There is more than enough reason to celebrate this year’s Microinsurance Month given the milestones achieved by the sector since the launch of the National Microinsurance Strategy and National Regulatory Framework in 2010.
The Philippines boasts an estimated 31 million Filipinos covered with microinsurance in 2014, making the country a model of success worldwide. In 2013, the Philippines was also cited as the country with the highest percentage of coverage in Asia and Oceania.
In terms of market development, the National Microinsurance Strategy followed the thrust of the National Strategy for Microfinance adopted in 2007, which is the engagement of the private sector in the provision of financial products and services to the low-income sector.
The government, spearheaded by the Department of Finance and the Insurance Commission, has successfully crafted an enabling regulatory environment to encourage multi-sectoral participation in the development and distribution of microinsurance products and services to the poor. There has been a continued increase in the number of insurers engaged in microinsurance, from 52 in 2012 to 63 out of 138 insurers in 2014.
Parallel growth is likewise observed in the number of approved microinsurance products from just 18 in 2009 to 162 products by the end of 2014.
The 2010 Microinsurance Strategy also aimed to mainstream informal insurance and insurance-like schemes observed to be prevalent prior to its issuance. As of end-2014, there were already 21 microinsurance MBAs (mutual benefit associations). The number of licensed microinsurance agents stood at 170, of whom 122 are individual agents and 48 are rural banks (in 2010, no rural bank was licensed as an institutional microinsurance agent).
Developments in the sector are expected to continue as public-private sector collaboration is maintained and strengthened. One area to consider is product diversity, as frameworks and guidelines for the development of micro-agri and micro-health products are already in place to further encourage private players to cultivate programs that will complement the existing social health scheme of Philhealth and the crop insurance program of the Philippine Crop Insurance Corporation.
Delivery models are likely to expand and innovate as non-traditional channels are now being considered for the distribution of microinsurance. Technology-based and other innovative platforms are seen further expanding coverage and an effort to include them in the regulatory sphere shall ensure that sound consumer protection is in place.
Challenges still confront the industry as insurance literacy is perceived to remain low in the country. The notion “insurance is often sold, not bought” persists. Efforts to increase understanding of the benefits of insurance must be multiplied and should be targeted at and specifically designed for the level of understanding of the low-income market.
Beyond awareness, marketing of microinsurance products requires continuous client education and an efficient product and service delivery to achieve an overall positive insurance experience for the client. A positive insurance experience is said to influence the client’s tendency to renew his microinsurance policy and share his experience with other members of the community where he belongs.
Microinsurance has been an effective tool for financial inclusion and it aids the government’s poverty alleviation measures as it helps mitigate the risks of financial loss, especially for the low-income families. January has been declared as National Microinsurance Month, by virtue of Presidential Proclamation No. 1212, signed in 2007 “to instill greater consciousness and understanding among the Filipino people of the social and economic benefits of microinsurance.”