Pawnshop leader drives microinsurance growth

MANILA, Philippines - There are now roughly 23 million Filipinos with microinsurance coverage, according to the Insurance Commission (IC). Microinsurance is an insurance product priced at between five to 7.5 percent of the minimum daily wage, while benefits must amount to no more than 500 times the daily minimum wage.

The mutual benefit associations (MBAs) were the first to formally sell microinsurance products in the 1990s. It was later on embraced by a large number of life, non-life insurance companies, and even some rural banks, upon government’s call for greater inclusive growth in the financial sector.

But what impressed IC deputy commissioner Ferdinand George A. Florendo was neither an MBA, insurer or rural bank was one of the leading distributors of microinsurance products.

Cebuana Lhuillier Insurance Solutions (CLIS), a subsidiary of PJLhuillier, markets all its microinsurance products mainly through the more than 1,700 outlets of Cebuana Lhuillier pawnshops.

“It took a commercial establishment like the Cebuana Lhuilleir Group to speed up the sale of micro protection products,” Florendo said.

CLIS is not an insurance company but a marketing and distribution company which formed business alliances with life and non-life insurance companies. Together, they developed mincroinsurance products.

Among the leading partner insurers are: Malayan Insurance Co. Inc., Prudential Guarantee and Assurance Inc., Federal Phoenix Assurance Co., and Charter Ping An, (all non-life insurers); and Pioneer Life Inc. and the Philippine American Life and General Insurance Co. (Philam Life).

CLIS has the physical distribution infrastructure located nationwide, and the flexibility to enter into business partnerships with financial and non-financial institutions in need of a distribution platform.

CLIS general manager Jonathan D. Batangan said that their target is to hit the 16-million microinsurance policy mark by the end of the year. So far, it has sold over 15-million policies.

“In fact, we have submitted to the IC several products for their approval,” Batangan said. These include micro-life, agri-insurance, personal accident (PA) with calamity assistance, and micro-health.

Its various microinsurance products already in the market covers property, auto, security guards, barangay tanods, tricycle drivers, and students.

Aside from the Cebuana Lhuillier outlets, CLIS also forged partnerships with property developers, local government units (LGUs), schools and sectoral associations.

The distribution and marketing group is also in talks with telecommunications providers such as Globe and Smart for the e-COC or electronic acquisition of insurance coverage.

Meanwhile, the Philippines had one of the lowest insurance penetration ratio of less than three percent of GDP (gross domestic product), in terms of commercial insurance.

But it is the leader among emerging economies in Asia in terms of microinsurance penetration of roughly 20 percent of population last year.

The Department of Finance (DOF) said that the microinsurance penetration rate in the Philippines last year was ahead of Thailand’s 14.1 percent, India’s 8.9 percent, Bangladesh’s 5.1 percent, Malaysia’s 3.6 percent, Pakistan’s three percent, China 0.9 percent, Indonesia 0.5 percent, and Vietnam 0.2 percent.