More microinsurance products in pipeline

MANILA, Philippines – Proponents of microinsurance are working on frameworks for the development of micro-agri, micro-health and micro-preneed that would soon lead to new “sachet-sized” insurance products for the general population.

In a microinsurance summit held recently, Emmanuel Dooc, commissioner of the Insurance Commission (IC) said government and private sector advocates have enhanced the regulatory framework for microinsurance to open the doors for new products.

Dooc added that more sectors of society are joining the bandwagon to create the new products, aside from those already deeply involved, which includes the Asian Development Bank (ADB), the German International Cooperation (GiZ), and the national government through the Department of Finance (DOF) and the IC.

The Philippines remains dependent on agriculture as most live and work in rural provinces.

“This is ironic because these farmers and fisher folks are supposed to provide food for us. Their crops and their catch are supposed to be sold to the market and eventually enjoyed on our dining tables. Yet these same farmers and fisher folks are the ones that go hungry whenever a strong typhoon hits our country,” the commissioner said.

The micro-agri insurance product will either be the traditional indemnity and the parametric or index-based. It would cover crops or products under various stages of development, their inputs, or assets.

Micro-preneed will still cover the traditional pre-need products of education, memorial and pension.

The pricing is being changed to more popular levels, the payment scheme expanded, the players increased, and trust fund requirements revised.

Micro-health is being developed as a means of achieving the objectives of the National Health Insurance Act of 2013.

Through the framework, advocates seek to augment the government’s universal health care program by providing more affordable options to our low-income countrymen.

The micro-health framework still needs the approval of all parties concerned before microinsurance providers can begin developing the products.

“This is definitely a challenge for us as regulators and for you as private insurers. The challenge is how to develop products, how to price them accordingly, and how to make it affordable, and at the same time sustainable,” Dooc pointed out.

The Enhanced Regulatory Framework and the new Microinsurance Frameworks is an improvement from the original document signed five years ago.

In 2013, microinsurance was put to the test when Typhoon Yolanda struck the country. More than 120,000 households that suffered loss of lives and property received more than P500 million in claims.

They received an average of P5,000 in insurance benefits.

“That P5,000 did not only buy rice and viands for the day, it also provided them with hope,” Dooc said.

Meanwhile, the ADB has extended until March next year its technical assistance for the microinsurance efforts.

The original amount was $1-million in 2010 and due to terminate this year.

Dooc said that they would like to approach the ADB for more assistance, aside from the present TA.

“The development of the index-type micro-Agri insurance will require more studies. Aside from the ADB, other partners such as the GiZ, could come to our assistance,” he said, adding that they will also approach proponents of Project Noah.

Project Noah will be launching two mini-satellites. Satellites and the parameter or index-insurance relies heavily on technology such as satellite mapping, typhoon tracking, and the like.

Out of the 36-million insured Filipinos, roughly 31 million hold micro-insurance policies or certificates. The remaining five to six million are holders of the more expensive commercial insurance.

That means also a third of the country’s population have one kind of insurance protection, not counting protection offered by government pension funds such as the Social Security System.

The leading proponent of microinsurance are the mutual benefit associations (MBAs) composed of 3.5 million members.

These include cooperatives, credit unions, trade associations such as tricycle drives, and the like.

Last year, it generated a record P7.6 million in premiums from traditional and unsophisticated microinsurance products.

“But the numbers are not as important as the lives it protects,” the IC commissioner said.