Microinsurance now covers some 500 million of the poor across the globe, thanks to the increase in low-premium products in Asian markets, especially the Philippines.
A report from the Microinsurance Innovation Facility (MIF) released last week showed that China and India accounted for four-fifths of insurance policies dedicated to the poor, but experience in the Philippines was cited as proof that the sector’s growth is not limited to very large populations.
“The Philippines provides an interesting example because of the diversity of approaches,” the report said. “Private insurers are active in the market, with Malayan Insurance Co. expanding its outreach from 4.1 million to over 5 million low-income lives from 2007 to 2009 by distributing through pawnshops and Country Bankers Life covering nearly one million persons.”
The report also mentioned broker MicroEnsure, which facilitated over 1.2 million micro life insurance policies, and state-run Philippine Health Insurance Corp. (PhilHealth) for its Kasapi program for the informal sector that covers some 30,000 individuals.
“However, the Center for Agriculture and Rural Development, an MBA [mutual benefit association] eclipsed them all, covering seven million low-income persons,” the study added.
MIF team leader Craig Churchill said in a statement many innovations have emerged over the past five years to overcome the difficulty in providing viable insurance services to low-income people.
The MIF is an initiative of the Switzerland-based International Labor Organization and the Germany-based Munich Re Foundation.
“Efforts now should focus on increasing effectiveness so that insurance products can successfully reduce their vulnerability,” said Churchill, who also chairs the global advocate Microinsurance Network.
He said the MIF report, titled “Microinsurance Compendium, Protecting the Poor,” is meant to help insurers, delivery channels, donors and other stakeholders understand what it means to provide valuable risk-management services to the working poor.
Microinsurance refers to policies against accidents, illnesses, death in the family, natural disasters and property losses, premium payments for which are tailored to the client’s preference and capacity to pay.
The 26-chapter report shows that microinsurance coverage expanded from 78 million worldwide in 2007 to 135 million in 2009 and then to nearly 500 million today.
Asia is seen as a leader in the global market due to its large and dense populations, interest from public and private insurers, proper distribution channels and active government support.
The MIF said innovations in microinsurance include new products that cover a variety of risks and distributed to poor households through an increasing diversity of channels such as banks, retailers and cell phone companies.
“Commercial insurers have also entered the low-income market, creating significant capacity for scale,” the report said. “At least 33 of the 50 largest commercial insurance companies in the world now offer microinsurance, up from only seven in 2005.”