Micro Ensure eyes higher premiums with Malayan, Grepalife alliance

MANILA, Philippines - Insurance intermediary Micro Ensure Philippines has set its sight on P180 million worth of life and non-life insurance premiums this year, after producing P140 million in premiums last year.

Micro Ensure Philippines is a wholly-owned subsidiary of Opportunity International, a non-profit global organization that provides small business loans, savings, insurance, and training to people living in poverty in the developing world.

Micro Ensure Philippines head William Martirez claims that they have a client base of 1.4 million from six groups made up of microfinance institutions (MFIs), cooperatives, non-government organizations (NGOs) and rural banks.

Among the notables are the Taytay sa Kauswagan Inc. (TSKI) and Kauswagan Bank Inc.

“In fact, we already have an estimated P130 million worth of premiums as of May this year,” Martirez boosted.

That is coming from six groups and another three will be finalized within the next few months.

Since Micro Ensure Philippines is an intermediary and not licensed to write policies, it forged working relationships with Malayan Insurance Co. Inc., the leading non-life insurance provider in the Philippines, and the Great Pacific Life Assurance Corp. (Grepalife), one of the country’s leading life insurers.

The financial intermediary will arrange, solicit, produce and negotiate insurance products, for both Grepalife and Malayan Insurance. If agreeable, the life and non-life insurers will write the policies.

In 2008, Malayan Insurance reported net premiums earned amounting to P2.91 billion, gross premiums written worth P6.33 billion, investments reaching P6.21 billion, and total assets valued at P16.31 billion.

In the same period, Grepalife was ranked eight leading life insurer with total premiums worth P1.8 billion in 2008.

Martirez explained that they offer low-cost insurance products designed to match the needs and financial capabilities of the lower income groups.

“Our aim is to achieve sustainability for insurance companies, product distributors, clients, and our own efforts. To distribute our products, we form partnership with organizations that are currently serving the poor such as MFIs, cooperatives and rural banks,” he explained.

It likewise utilizes technology in its back office processing that tracks details of clients covered, collects premiums and administers claims that helps reduce the cost of microinsurance.

Some of its basic insurance products are the credit life, which protects the lending institution against the inability of the borrower to repay loans as a result of death or disability.

There is term life or a fixed payout upon the death of the client, spouse, or children during a fixed loan period. The payout is normally designed to pay for the cost of a funeral and provide a sum to the bereaved family to provide for immediate needs. This product can also be extended to include coverage for disability on a permanent or temporary basis as well as critical illness coverage.

It markets basic property insurance or coverage of losses arising from a range of perils including fire, natural disasters, flood, wind and even theft. This product is especially useful for microfinance lenders providing secured loans to individual borrowers.

The unique Weather Index Crop insurance uses an index such as rainfall to determine if and when a payout is due. This product protects the farmer and the lender and so enables rural credit programs to expand with reduced risk.

Micro Ensure Philippines also offers a package policy that combines a number of products such as credit life, funeral insurance, and property insurance combined in a single microfinance “care” policy.

By working with health management organizations (HMOs), MicroEnsure can provide full in and out patient coverage including access to anti-retroviral drugs for individuals as well as families.

Recently, Micro Ensure was one of the recipients of the 2009 Financial Times Sustainable Banking Award, an event organized by Financial Times and the International Financial Corp. (IFC), a member of the World Bank Group.

According to the Financial Times, Micro Ensure was selected due to its innovative programs with significant social, environmental, and financial benefits that can be replicated in the developing world. It was noted for its pioneering development of weather index crop insurance in sub-Saharan Africa and Asia.

Seventy percent of the global poor are rural and agriculture is a mainstay of rural livelihoods. Smallholder farmers in the developing world often find it difficult or impossible to access credit because lenders view them as too high risk.

“Weather index crop insurance provides a safety net that protects farmers from the financial risks associated with adverse weather conditions such as drought, excess water, or even typhoons. But it has the benefit of enabling secure extension of credit for the purchase of quality farm inputs such as drought-resistant seed and fertilizer,” it said.

Micro Ensure piloted crop insurance schemes in Malawi, Tanzania, Rwanda, India, and the Philippines, covering a variety of crops including rice, maize, and tomatoes. The aim now is to continue geographical expansion, cover a wider range of crops, and achieve significant global scale.