Microinsurance aggresively targeting low-income group

MANILA, Philippines - The National Credit Council (NCC) said it is optimistic more Filipinos in the lower income bracket will get insurance protection with the aggressive growth and introduction of microinsurance.

Already, over two million Filipinos have microinsurance policies and this is seen to easily double with the recent entry of 50 life and non-life insurance companies into the microinsurance bandwagon.

This means the mainstream life and non-life insurance firms, not just the 14 mutual benefit association (MBA), will be selling the new microinsurance products.

NCC deputy executive director and Department of Finance (DOF) director Joselito S. Almario said the Insurance Commission (IC) has approved 50 microinsurance products.

MBAs usually have no capital stock, but issue certificates of membership providing for payment of benefits in case of sickness, disability or death of members. They have accumulated funds through the collection of fees or dues from members, at either stated or irregular intervals, with which to discharge liabilities on membership certificates and with which to pay the administrative expenses.

Almario explained that microinsurance have lower-priced premiums although with lower value of claims. The price of microinsurance premiums range from less than P1 to P20, and with maximum coverage of P200,000.

“From the 60-day claim period allowed for traditional life insurance, it will be a maximum 10 days claim payment period for microinsurance,” he said.

Microinsurance products introduced by the mainstream life insurers are similer to their traditional products but in a smaller and cheaper scale. But it still allows quarter, semi-annual and annual premium payments.

Meanwhile, non-life insurers with their own microinsurance products are annual in character and time frame, much like their existing personal accident (PA) insurance products.

To ensure the sustainability of microinsurance, the issuers have turned to a multi-channel distribution network, such as rural banks, cooperatives and non-government organizations (NGOs).

The Bangko Sentral ng Pilipinas (BSP) has allowed rural banks to sell or act as microinsurance agents, while MBAs and other cooperatives have started adopting the new microinsurance products.

The Rural Bankers Association of the Philippines (RBAP) and its research and training arm, the Rural Bankers Research and Development Foundation Inc. (RBRDFI), successfully trained 145 rural banks since January 2011, and assisted more than 40 rural banks with their microinsurance license applications.