Pioneer Life eyes 1-M microinsurance policies

MANILA, Philippines - Pioneer Life Inc. wants to increase the number of its microinsurance policy holders to one million, resulting in a total of P100 million worth of new policies.

The new microinsurance policies would add up to the total first year premiums worth over P665 million for the whole of 2012. In turn, that would result in a total premium income of P1.4 billion to P1.5 billion by yearend.

In a press briefing yesterday, Pioneer Life president and chief executive officer Lorenzo O. Chan said that first-year premiums in the first three months of the year amounted to P294.8 million, already more than a third of the full year target.

First-year premiums are new premiums generated in a given year, as differentiated from renewal business or policies that have been acquired earlier and premiums are being paid in tranches.

Renewal business is already estimated to amount to a conservative P700 million this year, which would result in a total premium income of P1.4- to P1.5-billion at the end of the year.

“From 29,000 microinsurance in 2008, it has reached half a million at the end of 2011,” Pioneer Life, one of the few major life insurance companies in the country that ventured into microinsurance, said.

Microinsurance accounts for seven percent of total business last year, and is targeted to grow between 10-12 percent of total business this year.

The bulk of Pioneer Life’s business remains the traditional life protection insurance for individuals, group insurance, and variable life or investment-laced products.

In the first three months of the year, group life amounted to P233 million, sale of traditional life amounted to P163 million, investment-linked reached P32 million, and microinsurance to P17 million.

The microinsurance price rates vary from company to company, increasing likewise with top-ups or riders. It can be as inexpensive as P50 to over P400 for yearly coverage.

However, Pioneer Life prefers to consult with the target market before it can actually determine the price range and coverage of its microinsurance products. For its distribution network, Pioneer Life partners with microfinance institutions (MFIs) and other financial institutions life rural banks and cooperatives.

“We discuss with our partners and from there customize the products based on their needs and capabilities,” Geric Laude, Pioneer Life vice president for microinsurance, said.

Laude said that their biggest partner is the CARD Group, knows globally for its strong and successful microfinance advocacy. It has over 1.7 million members, and even operates its own rural bank.

There are an estimated 1,410 MFIs, which a client base of seven million micro-borrowers. Laude said that these are also the numbers that will guide microinsurers.

The country’s penetration rate is between 3.5- to four percent of the population in terms of private-sold insurance policies. It balloons to 10- to 12-percent is all government pension funds are included.

Both the government and the private sector hope that microinsurance could increase the number of insured significantly thus increasing protection for its predominantly poor citizenry.