This presentation was delivered by Mr Hiroyuki Aoki (Senior Financial Sector Specialist-SERD/ SEPF at Asian Development Bank, The Philippines) at the ICMIF-AOA Development Network Seminar (18-20 September 2013; Manila, The Philippines)

1. 1
ADB’s Support for Emerging
Microinsurance under JFPR9118:
“Developing Microinsurance in PHI”
Hiroyuki Aoki
Senior Financial Sector Specialist, SERD/SEPF
Asian Development Bank
ICMIF-AOA Development Network Seminar
20 September 2013
Manila, Philippines

2. 2
Outline
 Introduction – What is a Microinsurance?
 Past ADB’s Supports for Microfinance in the
Philippines
 JFPR9118: Developing Microinsurance in PHI
 What We Achieved
 Some Thoughts for Next Steps

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Introduction
What is a Microinsurance?

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What is a Microinsurance?
 General Understanding: “Insurance service for the
Poor”
 One of Financial Services for the Poor?
 The Poor needs risk protection measures in addition to
credit, saving, remittance and payment services.
 A Tool for Social Welfare or Social Protection?
 Health/medical insurance for complementary to public
health system, or alternative in some countries
 Agro/Crop Insurance for the Farmers?
 Because the farmers are poor!

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What is a Microinsurance?
 Assumption: Microinsurance is the insurance
service to accommodate the cash flows of the
Poor (sometimes called “affordability”).
 Small Amount of Premium?
 Small policies means many transactions with small
amounts.
 New Technology to Reduce the Costs?
 Mobile banking, e-payment or Paperless Policies, etc
 Government Subsidy?
 Typical for Agro/Crop Products

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What is a Microinsurance?
Challenge: How can we manage various
stakeholders under various constraints?
 Policy makers
 Regulators/Supervisors
 Other Government Agencies
 Microinsurance Providers/Distributors
 Beneficiaries
 Communities/Local Governments
 Development Partners
We need some common understanding!!!

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Past ADB’s Supports for Microfinance
in the Philippines

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ADB Microfinance Development
Strategy in 2000
 Goal
 To ensure permanent access to institutional financial
services for the majority of poor and low income
households and their microenterprises through the
development of sustainable microfinance systems
 Definition of “Microfinance”
 Broad range of financial services such as deposits,
loans, payment services, money transfers and
insurance to poor and low income households and
their microenterprises

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Philippine Microfinance Strategy
 Approach
 Increased role of the private sector
 Government to focus on establishing the enabling
policy and regulatory environment
 Adoption of market oriented financial and credit
policies
 Non-participation of government line agencies in
implementing credit programs

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Past ADB Supports for Microfinance
 Microfinance Development Program
(2005-2007)
 A program loan that called for further development of
the microfinance sector through the strengthening of
the microfinance policy environment, improvement of
regulatory capacity, MFI capacity, and financial literacy
 JFPR9088: Developing Financial
Cooperatives (2006-2010)
 Support to the MDP program loan above
 Assisted the Government in further improving the
regulatory environment for credit and savings
cooperatives engaged in microfinance services.

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JFPR9118:
Developing Microinsurance
in PHI

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Why Microinsurance Development?
 Past projects mostly address the savings and
credit needs of the poor
 With sustainable access to savings and credit
services, both MFIs and government
recognized the need for risk protection
 Low income households need insurance to
address their risk protection
 Then, the need to develop the Philippine
Microinsurance Industry

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JFPR9118: Developing MI in PHI
 Four-year grant project with the following
three components (2008-2012)
 Component 1:
Improving Regulatory Framework for
Microinsurance
 Component 2:
Strengthening the Capacity of Government
regulators and Microinsurance Providers
 Component 3:
Promoting Financial Literacy on
Microinsurance

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What are the progress?
 Component 1:
Improving Regulatory Framework for
Microinsurance
 The Microinsurance Regulatory Framework
was prepared in 2009
 The Performance Standards (PS) “SEGURO”
for Microinsurance was developed in 2010
S for Solvency, E for Efficiency, G for Governance,
U for Understanding of Product by Clients, R for
Risk Based Capital and O for Outreach

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What are the progress?
 Component 2:
Strengthening the Capacity of Government
regulators and Microinsurance Providers
 The Module and Training Program on the
Performance Standards were developed
and implemented for both Regulators and
Microinsurance Providers in 2011/2012

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What are the progress?
 Component 3:
Promoting Financial Literacy on
Microinsurance
 The Materials for Financial Literacy
Campaign was developed in 2009
 Regional Financial Literacy Roadshow has
been implemented in 2011/2012

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What We Achieved

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Formalization of Microinsurance Sector
 Approval and Launch of the Regulatory
Framework for Microinsurance
 Revised Regulation on Microisnrance Products
 Formalization of Informal Microinsurance
Schemes
 Training and Licensing of Agents
 Insurance Commission has got the ability and
responsibility to monitor the Microinsurance
Industry and related reliable statistics became
available!

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Market Development of Microinsurance
 Product Development
More variety of products from life and non-life,
not just a credit life product (about 60 products
in 2011, 40 life and 20 non-life)
 Product Providers
New entries from insurance industry and diverse
players in the market, MBAs, Cooperatives and
Insurance Companies (44 providers in 2011, 17
MBAs, 2 Coops and 25 Insurance Companies)
 Outreach
3.5 million policies were issued in 2011
26.7 million of population out of 90 million are
below poverty line. Well above 10% coverage
for the Poor.

20. 20
Some Thoughts for Next Steps

21. THANK YOU!
Hiroyuki Aoki
Senior Financial Sector Specialist,
SERD/SEPF
haoki@adb.org