Microinsurance coverage nearly doubles to 12.9 M

MANILA, Philippines - From 6.6-million Filipinos with microinsurance coverage in 2010, the number almost doubled to 12.91 million by the end of 2012, according to the Insurance Commission (IC).

That means that from just 7.25 percent of the country’s population with microinsurance coverage, it has risen nearly twice or to 13.22 percent of the population of 97.6 million.

IC Commissioner Emmanuel F. Dooc said that in January 2010, the country’s finance leaders launched the Microinsurance Program making insurance products affordable and accessible.

It likewise tapped the private insurance sector in targeting the 27 million in the so-called marginalized sector, or those who need but are unable to tap the formal life insurance products.

Before 2010, mutual benefit associations (MBAs), with a few exceptions among the larger life insurers, sold the low-cost informal insurance products.

But the microinsurance program, with all its regulatory and actuarial improvements, changed all that.

In the last quarter of 2012, there were 80 microinsurance products – 54 are classified as life products and 26 as non-life products – approved by the IC.

Offering microinsurance products are 19 insurance companies and 17 MBAs with approved microinsurance products.

In fact, 14 of the 17 MBAs are focused solely on IC-approved microinsurance products. About two million MBA members have microinsurance products.

Already, the program benefited more than 95,000 clients/beneficiaries, with payments reaching P1.87-billion in death and disability benefits.

Dooc said that the increasing number of Filipinos getting microinsurance reflect government’s success in instilling financial literacy among the low-income segment of the population, and in empowering them to participate in areas that have long been enjoyed only by the wealthy.

The low-income population is most vulnerable to risks, such as illness, physical injury, accident, death, lose of property and loss of livelihood.

“That these are given at a time of dire need when an uninsured would have dipped with his savings, or use his small business fund, or even resort to high-interest loans, then microinsurance definitely has proven itself a very effective and potent tool for poverty alleviation,” Dooc said.

In a report released early this year, the Asian Development Bank (ADB) said that the Philippines “is considered one of the countries in Asia with a relatively developed microfinance industry that provides financial services to the low-income sector.”

The Economist Intelligence Unit (EIU) also recognized the Philippines as one of the countries in Asia with very strong regulatory regimes and good prospects for microfinance institutions (MFIs) to enter the sector and perform effectively.

In the 2010-2011 period, the country was adjudged as having the best microfinance regulatory framework among 54 countries.

Last year, the country’s entire insurance industry posted a 56.13-percent increase in premium production, generating P150.38 billion, a major leap from P96.32 billion in 2010.

It was also the first time that the life insurance sector, which accounts for 80 percent of the total industry premium, or P120.3 billion, surpassed that P100-billion mark.

That meant an increase in the insurance penetration rate and life insurance coverage.

In 2010, insurance penetration, or the contribution of the insurance sector to the national economy, stood at 1.04 percent of gross domestic product (GDP). The percentage has since increased to 1.42 percent as of end-2012.

But Dooc admitted that the Philippines have still a long way to go compared to its Asean nations.

In Malaysia, the insurance penetration rate was already at 4.8 percent, Singapore at 6.1 percent, and 4.3 percent in Thailand, all in 2010.

The ADB said that in 2009, the insurance penetration rate in Vietnam was 1.55 percent and it was 1.3 percent in Indonesia.