Disaster-prone PH sees rise of microinsurance

A WIDER range of affordable products helped further expand microinsurance coverage in the country to 31.1 million in 2014, a report published by the German International Cooperation (GIZ) showed.

GIZ’s Regulatory Impact Assessment of Microinsurance in the Philippines published last month noted of a growing number of insurance companies that had ventured into microinsurance.

“Out of the 138 insurers in 2014, 63 are engaged in some form of microinsurance, from 52 of 138 in 2012. Microinsurance has become an important addition to the insurer’s markets and in 2014 it represented 62 percent of all insurance coverage with 1.9-percent share of total premiums, up from 47 percent of industry insurance coverage and 2-percent share of total premiums in 2012,” the report cited.

Alongside the increase in firms engaged in microinsurance was a rise in the number of agents selling these cheaper alternatives. “The number of microinsurance agents licensed and active has grown to 170 at the end of 2014. There are 122 individual agents and 48 rural bank agents (although an additional 13 rural banks are fully licensed to offer microinsurance as agents, though they are not yet actively selling microinsurance products).”

As a result of more microinsurance players, “the number and diversity of products has improved considerably,” the report said.

“As of end-2014, 162 products were registered out of which 81 are life products and 81 non-life. This is a sharp increase compared to 2009 when only 18 products … had been approved,” it said.

Hence, a larger number of Filipinos bought microinsurance coverage last year, bringing the 2014 microinsurance penetration to 31.1 million, up from 19.8 million in 2012 and 2.9 million in 2009.

It helped that many Filipinos also found how microinsurance works after being devastated by natural calamities and disasters, GIZ said in a statement.

“Insurance providers have responded effectively after Typhoon ‘Yolanda’ (international name: Haiyan) in November 2013, paying out more than one hundred thousand microinsurance claims within the first three months, amounting to approximately half a billion pesos. The average amount per claim paid was P4,777,” it noted.

“Clear policy direction and proportionate regulatory guidelines provide the driving force to insurance market development. It provides certainty for the industry to invest in microinsurance activities. It gives public confidence to trust microinsurance products. The good numbers in microinsurance, as elaborated in the report, is a product of multi-stakeholders dialogue and cooperation.” Insurance Commissioner Emmanuel F. Dooc was quoted by GIZ as saying.

“The Philippines is a leader in inclusive insurance measures among countries in Asia. The country has proven that microinsurance works and could be sustainable using full market-based approach. The role of government in providing clear policy directions has enabled the private sector and other stakeholders to contribute to the advocacy of microinsurance market development,” said Finance Undersecretary Gil S. Beltran.

Last October, the Insurance Commission came out with the Enhanced Microinsurance Regulatory Framework, which was aimed to “enhance the regulatory environment for microinsurance in order to broaden the scope and deepen the outreach of microinsurance providers without sacrificing their viability and sustainability, and protect the consuming the public.”