MANILA, Philippines — The government wants microinsurance coverage among Filipinos to jump to 50 million by 2022 through making these already cheap insurance products more available to farmers and those living in disaster-prone areas, Department of Finance (DOF) Undersecretary Gil S. Beltran said.
During a meeting organized by the German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Beltran noted that the number of Filipinos covered by microinsurance increased to 38.9 million from less than three million in 2009.
The regulator Insurance Commission (IC) had attributed the 18.8-percent increase in microinsurance penetration last year to higher sales of more mutual benefit associations (MBAs) as well as life and non-life insurers selling these cheaper but short-term insurance policies.
“Since 1997, the DOF together with the National Credit Council began to develop policies on financial inclusion through the National Strategy for Microfinance. Through this, the Philippine government has set the stage for market-driven provision of both microfinance and microinsurance – leaving itself with a enabling, supporting role through policy, regulation and capacity-building,” Beltran noted.
Beltran, who is also DOF’s chief economist, likewise highlighted how microinsurance coverage helped when natural disasters like super-typhoon “Yolanda” (international name: Haiyan) pummeled the country and flattened central Philippines in 2013.
“In the aftermath of ‘Yolanda’, those covered with microinsurance claimed an estimated P500 million almost immediately. Claims were made mostly from non-banking institutions like pawnshops and remittance centers—both of which cater and are more accessible to those in the lower classes. These claims have been vital in the rehabilitation of survivors,” Beltran said.
“This shows that beyond accomplishing the goal of financial inclusion, microinsurance also took on the role of social safety net for vulnerable segments of the population,” he added.
Beltran told reporters that one way to jack up microinsurance penetration was by introducing products for farmers.
In 2016, IC came out with microinsurance frameworks for agriculture, health, and pre-need products, making the Philippines widely regarded as a microinsurance model in the region.
However, Beltran said the government does not intend to make microinsurance coverage mandatory, as had been proposed for products aimed at covering disaster risks.
“We don’t want to do that – we are like forcing people to eat something they might not want. Sometimes the market develops by itself; no country has tried to impose” microinsurance coverage, Beltran said.
Beltran noted that purchases of these types of insurance products were still mostly being shouldered by low-income households such that making them mandatory would be “very difficult, unless you increase the CCT [conditional cash transfers] and require that a part of it should go to insurance or increase the payout to farmers affected by the rice tariffication law and require that a portion of it goes to insurance.”