Highlights current microfinance initiatives undertaken by the Philippine Government to promote access to microinsurance by the low income and informal sectors of society. Presented during the Advocacy Seminar on Microinsurance held on January 27, 2012 at the Diamond Hotel, Manila.

1. Microinsurance:
Current Initiatives,
Rules and Regulations
ADVOCACY SEMINAR ON MICROINSURANCE
Manila Diamond Hotel, Manila
January 27, 2011

2. The Philippine Insurance Market
(2010)
Relatively small • 78% from the life insurance sector
(34 companies)
Insurance industry • 18% from the non-life sector
with P613 (87 companies)
billion assets • 4% from MBAs sector (26 MBAs)
• 12% of the banks’ total deposits
of P5.1 trillion
Total Industry Assets • 5th largest asset in the ASEAN
insurance markets (10 countries)

3. The Philippine Insurance ……
• Total Industry Premium Volume - P98 billion
 Life Sector - P71 billion (72% share)
 Non-Life Sector - P23 billion (24% share)
 MBA Sector - P 4 billion (4% share)
• Total Industry Premium Volume - 5th largest in the
ASEAN insurance markets

4. The Philippine Insurance ……
• Insurance Consumption
 Insurance Penetration - 1.08% of GDP
(ratio of premium volume
to GDP)
 Insurance Density (amount of premium
Low per capita)
insurance  Life Insurance - P798
take up
 Non- Life Insurance - P245
• Estimated life insurance coverage -
19% of the population of 94 million
(18 million)

5. The Philippine Insurance ……
• Insurance Penetration - 5th highest in the ASEAN
insurance markets
• Insurance Density
 Life Insurance - 6th highest in the ASEAN
insurance markets
 Non- Life Insurance - 7th highest in the ASEAN
insurance markets

6. Low Market Penetration
• Lack of appreciation of the importance and benefits
of insurance
• Insurance products mostly cater to the middle and upper
income market
• Insurance products are unaffordable , not accessible and not
tailor-fitted to the risk protection needs of the poor
• Insurance is an additional financial burden to the poor
• Insurance contracts are long, complex and contain
provisions that are too complicated to the poor

7. Low Income Sector - A Potential
Insurance Market
About 26.5% of the population of 94 million are
below the poverty line (25 million)
Of the 25 million Filipinos, only 2.9 million
have some kind of risk protection.
Of those provided, about 50% were covered by
informal insurance schemes.
They are most vulnerable to illness, physical
Injury, accident or death, natural calamities.
Thus, they need risk protection.

8. Circulars Issued by the IC
on Microinsurance (MI)
Insurance Memorandum Circulars (IMC) 9-2006 & 1-2010)
MICROINSURANCE
Daily Contributions/premiums
not more than 5 percent of the current daily
minimum wage rate
(P20.00)
Guaranteed benefits
not more than 500 times the daily minimum wage
rate.
(P200,000.00)

9. Key Distinctions Between Conventional
Insurance and Microinsurance
Common Provisions for Traditional Microinsurance Products
Individual/Group Insurance Insurance Products (IMC 1-2010)
Plans
 Maximum No 5% of the current daily
Premium Limitation minimum wage rate in
Metro Manila
 Maximum No 500 times the daily
Benefit Limitation minimum wage rate in
Metro Manila
 Policy Contract Full of complex conditions Simple and easy to
understand
 Frequency of Premium Monthly, Quarterly, Semi- Daily, Weekly, Monthly,
Collection Annual, Annual Quarterly, Semi-Annual,
Annual

10. Key Distinctions……….
Common Provisions Traditional Microinsurance
for Individual/Group Insurance Products
Insurance Plans Products
 Grace Period 31 days from 45 days from
premium due date premium due date
 Contestability Maximum of Maximum of
Period 2 years from date of 1 year from date of
issue or last issue or last
reinstatement of the reinstatement of the
policy policy

11. Key Distinctions……….
Common Provisions Traditional Microinsurance
for Individual/Group Insurance Products
Insurance Plans Products
 Suicide Clause Maximum of Maximum of 1 year
2 years from date of from date of issue or
issue or last last reinstatement of
reinstatement of the the policy
policy
 Claims Within 60 days after Within 10 days after
Settlement submission of submission of
complete documents complete documents

12. Key Distinctions……….
The contract for microinsurance product
shall bear the microinsurance logo.

13. Who can provide MI –
(IMC 1-2010)
• Life insurance Companies
All entities • Non-life insurance
licensed by Companies
the • Mutual Benefit
Insurance Associations
Commission • Cooperative Insurance
Societies

14. Who can sell MI products
(IMC 1-2010 and CL 6-2011)
Microinsurance agents Microinsurance brokers
• Individuals or entities • Individuals or institutions
licensed by the IC to obtain licensed by the IC to solicit
or solicit microinsurance on microinsurance products
behalf of a duly licensed on behalf of clients
insurance entity.
• Not required to take the
regular licensure
examination agents
• Shall undergo an approved
microinsurance training
program and pass a
qualifying examination

15. Who can sell ……….
License only covers the solicitation of
microinsurance products.
Individuals or entities such as MFIs (rural banks,
cooperatives and NGOs) can be licensed
Those with regular license are allowed to sell and
distribute MI products

16. On Informal Insurance – Joint
Memorandum Circular (JMC) 1-2010
WITH REGULATION NO REGULATION
• Contributions/premiums • Individuals voluntarily
are regularly collected pledge and contribute a
prior to the occurrence certain amount of
of a contingent event; money to a fund
and • Benefits are not pre-
• Guaranteed benefits determined but are
are provided upon the contingent to the
occurrence of a amounts collected.
contingent event. (e.g. Damayan/
Abuluyan Scheme)

17. What should be done by unregulated
entities – (JMC 1-2010 and JMC 3-2010)
TerminateTerminate informal insuranceinsurance-
informal insurance or
like activities by December(JMC 3-2010)
activities by December 31, 2011 31, 2011
JMC 1-2010
Formal Arrangements with Organize into an insurance
authorized insurance provider and seek
providers appropriate authority from
the Insurance Commission

18. What should be done by
unregulated entities (JMC) 1-2010)
• Partnership with
commercial
insurance
companies
Formal • Membership in an
arrangements existing
 Mutual Benefit
Association (MBA)
 Cooperative insurance
provider

19. How will MI operations be
evaluated (CL 5-2011)
All licensed entities with MI operations shall be evaluated using
the set of performance standards called SEGURO
Measures the following: Solvency, Efficiency, Governance,
Understanding of the Product by the Client, Risk Based Capital
and Outreach
SEGURO shall be used as an early warning system to identify
entities with concerns
MI entities to submit annually (starting 2012) resulting indicators
using the set of PS and the corresponding AS.

20. Regulatory Space for Microinsurance
Providers/Intermediaries
Lower guaranty fund requirement for
MBAs wholly engaged in
microinsurance.
Lower capitalization requirements for MI
agents and brokers .

21. Market Response to date…….
15 Microinsurance (MI) MBAs licensed
18 Rural Banks licensed as MI Agents
72 Individuals licensed as MI Agents
59 MI products approved (40 life and 19 non-life)

22. Market Response to date…….
19 Insurance Companies and 15 MBAs with approved
MI products
3,177,732 MI policies/certificates issued by the MI MBAs
966,681 MI policies/certificates issued by the insurance
companies

23. Malaki ang maaasahang kaunlaran
ng bayan kapag ang nakararami ay
protektado at nakaseguro.
Kailangan na natin ang
Microinsurance. Magtulungan
tayong lahat!!!

25. Thank you!!!