharing our experience with our colleagues from APEC member economies as part of our push for more access to financial services by low-income households, MSMEs, and the unbanked.
While micro-insurance products are provided by licensed insurance companies, and cooperative insurance societies and mutual benefit associations (MBAs), they are marketed through pawnshops, cooperatives, rural banks, mutual benefit associations, NGOs, and other microfinance providers that have taken advantage of the changing economic conditions and diversified their product mix. The unique context of microinsurance in the Philippines casts a wider net for financial inclusion, with more avenues opening greater access to finance for more vulnerable Filipinos.
Since the launch of the Strategy, there has been more than 50 licensed insurance entities such as banks, cooperatives, and microfinance NGOs that provide microinsurance products, 89 Insurance Commission-approved microinsurance products, and 28 million Filipinos covered. Developments in disaster risk insurance, micro health products and agricultural risk insurance are also being made to further increase the penetration rate in the country.
The Insurance Commission notes that there are 23 micro mutual benefit associations, 18 life insurance companies, 24 non-life insurance companies, 42 rural/cooperative bank agents and around 100 microinsurance agents engaged in the provision of microinsurance products. By the end of 2013, there are 122 microinsurance products approved by the Insurance Commission.