Our kababayans are beginning to understand and adopt the concept of insurance, as the Department of Finance (DOF) recently said that the number of Filipinos who own microinsurance policies have more than doubled as of end-2012 compared to 2010 figures.
As of end of last year, the DOF said that there were 12.9 million Filipinos who own microlife and nonlife insurance policies, as against six million policyholders in 2010. In effect, the figure signifies the credible job that rural banks have been doing in educating and reaching out to the underprivileged sector regarding the importance of microinsurance.
This significant growth can also be attributed to rural banks gaining much support from the government, by encouraging private entities to offer insurance products that cater to the needs and meet the limited financial capabilities of the poor, especially to those who had no previous access to microinsurance.
Being from the same community as its target market, rural banks—in general—are in a better position to understand the specific needs of the rural communities. As such, they have been permitted to act as agents of microinsurance products through the Bangko Sentral ng Pilipinas (BSP) Circular 683, series of 2010. This authority allowed rural banks to serve as channel partners on microinsurance, facilitate client’s enrollment and collect premiums and claims administration.
Meanwhile, the technical research arm of the Rural Bankers Association of the Philippines—Rural Bankers Research and Development Foundation Inc. (RBRDFI)—has also played an active role in preparing rural banks to be effective agents of microinsurance by facilitating technical assistance and knowledge transfer.
The trainings being conducted by the RBRDFI are designed to benefit rural banks that want to improve the ways they market and sell microinsurance. They focus on how rural banks can help people regard microinsurance as an effective safety net during times of contingencies. Viable strategies are also discussed on how to market microinsurance, and to better educate clients about the benefits of microinsurance.
RBRFI has also developed an extensive Microinsurance Development Toolkit, otherwise known as Ladders, that contains resources to help member-rural banks in developing and improving their microinsurance program from the “learning microinsurance” to further “strengthening” their business. It also includes the Microinsurance Literacy Toolkit, which is a set of customizable materials that are available in English and Filipino that member-rural banks can use to maximize their potential for success in providing microinsurance value to their clients.
Best industry practices around the globe are also shared during these seminars, which include the use of technologies to expand access to microinsurance.
The use of appropriate technology is very crucial not only in reaching out to the potential markets in far-flung areas, but also in bringing down the administrative costs for rural banks. One such technology that is commonly utilized is mobile banking.
As of May 2013, under the microinsurance initiative of RBRDFI, a total of 207 rural banks and 460 staff and officers have been trained in the two-day Basic Microinsurance Training course. In addition, 80 rural banks have been assisted in different stages of obtaining license from the Insurance Commission (IC) and accreditation from the BSP. Thirty-nine rural banks have already been issued microinsurance agent licenses by the IC, and 32 rural banks have been authorized by the BSP to apply for a microinsurance agent license.
The government is now in the middle of a huge financial literacy campaign to promote microinsurance among the poor. Foreign analysts have already cited the Philippines as one of the best enabling environments to support microinsurance in the world with good collaboration between government agencies and the private sector. Rural banks are a good reason for this.
With more than 2,700 branches and other banking offices and more than six million clients and another 10 million household members, the rural banking industry is one of the best distribution points for microinsurance in the country.