THE domestic insurance industry posted a stellar growth performance in the past year, registering an estimated 28 million Filipinos protected by microinsurance.
Microinsurance has proven to be a great tool in promoting affordable security in the Philippines with its significant contribution to the increase in insurance penetration, which hit 28 percent, one of the highest rates in the Asian region.
The recent calamities that shook the country highlighted the importance of having insurance protection, especially for the poor who are the most vulnerable. When Super Typhoon Yolanda struck the country in November 2013, over half a billion pesos in microinsurance claims were settled and given as benefits to families to cover calamity assistance for damaged crops, hospitalization and death.
Now that its wide-ranging impact is known, microinsurance is currently seen as an important component of risk management, complementing the government’s disaster prevention and rehabilitation program.
To support the industry’s growth, providers are encouraged to look into designing more products that will provide comprehensive coverage to the lives and livelihood of low-income people. One example of this is crop insurance offered by public insurance agencies in partnership with private providers.
There is a need to develop such products to cushion the effects on the low-income segment whose livelihoods and income sources are threatened when calamities strike. When such losses occur, the ability of an individual to bounce back from a calamity is severely affected, thus also affecting the productivity of their segment in the broader economy.
Delivery channels like the rural banks, cooperatives and other microfinance institutions should respond to these needs by providing access to a product that will provide security over losses at an affordable rate. Support and development institutions like industry associations, donors and other development-oriented agencies, on the other hand, should do their part by providing assistance in building the capabilities of various delivery channels to provide quality microinsurance services to the low-income sector.
For its part, the Rural Bankers Association of the Philippines is continuously providing training and licensing and other forms of technical assistance to its member banks. To date, a total of 223 rural banks and over 500 staff have already undergone microinsurance training provided by the RBAP’s training arm, the Rural Bankers Research and Development Association.
Bank staff who completed the course are qualified to act as their institution’s soliciting agent, which is part of the program to empower institutions as access points for clients to avail of microinsurance.
With continuous partnership between the private and the public sector, microinsurance will soon emerge to be a vital component of disaster risk management, benefiting more Filipino lives in the coming years.