Microinsurance coverage surges 95% year-on-year

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MANILA - About 7.8 million Filipinos, including dependents, are now covered by microinsurance, the government announced on Thursday.

During a national conference, Reynaldo Vergara, actuarial division chief at the Insurance Commission, said this level of coverage has expended from 4 million last year due to increased awareness and interest.

Before 2008, microinsurance products sold in the market were mostly credit life, except for those sold by mutual benefit associations. Only six licensed microisurance MBAs and "very few" commercial insurance companies were offering these kinds of products back then.

But now, the industry offers 80 microinsurance products, including 54 life and 26 non-life. Seventeen licensed microinsurance MBAs and 28 insurance firms (16 life and 12 non-life) are selling these insurance products.

Vergara, however, said the industry must aim for coverage of 23 million Filipinos who are living below the Asian poverty line. 

The low-income households can now have easier access to these financial products since the cost of selling and paying for microinsurance - where policy holders pay small premiums in many transactions - can be reduced by using mobile banking, e-payment or paperless policies.

Vergara said the Philippines is pushing for more private sector participation and the government's role would be on establishing the enabling policy and regulatory environment. 

Antonis Malagardis, GIZ Microinsurance innovation program manager, said the Philippines has one of the most advanced regulatory frameworks in the world. 

The German development organization has been working with the Philippine government towards the development of the microinsurance industry since 2007. GIZ has helped design microinsurance products that are affordable, simple  and accessible to low-income households. 

Malagardis said the Philippine government must now revise and draft new regulations in agroinsurance, which has been stagnating under the current Philippine Crop Insurance Corp. set-up.

For the farms, the ideal would be an area-based yield insurance that would base its actuarial computation on data gathered in the last 5 years. The coverage would be P10,000 per hectare and the premium would only be at 4 percent. 

The government and the private sector are in discussions on which of them would take care of marketing the product.

Industry sources said there are also proposals to overhaul PCIC and just make it a regulatory entity so that private sectors can come in and offer products that are responsive to the needs of farmers. 

Another option is to make the PCIC a national reinsurance body for agro-microinsurance.

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